Lightspeed Capital Generated $8.1M in MCA Revenue Last Year
June 23, 2023
When Lightspeed announced it was expanding its MCA program to the United Kingdom, Australia, New Zealand and Quebec, one may have been wondering who they were. The POS e-commerce platform has actually been around since 2005 and has been slowly building up its MCA offerings. Indeed, last quarter AltFinanceDaily pointed out that the company had been increasing its volume.
As of the company’s fiscal year-end of March 31, 2023, the company had an MCA receivable balance of $29.5M, up from $6.3M YoY. Altogether, Lightspeed generated $8.1M in revenue in FY 2022, amounting to only about 1% of its overall revenue. That means there’s still a lot more room for growth.
“We believe real-time access to capital is one of the largest challenges facing merchants today,” said JP Chauvet, Lightspeed CEO in a press release. “This expansion of Lightspeed Capital provides a simple, streamlined opportunity for our merchants to invest in their business. Our goal is to help turbocharge their operations … all through a single, integrated commerce solution.
eCapital Expands With Two Senior Hires
May 11, 2023MIAMI – May 11, 2023 – eCapital Corp. (“eCapital” or “the Company”), a leading finance provider across North America and the U.K., has reinforced its commitment to delivering specialized finance solutions to small to medium-sized businesses by recently appointing two accomplished Business Development Officers (BDOs) to its team. These new hires bring a wealth of experience to eCapital, as they serve clients across a variety of industries. With a focus on delivering customized financing options, eCapital has been able to distinguish itself in the current market conditions, leading to significant momentum for the company.
The two new hires, Matthew DeBernardo, SVP, Business Development Officer, and Bret Aaron Meuschke, SVP, Business Development Officer, will be involved in managing Factoring and Asset-based Lending transactions as part of the company’s Commercial Finance division. Bringing more than 25 years of industry knowledge, the two seasoned BDOs will prioritize meeting clients’ business and financial requirements while providing exceptional customer service.
“eCapital’s sustained expansion is drawing exceptional talent, such as Matthew and Bret, to our company because of our distinct business model and advanced technology capabilities,” stated James Poston, Chief Sales Officer at eCapital Corp. “Their specialized expertise, combined with eCapital’s extensive resources, will enable us to further elevate our capacity to deliver the quick, adaptable financing options that we are renowned for. Matthew and Bret have already demonstrated impressive results in their new positions, and we are excited to see them continue to thrive as integral members of our team.”
eCapital has been a champion of SMBs for almost two decades, harnessing its profound understanding of finance solutions and its remarkable capacity to cultivate and maintain strong business relationships. By adopting a personalized approach and promoting valuable connections with clients, eCapital offers rapid and hassle-free access to working capital, empowering SMBs to thrive and succeed.
“eCapital’s reputation in the industry along with today’s economic climate made it ideal timing to join the company and support clients in getting the financing they need,” said Meuschke. “eCapital’s business model plus the strength of the team was very attractive and something special I knew I wanted to be a part of as they continue to help solve a major pain point in the market.
“eCapital takes an innovative approach to problem-solving and supporting its customers, which is even more critical now as businesses look for options outside of traditional lending,” said DeBernardo. “I’m excited to put my background in alternative lending and expertise in government contracts to work for eCapital as we continue to support and service customers across North America, quickly getting them the funding they need, when they need it.”
About eCapital Corp.
eCapital is committed to accelerating access to capital for companies in the United States, Canada, and the U.K. By leveraging a team of over 700 experts and proprietary, industry-leading technology, eCapital is creating the future of business funding. With a full suite of products such as freight factoring, invoice factoring, lines of credit, asset-based lending, payroll funding, and equipment refinancing, eCapital ensures businesses have the funds they need to do more. Through its Transportation, Staffing, Wellness, Healthcare, Factoring and ABL divisions, eCapital delivers customized funding solutions for over 80 industries. To learn more about eCapital, visit eCapital.com.
Shopify Capital’s Funding Volume Continues to Surge
May 6, 2023Shopify’s business lending and merchant cash advance division originated a whopping $477M in the first quarter of 2023. That’s up substantially from the $346.7M produced in the first quarter last year. Despite the continuous strong increase, Shopify Capital was not mentioned or even asked about during the company’s quarterly earnings call.
Shopify is a huge e-commerce business. The company generated $1.5B in revenue in Q1 and generated a net income of $68M.
How the Amazon / Parafin Merchant Cash Advance Deal Came to Be
November 2, 2022Back in December, Parafin, then a fintech startup with 20 employees, submitted a proposal to Amazon to roll out a potential Amazon merchant cash advance product. At the time, Parafin was little known to the general public and its surprise deal with DoorDash wouldn’t even become public until a month later.
The prospect of an MCA would not have been foreign to Amazon given that the company already offers direct business loans, lines of credit through Marcus by Goldman Sachs, and other loans thanks to a successful pilot with Lendistry. But the team behind Parafin were virtual unknowns in the merchant cash advance industry itself. The company’s 3 co-founders, including CEO Sahill Poddar, all hail from Robinhood, the investment app that became wildly popular especially with younger adults over the last several years.
