Arival Bank Nets $2.3 Million in Equity Crowdfunding Campaign

FinovateAsia 2018 Best of Show winner Arival Bank announced this week that it raised $2.3 million (£1.87 million) in a pre-Series A, equity crowdfunding campaign. The Singapore-based fintech bank for businesses and entrepreneurs soared past its fundraising target of $864,500 (£700,000), and now boasts a pre-money valuation of more than $14.8 million (£12 million).

“We’re not a neobank or challenger bank,” the company noted in its crowdfunding pitch. “We think of ourselves as the first fintech bank. We’ll exist as a licensed bank, (with) forward-thinking compliance (as) our secret sauce, and we plan to bundle some of the world’s hottest fintech products inside one banking platform.”

The fundraising follows the company’s $1 million seed round from April of last year. The new capital will help support licensing, product development, and effectively going live. The company is targeting a series A early in 2020 to capitalize the bank in the U.S., as well as to expand operations globally.

The campaign also marks the first time a digital bank has conducted an equity crowdfunding raise in the U.S. Seedinvest, an SEC-licensed broker dealer platform based in New York, spearheaded the fundraising with Crowdcube (the largest platform in the U.K.) in the role of joint partner.

“This is atypical for a digital banking startup, especially in the U.S.,” Arival Bank COO Jeremy Berger explained. “However, this was something we presented to the local regulators as we enter one of the most sophisticated banking markets in the world. Other digital banks in Europe have had real success with similar raises as it opens the opportunity to build camaraderie with future customers.”

Currently, Arival Bank has more than 1,000 requests from individuals and entities interested in opening accounts with the firm as it seeks to provide an alternative for “abnormal clients” traditional banks and even some digital banks do not serve. The firm’s main target focus currently are crypto- and blockchain-related businesses – who are chronically underbanked – as well as tech startups, and freelancers. The company, which applied for a U.S.-based international banking license last year, is betting that providing SMEs with access to innovative third party financial products and services – as well as “kick-ass customer service” and a unified banking interface – will go a long way toward supporting the next generation of businesses.

At FinovateAsia 2018 in Hong Kong, Arival Bank demonstrated ArivalOS, a digital banking platform, powered by open APIs, that features integrated third party fintech solutions designed specifically for SMEs. ArivalOS offers bank accounts, money transfers, debit cards, mPOS and factoring, and SME loans. The company also offers A.ID, a “virtual compliance manager” that provides a full-stack compliance solution that covers KYC, onboarding, AML and transaction monitoring.

Arival Bank was founded in 2017 by Jeremy Berger (COO), Igor Pesin (CFO) and Vladislav Solodkiy (CEO) – also known as the team behind Life.SREDA venture capital. Berger was recognized by Forbes this year in its 30 Under 30 list of the world’s top young finance professionals. Pesin is one of the top-ranked fintech influencers in Southeast Asia according to Lattice80, and is author of the annual fintech report, Money of the Future. Solodkiy is author of the book, The First Fintech Bank’s Arrival, now in its second edition, that inspired the very idea for Arival.

Berger will be one of the featured speakers later this month at FinovateFall in New York, joining a panel discussion titled Digital Challengers vs Incumbents: Who Will Emerge Victorious? For more information on how to catch his presentation, visit our FinovateFall page.

First Look: Honeycomb Credit

Last fall Finovate added an Accelerator Showcase where pre-seed startups from fintech accelerators pitch on stage for three minutes. That’s where I first heard George Cook, founder of Honeycomb Credit, one of two startups selected to pitch at FinovateSpring by accelerator AlphaLab.

The Pittsburgh-based company got its start as a class project at Dartmouth’s graduate school of business. But co-founder Cook and his classmate Ken Martin received so much positive feedback from the idea they decided to make it a real company in 2017.

The company is joining what was expected to be a crowded space of SMB crowdfunding. But the lengthy implementation of the U.S. crowdfunding framework has caused many of the 38 startups in the space to give up leaving room for new companies such as Honeycomb. The notable exception is Funding Circle which has raised $375M (note 1). Other active platforms include Finovate alums P2Binvestor (raised $9.2 million) and SeedInvest (raised $8.2 million) along with Crowdfunder (raised $6M), Fundable (acquired by Startups.co) and Wefunder (raised $2.3 million). Indiegogo (raised $56 million) is also now involved in equity crowdfunding, although it is currently a small piece of its overall rewards-based funding platform.

