Fundworks Completes a Refinancing of its Capital Structure of up to $70 Million
July 13, 2021
VAN NUYS, CA, July 13, 2021: The Fundworks, LLC, a leading a tech-enabled small business finance company, announced the recent closing of a $25.0 million Credit Facility with a commercial bank and the sale of $20.0 million of Senior Secured Notes to a group of U.S.-based institutional investors. The Credit Facility is expandable up to a maximum of $50.0 million, representing a total capital raise of up to $70.0 million. These transactions refinanced the Company’s existing Senior Credit Facility and subordinated debt and provide substantial excess capital to fund the continued growth of its small business funding platform.
“We are very pleased to announce this financing, which will allow us to significantly expand our ability to provide funding to our small business client base,“ said Co-Founder and Chief Executive Officer, Evan Smiedt. “This new capital strategically positions The Fundworks to be the funder of choice for small businesses as they re-accelerate growth after a difficult and uncertain 2020. Quick access to capital is key for small businesses to succeed and we are very happy to be well capitalized when our clients need us the most.”
“Given the volatile markets and challenging funding environment in our sector, our ability to close these transactions with multiple, large and established financial institutions is a strong endorsement of the The Fundworks and the continued efforts by our employees and partners to put our clients first,“ said Bradley Smiedt, Co-Founder and Chairman. “We look at the closing of this financing as a significant next step in the growth and success of our Company.”
Brean Capital, LLC served as the Company’s Exclusive Financial Advisor and Placement Agent on both transactions.
About The Fundworks:
The Fundworks is a tech-enabled finance platform providing working capital solutions to merchants to grow their businesses, take advantage of short-term opportunities and fund seasonal business fluctuations. The Company’s proprietary technology platform makes the opaque, time-consuming process of obtaining capital simple, fast and reliable. Since inception, Fundworks has funded nearly $400 million to over 8,300 small businesses throughout the United States. The Company is headquartered in Van Nuys, CA. For more information, please visit: https://www.thefundworks.com/.
For more information/ questions/ interview requests / media inquiries, please contact: Evan Smiedt
Email: info@thefundworks.com | Phone: (844) 644-FUND
The Small Business Finance Industry is BACK
June 21, 2021
The industry is back. I say this while sitting in a Miami hotel, my third such trip to Florida since becoming fully vaccinated against Covid in May.
There’s a lot of action going on. I’ve sat down in multiple broker shops in both New York and Florida and the phones are ringing off the hook.
The demographic of the average customer in the post-covid recovery seems to vary. Some say the credit quality has gotten better, others have said it’s worse. Some merchants have become used to forgiveable loans and low APR financing while others appear willing to take capital at any price just to keep up with the pace of their growth. It’s one of those things where everyone is just trying to adjust to the new normal, even if there’s little consensus as to what that is.
In New York City, the return of packed bars and overflowing restaurants stands in stark contrast to the rows of abandoned stores and For Lease signs that dot the landscapes around them. And yet if one looks past all that, the only reminder that Covid was ever even there is the requirement that one still wear a mask on the subway even if they’re vaccinated.
In Florida, it’s the opposite. I recently got yelled at by a bus driver for wearing a mask in the first place.
The broker shops I’ve visited still had office space that were filled with teams that were more than happy to be occupying them in person. But at the same time, the industry has become extremely popular with the traditional work-from-home crowd.
Leo Kanell’s 7-day marathon challenge on facebook draws in more eager industry participants than I would’ve ever thought possible, an accomplishment I know to be true because I dropped in on him unannounced late one friday night while he was live.
Similarly, Oz Konar, who I did a livestream interview with in person, has trained more than 3,000 brokers in the industry, many who work for themselves from home.
We’ve also been very busy in the last couple months and have met a lot of brand new entrants on both the funding and broker side.
All this activity is setting the stage well for Broker Fair 2021 on December 6 in New York City. It is perfectly timed to discuss the new disclosure law that goes into effect in New York on Jan 1, 2022, one that is so consequential that at least one company has relocated to New Jersey.
What a time to be in the industry!
Thrasio Acquires Yardline to Offer E-Commerce Funding
June 16, 2021
Amazon merchant conglomerate Thrasio bought Yardline to incorporate e-commerce finance into the product offering. Thrasio has been active with Yardline since the firm’s initial backing of the company, and is now making Yardline a wholly owned subsidiary.
Yardline Chief Revenue Officer Seth Broman said that historically, e-commerce has been risky with no barrier to entry like traditional brick and mortar shops. Broman added that online stores used to be for supplements, but through Amazon’s third-party marketplace and Shopify’s help, scaling a quality business has become possible.
