Category: lending

Capchase and the Evolution of Enterprise Lending

Capchase and the Evolution of Enterprise Lending

We’re excited to announce our investment in Capchase as part of their Series B financing. Our firm has been fortunate to work with many of the pioneers in fintech, and we are excited to partner with Miguel, Przemek, and the entire team at Capchase in the emerging category of revenue-based financing for recurring-revenue businesses.

Our experience in working with other leaders within fintech such as LendingClub, Kabbage, and SoFi has been that they combine several key features that collectively revolutionize the customer experience. Key aspects of this include: (i) a greatly simplified customer experience, (ii) a shift to digital underwriting and a real-time understanding of credit risk, and (iii) greater insights into how to better serve borrowers over time, whether that be through data-driven insights or new products. Capchase similarly pulls these elements together, but this time with a focus on helping fast-moving recurring-revenue companies further accelerate their growth.

We were struck as we interviewed Capchase customers by the elegance of their customer experience. As any startup CEO knows, the process of getting a loan from a bank or venture lender can take several months. The back-and-forth discussions with lenders often involves coordinating meetings, management presentations, and collecting and organizing various types of reports. If successful, this leads to a term sheet from a potential lender that also comes with its own unique set of features and further negotiation. Capchase saw the opportunity to greatly simplify this process by offering an API-driven (Read more...)

Embedded Lending — Our Thesis on SMB Lending, Enabling Infrastructure and the Opportunity to…

Embedded Lending — Our Thesis on SMB Lending, Enabling Infrastructure and the Opportunity to Unlock Access to Capital

Sample lending tech stack for SMBs. Note: This visual does not capture companies that focus exclusively on personal, mortgage, auto, student debt lending. This visual also does not capture embedded lending companies that bundle lending operations into a single API.

At Thomvest, we have closely followed the evolution of lending across investments in LendingClub, Kabbage, SoFi, Tala, LoanSnap, and Figure. From personal to SMB to student loans and mortgage, we have seen how the first wave of online lending businesses created immense value at the time — we have also seen the distinct challenges of the lending 1.0 businesses, some of which were inhibited by their own full stack models. These businesses had to build, own, and manage every part of the lending workflow themselves, and this ultimately impacted their scalability, growth, and valuation in the public markets.

In the wake of lending 1.0, fintech has become one of the dominant sectors in the private capital markets. In 2Q21, 1 in 5 VC investments was a fintech investment. This boom in fintech has been driven by a paradigm shift in how financial services are distributed and consumed: a shift toward cloud-native, API infrastructure companies that are spearheading the connectivity between regulated bank entities and consumer-facing platforms and that are reshaping how financial products are created, configured, and distributed. Embedded finance is well underway and is enabling companies to embed financial services in their (Read more...)

Revenue-based financing startup Jenfi raises $6.3M to focus on high-growth Southeast Asian companies

Many Southeast Asian digital businesses run into obstacles when seeking early-stage growth financing. They might not want to sell equity in their company, but often struggle to secure working capital loans from traditional financial institutions. That’s where Singapore-based Jenfi comes in, providing revenue-based financing of up to $500,000 with flexible repayment plans that co-founder and chief executive officer Jeffrey Liu refers to as “growth capital as a product.” 

While revenue-based financing is gaining traction in many other markets, Liu told TechCrunch that Singapore-based Jenfi is the first company of its kind focused on Southeast Asia. The startup announced today that it has raised a $6.3 million Series A led by Monk’s Hill Ventures. Participants included Korea Investment Partners and Golden Equator Capital, 8VC, ICU Ventures and Taurus Ventures. The company previously raised $25 million in debt financing from San Francisco-based Arc Labs. 

Jenfi works primarily with “digital-native” companies, including SaaS providers and e-commerce sellers. Some of its clients include Tier One Entertainment, Pay With Split and Homebase. Jenfi hasn’t disclosed how much non-dilutive financing it’s provided so far, but its goal is to deploy $15 million by July 2022. It claims that the average Jenfi customer experienced compounded sales growth of about 26.5% over three months, 60% over six months and 156% over twelve months.

The aggregate sales of companies in its portfolio is currently more than $30 million, and Jenfi expects that the capital it has (Read more...)

Octane raises $52M at a $900M+ valuation to help people finance large recreational purchases

Most of the time when people get loans, it’s for big life purchases such as a house or a car.

But not every big purchase is a necessity. Some are more for fun, and the financing options for those types of buys — such as motorcycles and ATVs — are more limited. Today, Octane Lending, a company that embarked seven years ago on remedying that, announced it has raised $52 million in a Series D round of funding that values the company at over $900 million.

The company, which offers “instant” financing for large recreational purchases, boasts impressive financials in a startup world whose inhabitants are mostly unprofitable. For one, Octane is both net income and operating cash flow positive, and expects to originate more than $1 billion in the next 12 months. It has been doubling revenue annually, and CEO and co-founder Jason Guss projects that the company will see “over $100 million in revenue” this year. Its valuation is now “more than double” what it was at the time of its July 2020 $25 million raise, according to Guss.

Progressive Investment Company Inc., a member of the Progressive Insurance group, led its latest financing, which included participation from existing backers Valar Ventures, Upper90, Contour Venture Partners, Citi Ventures, Third Prime and Parkwood, as well as new investors Gaingels and ALIVE. 

With the latest round, New York-based Octane has now raised more than $192 million in total equity funding since its 2014 inception.

Octane launched with the goal (Read more...)

Citadel ID raises $3.5M for API-delivered income and employment verification

This morning Citadel ID announced a combined $3.5 million raise for its income and employment verification service. The startup provides an API to customer companies, allowing them to rapidly verify details of consumer employment.

The capital came from a blend of venture firms and angels. On the firm side, Abstract and Soma VC were in there, along with ChapterOne. Brianne Kimmel put capital in as well, according to the startup. And denizens with work histories at companies like Zynga (Mark Pincus), Stripe (Lachy Groom), Carta (Henry Ward), and others also put cash into the fundraise.

Citadel was founded back in June of 2020, before raising capital, snagging its first customer, and shipping its product all inside of the same year.

The idea for Citadel ID came when co-founder Kirill Klokov worked at Carta, the cap-table-as-a-service startup that recently built an exchange for the trading of private stock. Klokov discovered while working on the tech side of the company how hard it was to verify certain data, like employment and income and identity.

As Carta deals with money, stock, and the collection and distribution of both, you can imagine why having having a quick way to verify who worked where, and since when, mattered to the company. But Klokov came to realize that there wasn’t a good solution in the market for what Carta needed, sans building integrations to a host of payroll managers by hand and (Read more...)