Honeycomb is a debt crowdfunder where investors loan money at bank-like rates to SMBs currently unqualified for bank funding. In addition, like Kickstarter or Indiegogo, non-monetary gifts and experiences are offered to incent action on the part of would-be-lenders. For example, Pittsburgh Pickle offered t-shirts to the first 20 investors in its $10,000 to $50,000 crowdfunding campaign (see screenshot at top). It also invited anyone who kicked in at least $1,000 to an exclusive event at the pickling facility.

The idea is to enable small businesses to tap their local community for debt capital on better terms than higher-rate alt-lenders such as Kabbage or OnDeck. According to Cook, its SMB customers are “near bank quality” but lack one or two of the typical prerequisites such as 3 years of tax returns. But at least one of their beta customers used Honeycomb not because they couldn’t get bank financing, but because they’d been burned in the past and preferred a non-bank alternative.

The loans are funded by individual investors on the platform, using the same model as Lending Club, Prosper, or Zopa. Thanks to the provisions of the crowdfunding act (specifically Reg CF), investors need not be accredited, an important aspect of the Honeycomb business model, which relies on the borrower’s friends, family and customers to fund the loan. Eventually as the business scales, HoneyComb expects to attract institutional and high net worth funds seeking yields from alternative assets.

Honeycomb’s special sauce is community and collateralization. It lends to existing businesses looking to expand expand their share of wallet within their predefined market. For example, it recently ran a successful campaign for an ice cream shop to buy a truck for mobile sales. And whenever possible, HoneyComb takes equipment as collateral on the loans.

Pricing
Borrowers typically pay platform lenders 8% to 12% interest on 3- to 5-year installment loans. At the conclusion of a successful money-raising campaign, Honeycomb charges borrowers an 8% fee and investors 2.85%. Honeycomb doesn’t hold loans on its balance sheet, so all credit risk is pushed to investor/lenders.

Go-to-Market Strategy
The startup has begun rolling out the platform having ran two successful campaigns, raising $50,000 for an ice cream truck and $25,000 for several new greenhouses. There are currently two more in process, one of which has already surpassing its minimum raise amount.

To expand, Honeycomb is currently raising a seed round. They have received good publicity in their local market, but to make that scale to other markets Honeycomb may need to find local partners such as local development groups, governments, and financial institutions. However, Honeycomb believes that the public nature of crowdfunding campaigns will drive a large number of new customers to its platform keeping customer acquisition rates low.

To reach profitability Honeycomb needs to expand beyond its Western Pennsylvania home market. That’s going to be a challenge without compromising quality. The company hopes to attract revenue from ancillary services and balance sheet lending down the road, but that’s much easier said than done in the fickle SMB sector.

Bottom Line
As with many businesses, it’s all about scale and efficiency. Honeycomb will need to automate its processes while simultaneously increasing loan size. But as loan sizes increase, they will begin to run up against a raft of competitors, including banks and credit unions. But I also think there is a good opportunity to license the Honeycomb platform to banks and credit unions wanting to add crowdfunding to their SMB services.


Author: Jim Bruene (@netbanker) is Founder & Advisor at Finovate as well as Principal of BUX Certified, a financial services user-experience standard. 


Notes:
1. Also in the UK there are 4 other platforms with good traction: Crowdcube (£21.2M raised for itself) Seedrs (£13.7M raised), SyndicateRoom (£8.7M raised) and Venturefounders (£6.8M raised).

Six Alt-Lending Unicorns Worth Combined $15 Billion: Lending Club, Prosper, On Deck, Sofi, Avant, Funding Circle

Fortune_feb2015_coverPayments companies, especially mobile, have dominated the fintech news cycle for much of the past four years. But as those well-funded payments companies vie to become global standards, attention has turned to the lending arena. At least six alt-lending startups (not including China) have now passed the billion-dollar valuation mark:

1. LendingClub: $7.2 billion (public: LC)

The company launched as one of the original Facebook desktop apps in May 2007 and made its industry debut at the first Finovate in September 2007. Its December 2014 IPO briefly valued the company at $9 billion, the largest-ever IPO for a fintech startup.

2. Prosper: $1.9 billion (valuation from $165 million round announced last week)

The company was the second person-to-person lender in the world (after the U.K.’s Zopa) and the first in the United States, launching in Feb. 2006. It also made its industry debut at the first Finovate in 2007. It was much larger than Lending Club during its first few years; however, high default rates from its pure auction model scared away early investors. But the company retooled its underwriting and has become the third largest consumer P2P marketplace in the USA (and the world outside China).