Coincidentally, more than a dozen people employed by Parafin, including the co-founders, are former Robinhood employees, according to profiles reviewed on LinkedIn. It’s part of a trend, it appears, as other members of their team hail from well known Silicon Valley firms like Lending Club, Stripe, Funding Circle, Google, Amazon, Facebook, StreetShares, and more.
Ultimately, Parafin’s big bet paid off. On Tuesday, November 1st, Amazon announced that the Parafin team was the one it had chosen to debut its official merchant cash advance product.
“Amazon is committed to providing convenient and flexible access to capital for our sellers, regardless of their size,” said Tai Koottatep, director and general manager, Amazon WW B2B Payments & Lending, in the announcement. “Today’s launch is another milestone in strengthening Amazon’s commitment to sellers, and builds on the strong portfolio of financial solutions we already provide. This latest offering significantly expands sellers’ reach and capabilities, and broadens their access to capital in a flexible way—one that helps them control their cashflow, and by extension, their entire business.”
“We founded Parafin with the mission to grow small businesses, and we’re thrilled that we have the opportunity to do that by providing Amazon sellers with this merchant cash advance option,” said Vineet Goel, co-founder of Parafin. “It’s a privilege to count ourselves among Amazon’s suite of financial solutions, and we look forward to making a difference for Amazon.com sellers looking to expand their business.”
The product is already listed on Amazon’s website and was rolled out to some US businesses immediately. It will be available to hundreds of thousands of additional sellers by early 2023, the company claims.
Unique to an Amazon MCA is that funding amounts can start as low as $500 and go up to $10 million.
Amazon’s entrance into the merchant cash advance market coincides wih a unique moment in the product’s history as several states are in the midst of imposing strict regulations on their sale.
DoorDash Expands its Cash Advance Program to the Dashers Themselves
July 21, 2022
First it was restaurants. Now it’s the Dashers. DoorDash recently launched a limited trial of a new program, cash advances to delivery people. It’s a bit altruistic, however, because it is technically an interest-free 30-day loan with no fees at all.
According to the website, loans are paid back either through a percentage of future Dasher earnings or by placing a debit card on file. Loan amounts are determined by a Dasher’s revenue history. Credit is not a factor.
“Dashers who receive an email or see details in app about this pilot are qualified to participate in this pilot,” the site says. Preliminary reviews online by Dashers that have purportedly tried it, claim loan amounts can go as low as $50.
Eligibility is discoverable through the app. “Check your Dasher app to apply for a cash advance,” the site says. “Select how much cash you want and choose your repayment method.” Payments begin 7 days after funding.
DoorDash launched its other program, its merchant cash advance program via DoorDash Capital, late last year.
RCG Advances Permanently Banned From MCA Business by FTC
June 6, 2022
It’s déjà vu. Five months after the FTC successfully banned someone from engaging in the MCA business, the agency has secured a similar outcome from additional defendants. This time it’s RCG Advances and its operator that are banned, according to the final settlement announced by the parties. In addition, RCG is required to make an upfront payment of $1.5M to the FTC and refund $1.2M to its previous customers that it had allegedly deceived.
The penalty may appear rather small in the big picture, but it is possibly as strong an outcome as the FTC could’ve hoped to obtain given the odd circumstances that befell the case. For example, the FTC filed its suit against RCG in June 2020 under Section 13(b) of the FTC Act, one of the most common tools in its legal arsenal. Less than a year later, the Supreme Court of the United States ruled that despite long-standing precedent, 13(b) did not give the FTC legal authority to obtain monetary relief, which from the FTC’s point of view, defeated the entire purpose of bringing such claims. In light of the ruling, the FTC was forced to change its strategy in the RCG case. In May 2021, the FTC asked the Court if it could amend its lawsuit to state that what the defendants had actually done all along was violate the Gramm-Leach-Bliley Act. It was perhaps a more difficult path forward.
By January, the first settlement was announced. This RCG settlement now follows that. One defendant in the case has not settled and the proceedings are still ongoing.
Who Needs The Merchant Cash Advance Keyword Anyway?
May 31, 2022
Almost five years since Google banned its search engine from displaying ads when queries contain the phrase “cash advance,” the loss of business attributed to that has probably been nil to the small business finance space.
According to Google, despite there being between 100,000 to 1 million searches for “cash advance” each month on average, only 1,000 to 10,000 searches per month are specifically for “merchant cash advance.”
People are ~10x more likely to search for business line of credit, business loan, working capital, or business credit card, according to Google’s estimates.
This is somewhat in line with findings from the Federal Reserve, whose recent study determined that 7x more business owners seek out a loan or line of credit than they do a merchant cash advance.
But putting that aside, the ban on paid advertising for all things cash advance has had an upside for some lucky companies. Without ads, Google has inadvertently (or maybe intentionally) elevated funding providers that are local to the searcher to the top of the organic results. That means listings on Google Maps that contain keywords matching the search queries are reaping the benefits of being prominently placed at the top of the page and are potentially capturing all the clicks along with it. The end result is an old-fashioned SEO war to win what few searches there are.
