Finovate Alumni News

On Finovate.com

  • Xero and ZenPayroll Win Honors at CPA Practice Advisor 2015 Reader’s Choice Awards
  • Finovate Debuts: Using Financial Media Solutions’ MAPPS to Create Videographics

Around the Web

  • MasterQueue, powered by Intellaegis, partners with Whitepages Pro.
  • Bitpost lists Coinbase and Blockchain as 2 of the top 5 bitcoin wallets on Android.
  • EVO Payments partners with Boomtown to simplify tech support for POS developers and merchants.
  • Fintech Today reports: With Paydiant, PayPal Will Be a Huge Hit with Merchants.
  • Blackhawk to integrate Kofax Mobile Capture SDK into its digital services platform.
  • Team One CU to pilot MShift’s AnyWhereMobile payment-network with a locally owned restaurant in Michigan.
  • SecondMarket’s Bitcoin Desk Relaunches as Genesis Trading.
  • Taulia named by AlwaysOn as a 2015 OnFinance Top 100 Company.
  • According to Gartner, Check Point Software Technologies lead the worldwide market share for firewall equipment in Q4 2014 and FY 2014.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

 

Xero and ZenPayroll Win Honors at CPA Practice Advisor 2015 Reader’s Choice Awards

Xero and ZenPayroll Win Honors at CPA Practice Advisor 2015 Reader’s Choice Awards

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Two Finovate alums, Xero and ZenPayroll, have won first place in their respective categories at the CPA Practice Advisor 2015 Reader’s Choice Awards.

According to CPA Practice Advisor, more than 5,000 readers participated in the 11th edition of the awards. The goal is to give accounting firms a “professional-to-professional” opinion as to which systems are “most beneficial” for those working in the tax and public accounting industry.

ZenPayrollLogoZenPayroll won the payroll category, beating out competing technologies from QuickBooks, AMS, PayChex, and ADP. Xero won best “Online Invoicing/Bill Payment Solutions” in a category that included solutions from Intuit, Bill.com, and FreshBooks.

We recently featured ZenPayroll and the company’s $60 million funding in a round led by Google Capital. The company opened up its API to small-business technology providers last September 2014.

An alum of FinovateSpring 2014, ZenPayroll is headquartered in San Francisco, and was founded in October 2011 by Joshua Reeves (CEO), Tomer London (CPO), and Edward Kim (CTO).

Xero_logo_hi-resXero participated in FinDEVr San Francisco 2014, and is an alum of Finovate conferences, as well, most recently FinovateSpring 2011 in San Francisco. Earlier this week, we reported on Xero’s partnership with TransferWise to help small and medium-sized businesses save on international currency-transfer fees.

Xero was founded in July 2006, is headquartered in Wellington, New Zealand, and has offices in Los Angeles, Atlanta, New York, Denver, and San Francisco, where the company’s U.S. headquarters is located. With more than 400,000 customers in more than 100 countries, Xero has raised more than $250 million in funding, and is led by CEO and Executive Director, Rod Drury.

Finovate Alumni News

On Finovate.com

  • Xero & TransferWise Team Up to Save SMBs on Foreign Currency Exchange Fees

Around the Web

  • Bloomberg interviews LendingTree founder and CEO Doug Lebda.
  • Nashville Business Journal features iQuantifi and its recent study on millennials and their money.
  • Safeco grants Insuritas “Premier Partner” status.
  • Fenergo appoints former Adobe Systems executive Colm Heffernan to chief operating officer.
  • Mitek launches DoubleNet Pay financial app to help workers pay bills and fund savings. See the technology live at FinovateSpring in San Jose.
  • PYMNTS.com looks at the status of Prosper as tech’s latest “unicorn.”
  • Realty Mogul launches commercial offering.
  • BBVA acquires leading user experience firm Spring Studio.
  • Toshl Finance launches new features with WalletGear 2.0.
  • New York Tech Journal profiles Qapital.
  • InComm Partners with KUBRA to Simplify Cash Payments for Customers.
  • Tuition.io launches flex395.com, an employee-benefits product that enables employers to contribute directly to their employees’ student loans.
  • Air France-KLM to use Tradeshift for global e-invoicing.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Alumni News

