Ocrolus Announces Premium Fintech Platform, Ocrolus+ at New York City Event
December 12, 2019
Last night Ocrolus, the New York-based fintech infrastructure company that specializes in document verification and cash-flow analytics, announced its latest product, the Ocrolus+ platform from Chelsea’s Glasshouses.
Following a series of testimonies from companies such as BlueVine, OnDeck, and Enova, Ocrolus’s CEO, Sam Bobley took to the stage to run through what the new platform means for customers before thanking everyone for coming out.
Speaking to AltFinanceDaily earlier that day, Bobley explained that Ocrolus+ expands upon two of the services available to customers already, its Capture and Detect products. In their ‘+’ iterations these services will now offer the ability to upload documents and connect digital data sources to them as well as utilize advanced file tampering protection via their new partnerships with Plaid and SentiLink, respectively.
Bobley asserts that the development is partly due to Ocrolus’s customers and their evolving needs. “Our growth and our success is largely driven by our customers. We’re in the fortunate position where our customers have helped us build our product road map … They challenged us to improve our platform and provide additional services. And these were two areas that seemed absolutely critical.”
And looking forward, Ocrolus plans to continue to offer advanced services through their platform, with Bobley revealing that a third product is in the works, Analytics+, which will focus on cash flow. And as well as this, the CEO and Co-founder noted that additional digital data sources may be added in the long term.
“One thing we’re working on as a company is to transform from a company that analyzes financial documents to a company that provides fintech infrastructure, end-to-end fintech infrastructure, so by bolstering up our fraud detection capabilities and also including the ability to connect to bank accounts for confirmatory and ongoing monitoring, we’ve been able to solve additional problems that our customers are asking for.”
Lenders, Leaders, and Las Vegas: Money20/20 Review
November 3, 2019
Two things arrived in Las Vegas last month: the first being an unusual dip in local weather, with temperatures dropping to the low forties at times and woolen hats making an appearance; the second being Money20/20.
Now in its seventh year, the conference runs smoothly to the point of being habitual, a trait several attendees mentioned to me when asked how they felt about the 2019 edition.
Running from Sunday the 27thto Wednesday the 30th, each day offered a different focus. The first of these being alternative finance, blockchains, and cryptos. Here, leaders from LendingClub, Kabbage, and OnDeck, among others, took to the stages to discuss issues ranging from strategies in the face of a recession to AI in lending. Running throughout were conversations about where cannabis banking regulation was headed and what can be done to prepare. Of note was Jontae James of NatureTrak, who spoke from the Leadership Lodge Stage, pitching his company as a solution to compliance issues facing lenders who want to work with cannabis companies.
The following days contained a mix of subjects, with Monday featuring many events relating to payments and entrepreneurship; Tuesday being the day for cybersecurity, regulation, and banking; and Wednesday closing the show with various talks on emerging technologies. Among the highlights of these were a talk from David Marcus of Calibra on the currency’s efforts to alter the financial landscape, a discussion on growth in emerging markets from Ant Financial’s Douglas Feagin, and words from BlueVine’s Eyal Lifshitz on the needs of small businesses.
Outside of the stages where these were held was the main expo hall. Dotted with booths and stands, the narrow pathways that were carved out by these were lined with a mix of businesses.
In overwhelming numbers though were companies offering identity verification services. A growing industry in today’s increasingly online world, their presence dominated the hall, with it being hard to turn around without being offered a pamphlet on the importance of knowing who your customers are and how much it will cost to confirm their existence and authenticity.
And while walking through the hall and stopping at stalls to talk offered pleasant and informative conversation, there was an underlying tenseness to some of the chatting. Perhaps it was the unrelenting air conditioning that caused this? Or the endless stream of coffee available had rattled some nerve endings? Or maybe it was the frequency with which an oncoming recession was referenced in the titles of talks?
Who knows, what is likely though is that if it is the last of these possibilities, in the case of a “looming crisis,” as one event labelled it, what was talked about in Vegas may not stay in Vegas.
