Miami is Now Making Money Off of Its Own Crypto Coin
October 7, 2021
Francis Suarez, the crypto-crazed mayor of Miami that has attempted to make his city the next center of innovation in the industry, has recently generated more than $7.1M in funding for Miami’s government via MiamiCoin. Arriving in the form of a crypto “donation” to the city, it was all made possible by CityCoins, a nonprofit that allows users to mine coins that the company claims can help the wallets of both coin holders and the cities with whom they look to invest in.
According to CityCoins’ website, each time a city launches a new coin, users can mine coins themselves. They are an open-source network that allows developers to create smart contracts on top of the same layer used by Bitcoin, a feature normally reserved for blockchains like Ethereum or Cardano.
“Each time a new CityCoin such as MiamiCoin launches, 20+ unique wallets are needed to activate the token’s mining process,” the site reads. “Once this happens, a 150 block (~24 hour) countdown begins, signaling the start of the CityCoins’ mining process at the end of the countdown period. From there, anyone is eligible to participate in the CityCoins mining process within a given Stacks block and be rewarded for their contributions.”
The system creates a bidding process, sending Stack tokens to the chosen city’s smart contract for a specific block. The more Stack tokens that are sent to the contract, the more likely a user is to win rewards for that block. This creates a system where anyone can compete for the coins, as the process of mining a CityCoins product is completely free of any type of hardware.
Thirty percent of miners’ forwarded Stacks is directed into a crypto wallet for the respective city, and the remaining 70% can be used to earn Stacks or Bitcoin. Winners of the coins through CityCoins’ mining process, are chosen by a Verifiable Random Function (VRF) that takes into account the number of Stacks sent to specific contracts.
Anyone would be forgiven if the process and potential utility sounds convoluted. It becomes even more so after examining what exactly a “Stack token” is.
Stacks, a type of blockchain token originated into existence in 2019, were previously registered as securities with the SEC, a rarity in the crypto space. The company that issued them, however, has since changed course and has chosen to no longer register them. This was based upon the company’s own legal opinion, not the SEC’s.
Bottom line: However this CityCoins systems works and whatever the reasons why anyone would participate in it, it has somehow managed to yield more than $7 million for the city of Miami.
While everyone today likes to focus on the negative and want to create conflict and division…We made 1 million dollars on Miami Coin…TODAY…think about that! https://t.co/Ycbwre6Wss
— Mayor Francis Suarez (@FrancisSuarez) October 1, 2021
When speaking about the city’s involvement in becoming a fintech hub with The Floridian, Suarez credited timing to why his city is becoming the go-to spot for fintech businesses to flock. “We had an opportunity,” Suarez said. “You had cities across America, urban cities, pushing out innovators through taxation policies, sometimes elected officials saying “F” Elon Musk, or Amazon picks New York and they push them out.”
Suarez, a member of the Florida BlockChain Task Force, also credited his December 2020 viral tweet as a reason for tech’s attraction to Miami. Suarez answered a tweet with “how can I help?” after a user took to Twitter asking people if they believed Silicon Valley should move to Miami. “It was so counter-narrative to the way elected officials were dealing with technology and technologists,” he said, in reference to the Tweet.
According to Suarez, the city’s focus on crypto and fintech has made Miami a tech-trendsetter for other cities. Thanks to tech’s arrival, Miami is the first city to pursue paying workers in Bitcoin, the first to allow citizens to pay taxes in Bitcoin, and hitting huge numbers in the city’s job market. According to Suarez, the city added 8,000 jobs with an average annual salary of $120,000 in the past nine months.
“For the first time in [Miami’s] history, we are now creating high paying jobs,” Suarez said.
Marcus Has Reached $100 Billion in Deposits
September 24, 2021
Marcus by Goldman Sachs, the prestigious investment firm’s attempt at being a conventional bank, announced that they have over $100 billion in deposits after just five years in operation. The online platform that began as an invite-only savings platform has transformed into a full-blown consumer bank, operating on the futuristic model of operating savings and CD accounts digitally.
“If you told me we would accomplish so much in just five years from launch, I would have said you were crazy,” wrote Harit Talwar in a LinkedIn post on Thursday that announced his retirement from Marcus. “It shows that nothing is impossible when you have the best people.”
In his post, Talwar praised Marcus’ desire to take risks, acting as a separate entity while having to operate within the confines and upkeep of the Goldman Sachs reputation.