“Through COVID, the script was flipped,” Broman wrote in a statement. “E-commerce businesses became less risky, and brick-and-mortar businesses suffered the most. It’s also a much smaller universe and harder to target than a brick-and-mortar business.”
Thrasio boasts it is the largest acquirer of Amazon brands globally, and co-founder and co-CEO Carlos Cashman said 40% of brands they approach end up selling. Now, they can help scale those brands.
“Yardline will be an asset in creating more opportunities for these entrepreneurs and offering more sophisticated avenues for growth,” Cashman said in a statement. “They’ve been doing something different in the space—their strategic approach to providing embedded capital across e-commerce marketplaces is unique—and we’re eager to have their technology and proficiency on our team.”
Tomo Matsuo, president of Yardline, will be joining Thrasio’s senior leadership team. “It’s conceivable that every eCommerce-related platform will have FinTech capabilities in the future,” he said in a statement. “And our acquisition by Thrasio demonstrates that.”
Irish E-commerce Revenue-Based Funder Raises $76 Million Series A After First Year
May 27, 2021
An Irish revenue-based e-commerce financing platform called Wayflyer raised $76 million in a funding Series A round this past week. It has been a roaring first year for the small fintech, so far funding $150 million to online merchants. The firm just launched its cash advance product 14 months ago and raised $10.2M in a seed round only six months ago.
Wayflyer offers e-commerce sales-based funding, without the need for collateral, from $10k up to $20M. They partner with firms across the UK, including a recent deal with the international athleisure brand Gym+Coffee.
Left Lane Capital led the round with investments from DST Global, QED Investors, Speedinvest, and Zinal Growth. The successful funding comes after the firm widened its credit facility by $100M to keep up with the demand for capital and a partnership announcement with Adobe Commerce.
The cofounders, Aidan Corbett and Jack Pierse came together in 2019. Back then, Corbett led an online marketing analytics firm called Conjura when Pierse, a former venture capitalist, proposed using analytic tech to underwrite what amounts to digital MCAs.
“Jack came to me and said, ‘You should stop using our marketing analytics engine to do these big enterprise SaaS solutions, and instead use them to underwrite e-commerce businesses for short-term finance,'” Corbett told Tech Crunch. “We just had our heads down and started repurposing the platform for it to be an underwriting platform.”
Launching in April 2020, Wayflyer funded $600,000 in the first month. In March of 2021 alone, the firm did about $36 million in advances.
“So, it’s been a pretty aggressive kind of growth,” Corbett said.
International Payments Firm Lands $125M Series B
May 26, 2021
Paysend, a UK-based international payments processor, landed a $125 million Series B investment round led by London-based One Peak Partners. Paysend said it would use the funds to invest in its infrastructure, cutting the costs of sending funds toward a goal of $5.4 billion in savings towards customers by 2025.
Founded in 2017, The firm focuses on helping consumers and merchants send payments worldwide in any currency. To date, the firm said it had reached more than 3.7 million consumers and firms, connecting 110 countries.
“Paysend’s vision is to develop the next generation integrated global payment ecosystem for consumers and SMEs,” Paysend CEO Ronnie Millar said. “Our innovative technology is connecting 12bn cards worldwide to pay and send instantly anywhere, anyhow. Any currency – we call this Money for the Future.”
Paysend supports connections between 12 billion cards globally across Mastercard, Visa, China UnionPay, and local card schemes and provides over 40 payment methods for online SMEs. McKinsey’s 2019 Global Payments Report valued the untapped card to card international payments market at an estimated $133tn.
“We are excited by Paysend’s enormous growth potential,” Humbert de Liedekerke, a managing Partner at One Peak, said. “Paysend has built an exceptional payments platform by maintaining an unwavering focus on its customers and constantly innovating.”
Shopify Capital Q1 SMB Funding Soars
April 28, 2021
Shopify Capital posted monster figures on Wednesday, originating $308.6 million total in MCA and loans. Across the US, Canada, and the UK, Shopify saw a 90% increase from Q1 last year.
In total, Shopify Capital originated $794 million in 2020, and with a blistering first quarter, it may be on track to originate over a billion dollars this year.
“Shopify’s momentum continued into 2021 as digital commerce tailwinds remained strong and merchants took advantage of the range of capabilities offered by our platform,” Shopify CFO Amy Shapero said in an earnings statement. “We are focused on building a commerce operating system that will help shape the future of retail. Our merchant-first business model positions us to capture the massive opportunity presented by the growth of digital commerce, benefiting both our merchants and Shopify.”