On Finovate.com

  • AuthenticID Teams Up with MyECheck to Provide Document Authentication

Around the Web

  • OEM agreement between Kofax and BlackHawk Network enables mobile capture on GoWallet digital wallet.
  • Early Warning and BioCatch to collaborate in new data-sharing consortium.
  • Q2 teams up with Acculynk to provide real-time P2P payment service.
  • The Netbanker Blog is Moving to Finovate.com.
  • Lending Club and Citi partner with Varadero Capital to facilitate up to $150 million in loans to provide affordable credit to underserved borrowers and communities.
  • Options trading tool, Orca, partners with Tradier for its Brokerage API.
  • Prosper and OnDeck partner to offer customers more lending options.
  • GDS Link integrates MiiCard’s DirectID into its Credit Risk Management platform to reduce risk and increase conversion rates.
  • Lendio acquires Business Bounce to accelerate business lending on its marketplace platform.
  • PaySimple awarded Marketing Team of the Year by Marketo.
  • TechCrunch reports: SecondMarket launching product to put more control over secondary sales in the hands of startups.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Why Banks Should Do More “Strategic Seed Investing” in Fintech

Why Banks Should Do More “Strategic Seed Investing” in Fintech

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Editors’ Note: There is basically no such thing as “strategic seed investing.” It has just a single hit on Google (when’s the last time you nearly stumped the 30 trillion-page internet?). In traditional startup investing, it’s an oxymoron. If something is truly “strategic,” why would you drop a mere $50,000 into it? Well, if you have mountains of free cash and a high PE, you would shoot for the moon. But banks don’t have either of those, so they need a different model. Hence, I give you Strategic Seed Investing.

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As we ready for our two U.S. Finovate events this year (Spring, Fall), we have been thinking about the bigger picture. Not just showcasing exciting new solutions, but actually helping get them implemented. Experts seem encouraged that banks and other financial giants are becoming more active in the fintech investment space. Ken Siegman from WestMonroe Partners points to Wells Fargo’s Accelerator as a great example of the new thinking (see below).

Dozens of large international banks are active venture investors, typically putting $500,000 to $1 million into startups with a “strategic” fit. That way, pure financial returns are boosted by other benefits to the enterprise, whether they are a favorable contract, more attention from the startup’s management, or just pure learning from the various tests conducted by the startup as they explore product/market fit.

But typically, larger companies, be they banks, private equity firms, or other giant pools of cash, stay away from seed investing. The problem is that even quadrupling your $100,000 investment does essentially nothing for the bottom-line of a large corporation, but doubling or tripling a $5 million bet is real money. According to Jennifer Byrne, president of Quesnay, the bigger problem is that the $100,000 investment can eat up nearly the same amount of time for due diligence, monitoring, and mentoring, as the multimillion one. There’s just not a good ROI using traditional measures.

But what if you approach seed investing less as a way to make a financial gain (though that’s always nice) and more as a way to speed adoption of money-saving or revenue-enhancing techniques? So instead of putting seed investing under the domain of Yourbank Ventures, consider classifying its costs as up-front licensing fees that just happen to come with stock warrants/options to help you capture the upside of working with a startup.

Alternatively, take the Barclays approach and let a partner, Techstars in its case, coordinate the mentoring and make the seed investments. The bank can always jump into later, larger rounds. Or team up with other financial institutions in the area to jointly run an accelerator.

Once you have the due diligence costs reigned in, the key to successful strategic seed investing is taking an active role in ensuring that each startup in your portfolio is socialized within the bank, especially finding good pilot opportunities.

Industry examples
In the past 12 months, Wells Fargo, Barclays, and Citibank have all jumped into the seed investing/accelerator space, each taking a slightly different approach:

  • Barclays Accelerator: Barclays has been the most aggressive, teaming with TechStars to assemble an accelerator class of eleven companies in 2014. Then just last week, the 2015 class of 10 companies was announced. Each participant in the 13-week program receives extensive mentoring from TechStars and Barclays along with $20,000 in seed money from TechStars in exchange for an undisclosed amount of equity (6% to 10% according to Crunchbase). The program is being replicated in New York City this summer with applications due by May 10, 2015.
  • Wells Fargo launched its Startup Accelerator last year (press release). It’s headed by EVP Steve Ellis and began with investments in three startups: Finovate alums Zumigo and EyeVerify along with Kasisto. The first class should be finishing about now if they stuck to the 6-month length mentioned at the time (applications were due 1 Oct). The bank has not posted new details about the next class, just “check back in the Spring.”
  • Citibank launched its Mobile Challenge in 2014 with a contest in Latin America and the United States (winners). It is continuing this year with events planned this month in Nairobi, Jerusalem, Warsaw and London. Applicants submit a solution built from Citibank APIs with finalists invited to the demo-day to show it live to a group of Citi staff and other fintech companies. $100,000 in cash prize money is available to be split between two-to-five winners (max prize = $50,000; min = $20,000). It is a cash grant, not an investment. Winners also receive mentoring, help mounting a pilot at Citibank, and potentially receive a contract with the bank.

The bank benefits
Banks can potentially make solid returns on their equity investments, but it’s the combination of internal benefits combined with investing gains, that makes the math work. Let’s walk through an example.