Avi Wernick and Boris Kalendarev Move to RDM Capital Funding
September 23, 2019
Avi Wernick and Boris Kalendarev are joining RDM Capital Funding as the new Director of Partnerships and Strategy and CFO/COO, respectively.
The move comes after a fruitful year for the company, with it securing a $7.5 million credit facility from Charleston Capital, an amount that it has since extended; upping its funding originations from $300-500,000 per month at the beginning of 2018 to over $2.5 million currently; and witnessing 300% growth over the previous 12 months.
Wernick is moving from BlueVine, where he was a Business Development Manager. Seeking to develop and create new opportunities for RDM, as well as ensure the stability of these prospects, Wernick says that he’s bringing with him the skills and lessons learned at the New Jersey-based funding company, believing that how he will operate in RDM will serve as a “nod to his time and the guys at BlueVine.”
Prior to this, Wernick had done consulting work for Morgan Stanley in the early 2010s. Saying that he “wasn’t enthralled by” the world of institutional finance, he moved to RDM during its launch year, 2015, before starting at BlueVine in February 2018. Speaking of his homecoming to RDM, Wernick notes that he is excited to return to the “blend of ideas” that he says is integral to RDM’s approach towards operations and culture.
Kalendarev echoes this, saying that himself, Wernick, and Reuven Mirlis, RDM’s CEO, have been friends outside of business for years and that he enjoys the overlap of his personal and professional connections. “It’s something we arrived at gradually, it wasn’t like, ‘hey, we’re all working in finance, let’s pool our efforts.’”
Coming from Santander, where he was a Vice President, Kalendarev will be focusing on the operations of RDM. Having been a Financial Advisor for Wachovia Securities during the early years of college, as well as beginning his time at Santander during the days of his senior year, Kalendarev has been in finance for over ten years. On his departure from the Spanish bank he said that it “was a very hard role to leave,” but that he savored the risk which came with building a less established financial entity, saying that “you’re more aligned with it, you’ve got skin in the game.”
On the pair joining, Mirlis had to say, “We’re very, very excited for both Avi and Boris. They have an immense amount of value and they’re going to be an integral part of our group going forward. We’re extremely excited to have them on board and to see what’s to come going forward.”
When asked about what exactly may come in the future for RDM, Mirlis noted he plans to reach 300% growth for a second year in a row.
On the topic of the recent COJ bill, the new hires were optimistic, with Kalendarev remarking that RDM stopped using the contracts over eight months ago and that he thinks “it’s good for the space.” “It’ll be a challenge for these companies who tried to get rich quick and take short cuts and not build a sustainable operation,” said Wernick. “You know regulation is a scary thing.”
Funding Circle Originated $377M of US Loans in First Two Quarters of 2019
August 8, 2019Funding Circle originated $377M of loans in the US in the first six months of 2019, according to their latest public report. The company said that “growth was proactively controlled” and that they tightened higher risk band lending and increased prices. They’ve now loaned more than $2B cumulatively in the US since inception and their growth is being led by “new borrowers” that are being lured away from traditional lenders.
Funding Circle still lags behind PayPal, OnDeck, Kabbage, Square Capital, and Amazon in the US in loan origination volume, according to the AltFinanceDaily small business finance rankings. Its closest competitors by volume are BlueVine, National Funding, and Kapitus.
CFA Report Shows Increase in US Factoring Volume
May 30, 2019The Commercial Finance Association (CFA) recently published a report on asset-based lending and factoring which showed a 10.4 % increase in domestic factoring volume in 2018 compared to 2017. While the increase isn’t enormous, it is consistent with a gradual growth in factoring, according to Jeff Goldrich, CEO at Princeton, NJ-based North Mill Capital, which provides invoice factoring.
“It’s not a hockey stick, it’s gradual growth,” Goldrich said.
Goldrich attributed the growth, albeit moderate, to two factors. One is that, while not everywhere, he said there’s been some tightening of credit with banks, which leads companies to consider factoring.