3. On Deck Capital: $1.5 billion (public: ONDK)

Small and mid-sized businesses (SMB) were hit hard in the 2008 recession with lower profits combined with a massive dry spell in traditional bank credit. So, naturally, entrepreneurs moved in and picked up the slack. On Deck was one of the first on the scene, making its Finovate debut in 2009. Originally, On Deck was dipping its toes into the direct lending space as a proof of concept for its small-business lending platform it hoped to sell to banks. But it turns out they were in the right place at the right time, and, after a December IPO, On Deck is a successful public lender valued at $1.5 billion.

4. Sofi: $1.3 billion (based on Goldman Sachs fundraising efforts for the Feb 2015 round; however, recent press reports say the company is looking to raise $500 million in a 2015 IPO valuing it at $3.5 billion)

With $700 million in loans originated in Q1 2015, Sofi just passed Prosper to become #2 in the United States—and in the world, outside of China. The company initially focused on refinancing student loans for graduates of elite universities, but it has diversified into other types of consumer and SMB lending.

5. Avant: $1+ billion. Forbes recently estimated its value at $875 million; we think that’s low based on the $1.4 billion, including $350 million in equity, that startup has raised.

Like On Deck, Avant is targeting a segment abandoned by traditional lenders in the aftermath of the 2008 financial crisis. But Avant’s specialty is sub-prime borrowers, a segment with higher margins in good times, but risky bets in downturns.

6. Funding Circle: $1 billion, based on an estimate in The Telegraph this month

The only non-U.S. company on the list is London’s Funding Circle (although Wonga is probably still close, and has been above $1 billion in the past). Funding Circle, which specializes in SMB marketplace lending, was founded in 2010 and moved into the U.S. market last year with the acquisition of Endurance Lending.

———–

Also in the running: Finovate alums Kabbage—meet them at FinovateSpring next month, along with a handful of other promising newcomers; CAN Capital; Kreditech; and Wonga, which was valued well above $1 billion in 2012, but has had a falling out with U.K. regulators. Several peer-to-peer lenders in China are believed to have obtained unicorn status, the biggest being Lufax, which was said to be valued at almost $10 billion by the Wall Street Journal last week.

The Rise (finally) of Online Specialty Lenders

image

One thing that always struck me as odd about the financial services startups of the late ’90s and early 2000s was their obsession with deposits. I can understand the appeal of having people send you money; it’s a rock-solid, low-risk part of the banking business model. But it also contains massively entrenched players who already have the consumers’ trust, along with a vast branch network to back it up. And it’s a commodity.

The much bigger opportunity for newcomers, to my thinking, is to go after the loan side. Consumer trust is almost a non-issue since you are handing them the money. And loan underwriting is both an art and a science with thousands of variables to innovate on. 

But it’s a dicey area for investors. The economic downturn of 2000-2002 spooked the VCs as dotcom-darling NextCard went belly up (as did other non-online, sub-prime lenders). Then the big hit in 2007/2008 killed whatever business plans had been drawn up in the post-2002 period. And there will always be concerns about where to find more funds to lend out, especially in the post-securitization world.

Fast-forward seven years. We are finally seeing an explosion of consumer and small business lending online (with mobile coming on). This newfound activity is being led by the so-called crowdfunders and P2P lenders tapping institutional money along with accredited investors (and VCs) to deliver capital using a mix of debt and equity terms.

Another specialty lending area exploding online is secondary educational financing (note 1). For example, Sofi started by targeting graduates of elite U.S. universities. CommonBond is focusing on graduate students. ProdigyFinance lends to international MBA students.

The latest entrant in the educational space is CoderLoan (screenshot below). The NYC-based startup is working with employers and educational institutions to help finance participants in coding bootcamps, where tuition can run $10,000 for a summer-long program. Employer sponsors can repay the CoderLoan after a set amount of time on the job. Or the graduates themselves can afford to repay the loans with their developer-level salaries.  

Bottom line: The uptick in digital specialty lending is win-win-win. There are potentially good returns for investors (note 2) while more capital flows to both entrepreneurs looking to expand and employees wanting to sharpen skills. Ultimately, that leads to a more productive and engaged workforce and a more rigorous economy. 

————————

CoderLoan homepage (link, 27 May 2014)

image

——————————
Notes:
1. For a 38-minute discussion on crowdfunding student lending, check out the panel at the Lendit conference in San Francisco three weeks ago (link). The panel included Vince Passione, LendKey; Mike Cagney of SoFi; David Klein of Commonbond; Cameron Stevens of Prodigy Finance; and Brendon McQueen of Tuition.io.
2. Most of the activity is too recent to fully understand whether the risk is being priced adequately (see NextCard in 2002), but the results from the earliest entrants — Zopa, Prosper and Lending Club — are promising.
3. For much more on crowdfunding (debt and equity), see our May 2013 report (subscription).