“We had the audacity to think big, and it’s safe to say we proved the skeptics wrong – eight million customers, $100 billion in deposits, nearly $10 billion in card and loan balances, $1.5 billion in run rate revenue, two J.D. Power wins and partnerships with the top brands in the world including Apple, Amazon, Walmart, JetBlue, AARP, General Motors and more,” Talwar wrote.
Marcus launched in 2016 with some of the best interest rates in the banking industry. It introduced the Goldman Sachs brand to an entire new group of customers by offering up high interest rates on accounts with no fees, which was nearly unheard of at the time. Two years after launch, Marcus had over $35 billion in deposits.
Marcus’ path was almost completely different prior to its launch. The original idea prior to Marcus was a platform called Mosaic, a banking concept meant for borrowers with good credit that were looking to refinance other debt.
In his retirement post, Talwar credited the camaraderie that developed between employees as a major factor resulting in the success of Marcus. “The team has given more than perhaps in prior jobs, but maybe that is the price of building something this extraordinary at an unprecedented pace,” Talwar wrote. “Yet by sharing those experiences in the trenches, we’ve made lasting friendships and redefined what a consumer business looks like.”
The outlook for Marcus is seemingly endless. Online banking is trendier than ever, and the outlook for banking is losing the brick-and-mortar mentality.
Experts also believe that Marcus has helped Goldman Sachs’ progress into new markets. “Marcus has taken advantage of a core strategic advantage—[Goldman Sachs’] lack of a preexisting deposit customer base— to prove that digital deposit gathering at scale is possible for a large institution,” Todd Baker, Managing Principal of Broodmoar Consulting and Senior Fellow at Columbia University told AltFinanceDaily.
When the company first came about, AltFinanceDaily reported that Marcus may be poaching customers from a peer-to-peer lender named LendingClub. The two companies are now more alike than ever given that LendingClub is also now a bank. LendingClub, still new to the banking scene however, had only amassed $2.5B in deposits as of June 30, 2021.
It seems that Marcus may have been ahead of the curve when it comes to fintech’s place in traditional banking, racking up staggering figures across the board and showing young upstart competitors just how strong it is.
Google to Purchase Manhattan Building in Mega Deal
September 21, 2021
In the footsteps of other giant companies like Facebook and Amazon, it seems that Google has joined in on buying a tremendous piece of New York City office space, as Google’s parent company Alphabet has announced a tentative $2.1 billion deal Tuesday to purchase the building they already lease.
Under extensive renovations, Google plans on making a 1.7 million square foot community of office space by adding the former freight terminal to their New York offices— competing with some of the biggest names and workspaces in the city.
Google will remain in complete control of two other office spaces in Soho and Greenwich Village in conjunction with the new acquisition on the Hudson. The combination of these three offices will create a campus-esque environment for the tech giant. All the offices are within about a mile radius of one another.
First reported by the Wall Street Journal, the purchase is New York’s largest single office building sale since pre-pandemic days, while also being one of the biggest purchases in New York City commercial real estate history.
As smaller fintech companies are seemingly leaving the city in droves, it is the big players in the industry who are looking to stick around and ride out Manhattan’s post-pandemic and remote work woes.
It seems that Google, along with the other tech giants, are expecting a large in-person working environment to return to New York. According to CEO Sundar Pichai in an announcement on Google’s blog from August 31, the company plans on keeping remote work an option for all employees until January 10. After that, they are leaving it up to local officials to dictate if employees can be asked to return in person.
“To make sure everyone has ample time to plan, [employees will] have a 30-day heads-up before [they’re] expected back in the office,” Pichai wrote.
With Facebook’s acquisition of office space at Penn Station and Amazon’s purchase of Lord and Taylor’s former 5th Avenue landmark building, Google is late to the Manhattan real estate grab. These giants are paying top dollar for these spaces, as eight-figure real estate deals are status quo for a city that is littered with empty storefronts and a questionable future for many of its longtime tenants.
Google has a track record of building a presence in New York. An east coast presence is nothing new for the company. “Our investment in New York is a huge part of our commitment to grow and invest in U.S. facilities, offices and jobs,” wrote SVP and CFO Ruth Porat on a Google Blog back in 2018 when the lease agreement for the building was made.
Earlier this year, the company committed to a $150 million investment in New York workspaces.
Google’s new offices will serve as the main hub of their New York City offices. As the new year arrives, Google expects to see 1/5 its workforce still remote. With their new offices already functioning, the new office should complete the Google campus in 2023.