Overall, total revenue for Q1 was $988.6 million, a 110% increase year over year. Nearly a third of the posted revenue was small business lending and MCA funding.
LoanMe, Liberty Tax Merger to Take on Intuit, Enova
February 22, 2021NextPoint Financial will combine LoanMe’s business, consumer, and mortgage lending with Liberty Tax’s tax preparation business, according to merger announced on Monday. Liberty’s “2,700+ locations in the US and Canada” will become consumer and SMB loan shops.
The new firm will also offer Merchant Cash Advances; LoanMe launched MCA funding in January and expects to fund $15 million in MCAs in 2021. Based on the acquisition prospectus, NextPoint will be a tax readiness firm, with the added suite of financial products as a value and growth builder.
Ramping up consumer, installment, and MCA lending, paired with the third-largest tax-prep business in the U.S, NextPoint expects to compete directly with Intuit, H&R Block, Enova, and Elevate.
Fintech firms are setting themselves apart from the competition as one-stop shops for everything a business needs, including MCA products. Why branch into financial services now? NextPoint found that this year alt lenders have outperformed the S&P500 three times over.
“We are a one-stop financial services destination empowering hardworking and credit-challenged consumers and small businesses,” the investor presentation reads. “To get to the next point in their financial futures.”
Intuit offers a variety of financial products, like business loans through Quickbooks Capital, alongside their popular, 60%+ market share of tax prep software. H&R began offering small $1,000 lines of credit this year, but not much more.
The team leading the new company, NextPoint Financial, will feature execs like Brent Turner as CEO, Mike Piper CFO, both keeping their previous Liberty Tax positions. Jonathan Williams, former president and founding shareholder of LoanMe, will become president of lending.
Broker in Early Twenties Builds MCA Business in Less Than Three Years
February 10, 2021
Davron Karimov, a 22-year-old MCA broker, went from $10k in debt to collecting $200k a year in commissions. It took less than three years, and Karimov shared his journey on his personal, sometimes chaotic, yet always informative YouTube channel.
The Staten Island native said he first started at a Long Island City shop and quickly made some early deals, eventually leaving to start his own firm, FunderHunt, and recently opened an office in Miami.
But do the YouTube videos help him make deals? Of course they do, Karimov says, and he not only gets deals through his video platform but he also get questions from other MCA brokers who reach out for help.
“Of course, we get people all the time calling in, people that have questions, people in the industry need help with their merchants,” Karimov says. “I started around 2018, and there was no info on YouTube about business funding, a huge void online. I stepped up and thought I could be the one to supply info.”
Nearly three years later, Karimov has built an expanding business while helping others through the struggles of being a broker and CEO in the MCA world. In the last year alone, the pandemic caused applications to explode, Karimov says.
“It’s been better than ever; I’ve never seen so many applications in March and April; they were just soaring,” Karimov says. “And then I’ve never seen so many applications get denied because of the industry at the time everything was shutting down.”
It was a time to capitalize if your shop was strong enough to survive what Karimov called the “dark ages” for MCA. If you survived, you get to reap the reward of a capital-deprived market, he says.
“The whole crisis took out so many funders that were just not good, they probably were supposed to go out of business a long time ago, but this accelerated it,” Karimov says. “It took out all the bad funders and replaced them with people that are solid, fast, and have everyone’s best interest at heart, from the merchant to whoever the ISO is.”
According to Karimov, 2020 solidified who is a real player in the game. Launching a new office himself, Davron says he enjoys sunny days in Miami while it is twenty degrees in-between blizzards in New York. Though snow wasn’t the reason he moved, but instead the funding environment.
“Everyone has been warm and welcoming [in Miami], the government knows what this is, and that’s what we do. We try to educate them: not a lot of people know here about this; it’s like it’s a secret,” Karimov says. “If you go to New York, it’s like everybody knows, there are so many shops there. But here, it’s kind of rare to see someone that knows what a cash advance is.”
Compared to New York’s increasingly restrictive funding ecosystem, the Florida space is open to growth. That’s exactly the environment Karimov hopes to profit from, expanding his business in any way that will be geared toward helping businesses.
“I’m not a huge fan of diversification,” Karimov says. “I like doing one thing. But we opened up an office in Miami; we’re bringing experienced people in and trying to fund deals as fast as possible. We’re maybe looking to develop into offering a debit card, whatever is in the business’s best interest.”