Fintech Funding Bubble?

When we first started Finovate in 2007/2008, during the depths of the financial-services sector collapse, there were maybe a half-dozen major venture fintech fundings per quarter. In comparison, yesterday (25 March 2014), in a single day, 10 fintech fundings were announced totaling nearly $60 million (according to Crunchbase).

Yes, you read it right. TEN in 24 HOURS! And that doesn’t even include ThreatMetrix, whose latest $20 mil round didn’t make it into the database by today’s noon (Eastern Time) cutoff. 

What are the drivers? As you can see from the list below, the digital currency craze attracted nearly half the amount, with $23.5 million sent to three companies. Crowdfunding and other alt-lending has been absorbing large amounts of capital of late, and yesterday pulled in another $20 million in three fundings. The other four ran the gamut from $12 mil into a prepaid card company and $1+ million each in insurance, healthcare payments and stock analysis.

Is it 1999 again? That’s not for me to say. I hope not (obviously). But it’s hard to believe that there is enough revenue to sustain even a small portion of these startups. Clearly investors believe there are major disruptions ahead in all things financial. 

——————————–

Table: Fintech Fundings Announced March 25, 2014

Amount Company Market Segment
$17 mil Circle Internet Financial Digital currency/bitcoin
$14 mil CircleUp Equity-based crowdfunding
$12.2 mil SpendSmart Payments Co Prepaid cards for youth
$5 mil Payward (Kraken) Bitcoin
$4 mil BlueVine Small biz alt-lending
$1.6 mil RealCrowd Crowdfunding real estate
$1.5 mil GoCoin Bitcoin
$1.4 mil SeniorQuote Insurance Insurance lead gen
$1.2 mil FlexMinder Healthcare payments
$1.2 mil Estimize Earnings estimates for stocks
$59 mil TOTAL

Source: Crunchbase, 26 March 2014

Crowdfunding via Facebook: Puddle’s P2P Platform Allows Friends to Pool Funds to Loan to Each Other

image When Prosper launched seven years ago, much of it’s initial promise revolved around the notion that people would be more likely to repay loans made by their peers. To  create peer pressure, borrowers were encouraged to join loosely affiliated "groups" (see note 1). Over time, groups with good repayment performance would be rewarded with lower borrowing costs.

It was brilliant on paper, but early repayment behavior didn’t follow the model. Had there been more runway (funding and/or regulatory tolerance), it might have worked. But the wicked combination of adverse selection (many initial borrowers were financially desperate and/or quasi-fraudulent, despite all the heart-warming stories posted) and the Great Recession pushed Prosper, and it’s contemporary, Lending Club, into more standard unsecured lending procedures. And it seems to be working. The two are on track to do more than $2 billion this year, with revenues of $100 million or more (Note: 85% of current volume is from Lending Club, see latest numbers here).

Fast-forward five years: With the ubiquity of Facebook, it makes sense for newcomers to test the waters of the original Prosper/Lending Club hypothesis (note 2). That friends can lend to friends (F2F) at a far lower cost. And that a third-party platform is needed to facilitate lending relationships, which can become tense if borrowers fall behind or default on their obligations.

imagePuddle (formerly Puddle.io) is a new startup from Kiva CEO & Co-founder Matt Flannery and early Kiva developer Skylar Woodward along with Jean Claude Rodriguez. It uses Facebook bonds to create pools of money that friend groups can share amongst themselves. With suggested interest rates in the 4% range, it’s a win-win, assuming the money is repaid. Borrowers save 10% or more from credit card rates and lenders get a return much higher than bank savings accounts.

___________________________________

How it Works
___________________________________

1. Register with the company using your Facebook credentials

2. Connect a PayPal account or debit card to the platform (Wells Fargo holds the money)

3. Start a new "puddle" by setting the rate from 0% to 20% (current average is 4.7%, see inset) and the maximum leverage rate (you can only borrow a multiple of what you put into the pool, the allowable range is 2:1 to 10:1 with the recommended rate of 8:1).  

4. Invite Facebook friends to throw cash into the pool

5. Borrow from the pool (if that is your intent). Currently, loan sizes range from $300 to $3,000 with repayment on an installment schedule spread over a maximum of 12 months (current average outstanding is $320 across 50 borrowers). You can only borrow a max of 40% of the entire pool.