It seems that Silicon Valley’s presence may be creeping East as the finance industry continues to head South. With the price of commercial real estate sky high, the reputation for the city at a low, and a political climate that is creeping its way into business, it seems as if New York may be evolving into the East Coast Silicon Valley hub.
Iwoca Brings Flexible Repayment Loan Product to Funding Xchange
September 3, 2021
Iwoca, a UK-based small business lender, announced Wednesday that it will be launching a new flexible loan product for online sellers through Funding Xchange. According to Iwoca, they will be the first lender in the UK using “open banking” for revenue-based payments to online businesses on the marketplace.
Small businesses in the UK operating in e-commerce can now apply for revenue-based financing between £1,000- £50,001 through Funding Xchange’s website. The loans will have monthly payments based on the borrower’s revenue, but will also allow businesses to choose repayment options that are based upon their daily ups and downs, allowing the borrower different payment amounts during times of slow business, seasonal disruptions, or other factors that may cause business to halt during certain times of the year.
“Our vision is to provide finance to SMEs when, where and how they need it. We are transforming small business lending through product innovation powered by technology, combined with creative distribution partnerships,” said Christoph Rieche, co-founder and CEO of Iwoca in a company release.
Iwoca has a history of being on the front line of innovation in lending, as they claim to be the first UK company to provide instant credit decisions with Amazon and eBay sellers. The company also claims to be the first company to offer a lending API in their services, while also taking credit for being the first SME lender to connect the 9 largest banks in the UK with open banking.
“Iwoca and Funding XChange are leaders in the use of intelligent technology to make SME funding more accessible, more affordable and more sustainable. By transforming the credit-assessment and cost-to-serve, we deliver targeted, self-serve propositions to underserved segments,” said Katrin Herring, CEO of Funding Xchange in the same release. “Given the challenges that the crisis has created for small businesses, this partnership is delivering critical access to finance to help businesses rebuild and flourish.”
How to Think About Credit Invisibility
July 29, 2021Authored by:
Lily Cook, Researcher at Canadian Lenders Association
Tal Schwartz, Senior Advisor at Canadian Lenders Association
Recent research by PERC has highlighted the issue of credit invisibility in Canada, defined as “persons with either no account payment history in their credit report (referred to as “no files”) or fewer than three accounts in their credit report (referred to as “thin files);”
In Canada, credit scores are calculated using payment history, outstanding debt, credit account history, recent inquiries and types of credit. However, according to research from Cornerstone Advisors, the ‘on-ramps’ to being credit visible are limited and come with challenges. The most common paths are:
- Credit cards:
- Collections: Collections as a point of entry into a credit system immediately sets the consumer at a disadvantage, since the first thing to identify them is a negative characteristic.
In general, Canadians under 25 tend to use credit cards at far lower rates. Those in that age group who do have a credit history have the highest percentage of credit scores below 520, according to Equifax Canada.
The rate and impact of credit invisibility in Canada is significant:
- 35.3% of Canadians are credit invisible vs. 19.3% in the US.
- the issue disproportionately affects immigrants, minority communities or younger individuals.
How are fintechs addressing this?
1. Access to alternative data
Canadian data aggregators provide lenders with access to non-traditional credit information that advanced firms can apply ML to in order to better adjudicate credit.
- Open banking data providers like Flinks and Inverite provide consumer transaction history information that allows fintech lenders to underwrite credit invisibles based on their cash flow instead of their credit score.
- Commercial data providers like Forward AI, Boss and Railz pull financial data from accounting systems, payroll, and point of sale terminals in order to give lenders a more fulsome picture of a businesses health.
2. Make alternative data mainstream
PERC Canada recommended that the CFPB explicitly include non-financial institutions in their definition of a ‘creditor’ in order to report positive payment data to credit bureaus. Credit reports that could ‘reward’ customers for paying telecommunications bills on time, for example, could make the credit system more forgiving in the future.
- Billi, for example, a Canadian fintech allows users to integrate on-time payments for their Amazon Prime and Netflix accounts into their credit reports in order to improve them.
Canadian credit bureaus have also taken active steps to being more inclusive of alternative data. A prime (no pun intended) example is Landlord Credit Bureau’s (LCB) and Equifax’s partnership to allow rent payments to count towards credit scores.
- Both as a way to reduce risk for landlords and give tenants a leg up in the market, this shared use of alternative data is “ninety-plus per cent….positive in nature, so overwhelmingly landlords use this to reward tenants,” LCB’s CEO, Zachary Killam said.