The other is that he said large sized companies are increasingly using factoring as a financing option. While factoring is generally more expensive than taking out a bank loan, companies don’t have to worry about having stellar financial history because factors are less concerned with the financial health of the borrower and more concerned with the strength of the receivable.
Another finding in the CFA report is that Recourse factoring increased by roughly 11% in 2018 compared to 2017. Recourse factoring is when a factor has recourse if a company fails and is unable to pay a receivable to a factor’s client, according to Harvey Gross, Executive Director of the New York Institute of Credit. This is unlike the more common Non-Recourse factoring, where the factor can do nothing if the company that the owes the receivable goes out of business. Gross says that Recourse factoring is becoming more common as factors don’t want to take on as much risk.
Gross said that the older, traditional factors (which often cater to the apparel and toy industries, for example) are still Non-Recourse factors. They shoulder the loss if a company can’t pay its invoices. But at the same time, Gross said that these factors want clients with a large volume of invoices and invoices from solid companies.
BlueVine is one of the few companies that offers factoring online, where a company can get funded online without first interacting with a company representative.
“I see a continuation of factoring marrying fintech,” Goldrich said. “That’s where the big backers have interest.”
BFS Capital Joins ILPA
May 23, 2019
The Innovation Lending Platform Association (ILPA), a group of online small business financing and service companies, announced today the addition of BFS Capital. ILPA is known for creating the Straightforward Metrics Around Rate and Total Cost (SMART) Box.
“We believe that transparency matters,” Ruddock told AltFinanceDaily.
“BFS Capital is committed to being both a responsible and an innovative lender,” Ruddock said. “Our membership in the ILPA allows us to work with industry leaders who are dedicated to advancing standards and best practices in the critical small business lending marketplace… [and] we believe that clarity and transparency is critical in helping [small businesses] make educated and informed financial decisions.”
As a new member of ILPA, BFS will join current members including OnDeck, Kabbage, BlueVine and 6th Avenue Capital.
“We applaud Mulligan Funding and BFS Capital for committing to adopt fair and transparent disclosure best practices to ensure small businesses are well informed when seeking funding,” said ILPA CEO Scott Stewart. (ILPA announced that Mulligan Funding has joined the association as well).
BFS is also a member of the Small Business Finance Association (SBFA) and Ruddock told AltFinanceDaily that BFS will remain a member of that trade association as well.
Separately, BFS announced today that it has named Fred Kauber as the company’s new Chief Technology Officer and Chief Product Officer. Kauber was previously with fintech marketplace platform CAIS Group and he served in senior roles at First Data, Dun & Bradstreet and IBM.
“I’m confident that Fred is the right person to advance both our vision and our capabilities [at BFS,]” Ruddock said.
The Road Back to Residual Commissions
May 17, 2019
“We’re still getting resids from a company 14 years later.” That’s what Phil Dushey said about a factoring client he has at Global Financial Services, a New York-based financial brokerage firm he founded.
He was speaking at AltFinanceDaily’s “Broker Fair” to a room filled mostly with MCA brokers. Years ago, in the early stages of the merchant cash advance industry, brokers would earn residual payments from credit card processing companies when the merchants were converted from one merchant account to another to make the advance possible. Brokers also got residuals from MCA funders that would pay them over time as the merchant paid back.
Now that MCA companies rarely ever rely on credit processors and since they started to offer brokers their entire commission upfront, the concept of residual payments for MCA brokers became history. But for MCA brokers interested in broadening their product offering, residuals can resurface as a revenue stream if they embrace factoring.
Dushey later conceded that residuals from a factoring client lasting 14 years is highly unusual. What is common, though, is to get residuals that last four to five years, he said.
Ed DeAngelis, founder of Amerifi, a brokerage of 12 in Pennsylvania, said that brokers’ residual payments can be anywhere from 8% to 15% of what the factor collects from the merchant. He presented what he said was a realistic example of a merchant factoring a $100,000 invoice. The factor might typically take a 2% factoring fee, or $2,000. And the broker might take 10% of that amount, or $200, for every month that the invoice is outstanding.