6. Puddle manages the repayment process, including assessing late fees (the late penalty is equal to the interest owed on the previous month’s installment, i.e., you pay double interest if late)

7. As funds are repaid, they become available to other members of the pool to borrow.  

________________________________________________________

Analysis
________________________________________________________

Like Prosper/Lending Club in 2006/2007, the Puddle model sounds great in theory. But should friends be encouraged to lend to their friends online? I can see this ending badly, with unfortunate borrowers losing more than just the $1,000 they took out of the pool. With a public default to your (ex)friends, will a bad situation just get worse?

But given the founders experience at online microfinance leader Kiva, which has spread $440 million around the globe from nearly 1 million lenders, they fully understand the pitfalls. They also know that affordable credit can change lives.

Bottom line: I think it’s a great experiment (and it is an experiment, the founders admit to not knowing how they will monetize or how regulators will react). But I’m not sure it scales without more financial controls (underwriting, collections, income verification) at which point it becomes nuch like Lending Club in 2007 (though not a bad outcome…given the P2P pioneer’s recent $1.6 billion VC valuation).

I’d like to see financial institutions (or accredited investors) stepping in to backstop the loans (perhaps keeping the default confidential). For example, for a 4% to 5% annual fee, investors would agree to reimburse the pool for 80% to 90% of losses from any defaulting borrower. The fee would vary depending on the credit profile of borrowers in the pool. While borrowing costs would be significantly higher, down-on-their-luck borrowers would be less likely to lose their friends just when they needed them most. 

——————————–

Puddle dashboard (active user)

Puddle dashboard

The Puddle dashboard through the eyes of a new user
Note: The great definition in box 1, "A puddle is like a small bank owned by you and your friends. You set the rules."

Puddle new user "get started" screen

————-

Notes:
image1. For a review of circa-2006 Prosper
"groups" see our March 2006 report on P2P lending (subscription).
2. Lending Club initially launched as a Facebook-only p2p lending service (our original 25 May 2007 post). The original Lending Club Facebook page is shown at right (click on inset). 
3. For the latest on crowdfunding, see our latest Online Banking Report on Crowdfunding (subscription).

New Online Banking Report Published: Crowdfunding Small Businesses

clip_image002We believe crowdfunding has the potential to materially impact banking market share in the next 20 years. Tapping the massive capital and higher risk tolerances of institutional and individual investors, these platforms will provide funding to segments currently underserved by traditional lenders (e.g., small and micro businesses).

We’ve written extensively about the consumer debt-based crowdfunding, which we’ve called P2P, or peer-to-peer, lending (note 1). Now, we turn to the new crop of startups arranging funding for small businesses and startups.

The report covers the three variations that promise financial returns to investors (note 2): 

  • Debt-based financing (crowdlending)
  • Equity-based funding (crowdinvesting)
  • Receivables-based funding (crowdfactoring)

Sixteen crowdfunding platforms are profiled, eight in the United States and eight in the United Kingdom:

Debt:

  • Abundance Generation
  • Bolstr
  • Funding Circle
  • Mosaic
  • RealtyMogul
  • Relendex
  • Sofi
  • SoMoLend
  • ThinCats

Equity:

  • AngelList
  • CrowdCube
  • FundersClub
  • Seedrs

Receivables:

  • Market Invoice
  • P2Binvestor
  • PlanetBlack

Finally, we look at specific opportunities for retail banks to leverage the new technology.

__________________________________________________________________

About the report
__________________________________________________________________

Crowdfund Investing Platforms: Debt & Equity (link)
Payments in the smartphone era

Author: Andy Davis, U.K. Financial writer

Editor: Jim Bruene, Editor & Founder

Published: 21 Feb 2013

Length: 68 pages, 24,000 words, 5 tables

Cost: No extra charge to OBR subscribers, US$495 for others (here)

—————————-

Notes:
1. We have published three reports in this area (OBR 127 in 2006, 148/149 in 2007, and SR-5 in 2009). In addition, we’ve created a 10-year forecast for U.S. P2P lending in each of our last six year-end reports.
2. We do not cover the donation or rewards models, such as Kickstarter. While those are effective ways for businesses to raise money and/or visibility for new products, they have fewer parallels and opportunities for retail banks.

Crowdfunding a Better Future: Pave

image If you’ve ever worked in lending (or for a nonprofit), you know there’s always far more need than funds that are available. That is unlikely to change at a macro level. But that doesn’t mean we can’t reach tens of millions more by deploying capital more widely and more efficiently (and at a profit). 