3. Create a better on ramp to credit building
Credit building loans can unlock credit for those with minimal histories or challenging track records. These are installment loans that only pay out once the customer has paid them off, and are offered by fintechs like as Spring, Marble and Refresh.
Essentially reverse loans, the reverse structure protects the lender, in the event that the customer doesn’t make all their payments. Over the course of the loan term, the customer’s payments are reported to the credit bureaus. Borrowell, which recently acquired Refresh’s credit building loan portfolio, is now one of the largest providers of this service in Canada.
So what’s the solution?
In order to drive meaningful change on the issue of credit invisibility, fintechs must continue to enable lenders to challenge the limitations of the credit system – by improving access to alternative data, normalizing its use and building better on-ramps to the credit system than collections and credit cards.
Credit invisibility is caused largely by structural issues within Canada’s data markets, but fintechs are starting to fill these gaps.
Funding E-Commerce Businesses Helped This Startup Get Acquired Right After They Launched
June 23, 2021
Less than eight months after Yardline announced their launch in the e-commerce financing space, they were acquired by Thrasio. The blazing fast progression from launching to selling the company suggests that Yardline’s niche presents a unique opportunity.
“There are many companies out there that look at e-commerce businesses in the space and say, ‘there’s no barrier for entry to operate in e-commerce, they’re all drop shippers, it’s a hobby, they have no skin in the game,'” said Seth Broman, Chief Revenue Officer of Yardline. “What Yardline does is really unique: One, we obviously have a lot more information and understanding of how they operate their business, and we can really break down on a deal by deal basis, what their margins look like, to get them a more customized offering that meets their needs.”
Yardline will fund Amazon sellers, for example.
Broman said that while most MCA funders know how to look at a merchant’s fixed costs like rent, payroll, taxes, and inventory to provide funding based on a gross revenue, those same funders don’t have a risk tolerance for e-commerce.
Yardline pulls data from digital marketplaces like Amazon and online storefront platforms like Shopify to make better credit decisions, Broman said, and this was a banner year for digital shopping.
“During COVID, you were seeing such an increase of demand for e-commerce goods; Amazon, Shopify, if you look at their stock price over the last 15 months, it’s incredible,” he said. “And the reason being retails closed, everybody’s shopping from home, and the demand for all my goods is through the roof.”
Before everyone was stuck inside, e-commerce already made up 20% of consumer commerce, Broman estimated. Then everything was online-only, and demand became nearly unlimited, he said. Amazon’s third-party sellers transact 60% of all products sold on the site, and Thrasio is one of the largest consolidators of those sellers in the world, Broman said.
Now, Yardline will have access to Thrasio’s international seller network.
“We’re confident in saying that untapped ecosystem can be very profitable for ISOs if they were to start focusing on e-commerce businesses,” Broman said. “There’s less demand for it, less competition, and now they have a home for where they can get these deals done.”
Broman said after the pandemic, typical brick and mortar stores were hit hard and required PPP to keep the doors open while e-commerce flourished.
“It’s not a matter if shopping online is the future; shopping online is the present. People will continue to shop at brick and mortar, people want to eat out, just look at New York City,” Broman said. “If you look at what Amazon offers, what Walmart’s doing, what Target’s doing, what these online marketplaces are doing to make commerce quicker and easier, there’s no doubt that it’s going to continue to grow.”
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.”
Ebay to Launch Sales-Based SMB Loans in UK
May 13, 2021
Ebay is launching a small business working capital product in the UK, offering sales-based loans to 300k SMBS through YouLend.
The product, called “Capital for eBay Business Sellers,” offers loans repaid through a percentage of daily sales and a lump sum. A year after eBay first ventured into offering merchant payments services, the firm is joining the likes of PayPal, Shopify, and Amazon by offering a business loan product. Loans will vary in size based on sales volumes, from £500 to £1 million, or about $640- $1.3M.
“Capital for eBay Business Sellers is intended to help plug this gap, giving small businesses quick access to a range of financing options,” Murray Lambell, GM of eBay UK, said. “With 300,000 UK small businesses trading on eBay, this proposition will help them reinvest, protect jobs, and succeed, even as the government’s support schemes dry up.”
The application process will take five to ten minutes, the firm attests, landing funds that same day.
“Our focus is on giving leading e-commerce platforms, tech companies, and payment service providers the ability to offer their customers rapid funding through our technology platform,” CCO of YouLend Jakob Pethick said. “We’re delighted to partner with eBay UK to support their business sellers thrive and grow.”