Compare that to a search for sba loan where paid advertising is fair game. In the era of PPP and EIDL, it’s perhaps no surprise that there are between 100,000 to 1 million searches per month for that keyword on average. Many of those searchers will probably not be eligible for an SBA loan so perhaps the next best fit would be equipment leasing or invoice factoring, two queries that are on par with merchant cash advance in average monthly searches, meaning volume is relatively low.
But how does low search volume turn into the large volume of funding originated? Well, another factor has changed since Google implemented the cash advance advertising restriction in 2017, and that is that Google is not as relevant as it used to be. Business owners are more likely to discover a potential capital source from social media or a fintech platform they already have a relationship with than ever before. According to a recent study, 25% of people claimed they had actually used either Alexa, Siri, or another voice assistant to find information about financial services, signaling a major departure from how traditional searching used to be conducted.
All of which means that the paid advertising restriction on a niche keyword on Google is unlikely to make any kind of difference in the big picture. Odds are you might not have known this restriction even existed. Bing, on the other hand, has no qualms with cash advances and allows paid advertising on it.
Velocity Capital Group (VCG) Secures New $50 Million Credit Facility
February 14, 2022
CEDARHURST, NEW YORK—FEBRUARY 14, 2022– Velocity Capital Group (VCG), a leading provider of same-day capital advances to small businesses, has secured a multi-draw term funding line of credit with Arena Investors, LP, a global institutional alternative asset manager. The line of credit will provide VCG with borrowing capacity up to $50 million and deep pool of capital from which to expand its business, further strengthening VCG’s ability to provide funding for small business merchants. Though the name VCG may be new to some, the company is no stranger to alternative finance. Eleven years of experience in the space with over 25,000 funded clients has helped their team understand what merchants need most during the funding process, primarily trustworthiness and speed.
Since VCG’s inception, CEO/Principal Jay Avigdor has made it his mission to provide an efficient and flexible funding experience and product for merchants. “We’re setting new strides for speed and service every year. 2022 is going to be even more impactful for VCG and our stakeholders!” said an enthused Jay Avigdor. “We have a big opportunity for us this year to build on last year’s initiatives. This line will give us the wings we truly need to fly! Giving us the ability to fund larger deals and provide longer terms.” said Jay. The previous year, VCG made news by switching to their own internally developed processing software for deal applications called Drag-in. The software pulls critical data from VCG’s applications to conduct all necessary screenings via API, then uploads that data to their CRM with the click of a button. Drag-in gives VCG the ability to provide offers within minutes rather than hours, giving them a leg up on the industry. Stakeholders have been thrilled with the improved response time on their deals. Drag-in is Currently working on a beta version to provide multiple other industries.
Speed isn’t the VCG’s only focus. “Merchants and ISOs alike deserve to have more control of the capital they’re provided,” Jay added. In August 2021, Velocity Capital Group began offering ISOs and Merchants the option to receive their capital in a Cryptocurrency. Primarily sent through as stable coins (USDC, DAI, USDT). “Due to the cut-off times within which banks have to operate, they can become a bottleneck for our transactions. The opportunity for providing capital in Crypto couldn’t have come at a better time,” said Jay. Available to transfer during all times of the day, funding in Cryptocurrency was added as an option for how Merchants & ISOs receive capital.
“We are excited to facilitate VCG’s activities in small business finance at a time when there are limited options and great needs for capital, and where VCG can provide that capital without unduly burdening merchants receiving it. This transaction fits well with Arena’s broader mission to provide flexible, scalable funding solutions for companies and ideas which have unique growth or liquidity needs. We look forward to working with Jay and his team,” said Victor Dupont, who leads Arena’s investments in the SME sector.
The new line of credit gives steady rails for Velocity Capital Group to continue growing and funding at a significant rate into 2023. “We anticipate we will do north of 150M in funding this year with our current deal flow and this new line. We can provide well-needed cash during these troubling times to small businesses and fuel their success while growing ours as well. We can help small businesses access funding like never before in company history. Through implementing Drag-in, this new credit line with Arena, and with our amazing loyal employees and brokers, the sky is only the limit! ” remarked Jay.
About Velocity Capital Group
Velocity Capital Group helps small businesses all over the United States access capital at incredible speeds. Our team has serviced over 25,000 clients in under 11 years. We’ve grown our business to great heights by focusing on speed, efficiency, and transparency.
About Arena Investors, LP
Arena Investors is an institutional asset manager founded in partnership with The Westaim Corporation (TSXV: WED). With $2.8 billion of committed assets under management as of January 1, 2022, and a team of over 100 employees in six offices globally, Arena provides creative solutions for those seeking capital in special situations. The firm brings individuals with decades of experience, a track record of comfort with complexity, the ability to deliver within time constraints, and the flexibility to engage in transactions that cannot be addressed by banks and other conventional financial institutions. See www.arenaco.com for more information.
Velocity Capital Group Specializes in Funding
Up to $1 Million Same-Day thru MCA (1st thru 4th Positions), Reverse Consolidations, & Consolidations
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