“It’s a steady drip that makes a puddle,” DeAngelis said.
Of course, for a larger invoice, like for $500,000, the broker would get $1,000 a month, as long as the client keeps factoring. But DeAngelis said that most factoring companies have a one year agreement and that most clients stay with their factoring company for two to three years. And some, like Dushey’s client, stay for as many as 15 years. Since DeAngelis opened his brokerage two years ago, he said that all of his factoring clients are still in their agreements.
Eyal Lifshitz, CEO of BlueVine, one of the larger factoring companies, said that MCA brokering definitely pays more upfront, whereas factoring is more about building a book of business.
“There are factoring brokers that make quite a lot, but I would say they probably focus on larger deals,” Lifshitz said.
Lifshitz wouldn’t disclose the average size of a BlueVine factoring deal, but his estimation was that the industry average was $250,000 to $500,000.
“What we’re trying to build is a 20 to 30 year sustainable business,” DeAngelis said. “…So we’re trying to build those small residuals because five years from now, who knows? With regulations [in] cash advance, it may not be around. We’re already diversifying our portfolio with all these other traditional products so we’re not cash advance dependent.”
Not all brokers of factoring deals make residuals, according to Frank Capozza, founder of LiquidFSI, which provides factoring services to doctors offices. He said that he works with select brokers and they generally don’t get residual payments from his company. Instead, he pays them an origination fee.
Still, it seems more common for brokers of factoring deals to receive residuals. But it might not be for everyone.
For MCA brokers interested in also offering factoring, Lifshitz said: “They need to understand the product and what merchant could fit the criteria. It is more complex to understand than MCAs in my opinion.”
Amazon Now Among The Top Online Small Business Lenders in The United States
May 8, 2019
Amazon has joined PayPal, OnDeck, Kabbage, and Square as being among the largest online small business lenders. On Tuesday, Amazon revealed that it had made more than $1 billion in small business loans to US-based merchants in 2018. Amazon says the capital is used to build inventory and support their Amazon stores.
By selling on Amazon, “SMBs do not need to invest in a physical store or the costs of customer discovery, acquisition, and driving customer traffic to their branded websites,” the company says. Small and medium-sized businesses selling in Amazon’s stores now account for 58 percent of Amazon’s sales. More than 200,000 SMBs exceeded $100,000 in sales on Amazon in 2018 and more than 25,000 surpassed $1 million.
You can view the full report they published here.
| Company Name | 2018 Originations | 2017 | 2016 | 2015 | 2014 | |
| PayPal | $4,000,000,000* | $750,000,000* | ||||
| OnDeck | $2,484,000,000 | $2,114,663,000 | $2,400,000,000 | $1,900,000,000 | $1,200,000,000 | |
| Kabbage | $2,000,000,000 | $1,500,000,000 | $1,220,000,000 | $900,000,000 | $350,000,000 | |
| Square Capital | $1,600,000,000 | $1,177,000,000 | $798,000,000 | $400,000,000 | $100,000,000 | |
| Amazon | $1,000,000,000 | |||||
| Funding Circle (USA only) | $792,000,000 | $514,000,000 | $281,000,000 | |||
| BlueVine | $500,000,000* | $200,000,000* | ||||
| National Funding | $494,000,000 | $427,000,000 | $350,000,000 | $293,000,000 | ||
| Kapitus | $393,000,000 | $375,000,000 | $375,000,000 | $280,000,000 | ||
| BFS Capital | $300,000,000 | $300,000,000 | $300,000,000 | |||
| RapidFinance | $260,000,000 | $280,000,000 | $195,000,000 | |||
| Credibly | $290,000,000 | $180,000,000 | $150,000,000 | $95,000,000 | $55,000,000 | |
| Shopify | $277,100,000 | $140,000,000 | ||||
| Forward Financing | $210,000,000 | $125,000,000 | ||||
| IOU Financial | $125,000,000 | $91,300,000 | $107,600,000 | $146,400,000 | $100,000,000 | |
| Yalber | $65,000,000 |