Enter crowdfunding, and the subset, P2P lending.

I’ve been a huge fan since it burst on the scene in 2006, authoring several reports (note 1) along with the only open letter in my life when the SEC squelched P2P in 2008/2009. I just could not believe that something with so much potential for good was curtailed while in its infancy.

But luckily, the tide is turning. Even though last year’s Jobs Act is being held up (by guess who again), I’m encouraged that our government is seeing the light, although I wish Washington would embrace P2P like the Brits have.

And despite onerous disclosure requirements, Lending Club is on fire (with a $1.4 billion run rate in Feb) and proving to investors, and industry observers, that crowdfunding works. For the sake of the nascent industry, let’s hope it doesn’t stumble.

image We are working on a new report on the space (note 1), but in advance of that, take a look at Pave (see below), one of hundreds of newcomers. Maybe I’m a just a sucker for the drama, but it absolutely gives me chills to see web-based investment/lending platforms helping to move deserving folk forward. It’s like a virtual credit union. 

At Pave, backers pledge money to prospects and form a team. In return, backers receive a portion of the prospects’ future income. It’s like angel investing, but focused on careers. Pave is just getting started, with eight funded teams, but the stories are compelling and the future is bright, just as it is for the whole industry. 

———————————————

Pave brings mentors/benefactors together with talented individuals needing support (28 Feb 2013)

  image

Pave prospects

image

Pave backers

image

Pave teams

image

———————————–

Notes:  
1. We have published three reports in this area (OBR 127 in 2006, 148/149 in 2007, and SR-5 in 2009). We are working on our fourth. It will focus more on equity and debt crowdfunding for small and mid-sized businesses. Our latest P2P lending market forecast is contained in the current Online Banking Report here (Jan 2013, subscription).

Two Card-Linked Offers/Rewards Startups Launch at TechCrunch Disrupt

image While I’ve read TechCrunch since its beginning, I’ve only been able to make it to their semi-annual event, Disrupt, once before. It’s usually just too close to our own Finovate. But this year I made the trek to Pier 94 in Manhattan to see what was going on in tech in general and to meet with the fintech startups in the Startup Alley or Battlefield launch competition.

There were six fintech companies in total. Three offered variations on card-linked offers, one has developed an alternative payment system, one was a newer payments gateway, and surprisingly there was just a single crowdfunding platform.  

Startup Battlefield competitors from fintech: TechCrunch selected thirty companies in advance. All have agreed to launch their companies on stage at the event. 

  • imageCardify: Card-linked loyalty/offers geared toward local merchants. Sean Rad is CEO and of the West Hollywood company which has raised $750,000.
  • imageMirth: Same as above. Jeremy Philip Galen is Founder. The NYC-based company is bootstrapped. 

Startup Alley participants from fintech: These are companies less than two years old that qualify for a table in the networking hall. Each day one of the Alley companies is voted to the stage to imagecompete in the Battlefield.

  • LocalBonus: A card-linked offers platform focusing on the local market
  • imagePayintele: An alt-payments company using barcodes to pass info between merchant and payee (I’ll do a whole post on them shortly)image
  • PayLeap: A payments gateway from two previous Authorize.net execs
  • The Crowd Funds: A crowdfunding startup from former image E*Trade CTO, Joshua Levine

Observations: It was interesting to see three new card-linked rewards companies all going after the local market. But if you look at what Groupon’s done with local merchants and where Square is headed, you can see there are huge opportunities here.

And the payment APIs available from Cardspring (which both Mirth and Cardify use) are making it relatively easy for startups to tap into a merchant’s card transaction streams to make offers, tally rewards, identify frequent customers, and communicate with them.

As a side note, Cardify has a gorgeous UI. It’s very hip and high-end looking like something you’d see at more well-funded companies such as Square, Simple or Mint (screenshot below). Kudos to the design folk there.

———

Cardify homepage (24 May 2012)

cardify app as seen on its homepage

—————————-

Notes:
1. While not a fintech company, as an auction junkie, I was intrigued by Outbid’s social mobile/online auction platform. The company said it’s talking to four banks looking to host live auctions on their site to use for promotions and social gaming. I think it’s a promising idea, one I’ve explored a few times over the years. But with Facebook Connect you can actually get a critical mass of customers involved very quickly. The company had the cheesiest demo I’ve ever seen (and that’s saying something), but that shouldn’t impact your decision.