Assuming a 50% survival rate (not easy to do, but not impossible), a $100,000 seed investment per deal, a $50,000 internal cost per deal for due diligence and mentoring of each company, and ignoring follow-on investments (which improve the ROI), banks need the winners to return an average of 2.5x for the effort to break even financially (e.g., a single ‘1x’; a double ‘2x’; a triple ‘3x’; and a home-run ‘4x’).

Here’s how it might work with a $1.2 million budget earmarked for 8 projects:

  • Two companies fail to get their minimally viable product off the ground and are quickly written off with minimal bank time expended. Two others hold on longer, but ultimately fail to provide any positive returns.
    Cost = $150,000 each ($100k investment + $50k internal cost)
    Benefit = $0
    Cumulative gain (loss) = ($600,000)
  • One company has promising tests, but ultimately fails to scale. So it is sold to a competitor for 1x the investor’s money.
    Cost = $150,000
    Benefit = $100,000 (disposing of assets)
    Cumulative gain = ($650,000)
  • One company is a moderate winner. Tests go well and it’s able to move to the next level by attracting VC funding at double the seed valuation. In addition, the bank is realizing $25,000 per year in cost savings, for an NPV of $100,000.
    Cost = $150,000
    Benefit = $300,000 ($200,000 stock sale; $100,000 cost savings)
    Cumulative gain = ($500,000)
  • One company is quite successful, attracting a 3x VC round, and saving the bank $100k per year for an NPV of $400,000.
    Cost = $150,000
    Benefit = $700,000 ($300k stock sale; $400k cost savings)
    Cumulative gain = $50,000
  • One company hits it out of the park, with VCs bidding the A round up to 4x the seed valuation, and the technology is saving the bank $200,000 annually for a $1 million NPV.
    Cost = $150,000
    Benefit = $1.4 million ($400k stock sale; $1 million cost savings)
    Cumulative gain = $1.3 million

In total, the bank loses $200,000 from a purely financial investment standpoint. But with a $1.5 million gain from implementing the new products, the program has a $1.3 million positive NPV.

Costs = $1.2 mil ($800k invested + $400k internal costs)
Investments returned: $1.0 mil
Internal savings (NPV): $1.5 mil
————————–
Total net: $1.3 million

Bottom line
For best results, banks should focus seed investing not on direct-to-consumer plays, but on back-office process-automation, risk-management tools, or other software with measurable cost savings. That way, the combination of equity returns PLUS cost savings, creates a positive ROI.

Besides the financial gain, there are intangible benefits of working with fintech startups:

  • Knowledge transfer: This is the main reason companies benefit from involvement with startups. The startup can run 100s of experiments at a fraction the cost incurred by a large corporation. Learnings from those can be priceless. You can see this happening in the alt-lending space now. Four banks took part in Prosper’s massive $165 million round last week: BBVA, USAA, SunTrust, and JP Morgan. Insights gleaned from insider access to Prosper’s underwriting results could be worth millions, if not tens of millions, for these huge lenders.
  • Employee development: As internal IT staff work with outside engineers, there is a good chance that they will learn from each other.
  • Quality of work life: I worked at four large corporations back in the day, and I can’t tell you how much I looked forward to the interactions with outside vendors. And as a relatively introverted engineer, it wasn’t for the socializing. I loved learning how outsiders viewed our problems and learned a ton about how they proposed to solve them. And it was a good way to sneak my own ideas into the organization by gaining third-party validation.
  • Unintended improvements: This is the opposite of unintended consequences, generally negative aspects of well meaning solutions/policies. By focusing a few smart brains on a problem or opportunity, we often see new solutions/innovations that no one expected. By expanding the gene pool with outsiders, there is a better chance of making an order of magnitude process improvement.
  • Brand image: Supporting small business, and tech startups specifically, is good for your image, especially if the firms are local (not always feasible).

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Picture credit: AdvertisingAntiques.co.uk

 

SaveUp Purchased by Chicago-area Entrepreneur Paul J. Burt

SaveUp Purchased by Chicago-area Entrepreneur Paul J. Burt

SaveUp_homepage

SaveUp has officially been sold to Chicago-based entrepreneur Paul J. Burt.

SaveUp helps millennials and Gen Y consumers improve their personal finances through a combination of behavioral economics and gamification. Founded in April 2011 by the late Priya Haji and Sammy Shreibati, the company demonstrated its technology at FinovateSpring 2012 and again at FinovateSpring 2014, where it won Best of Show honors.

As part of the deal, SaveUp has been relocated from Silicon Valley to Lake Forest, Illinois. The purchase was made in December 31, 2014, and closed on April 8, 2015. Terms were not disclosed. SaveUp had raised $7 million in funding as of July 2012.

SaveUp_PaulJBurtPaul J. Burt is the founder and CEO of Westlake Financial Group, an employee benefits company for mid- to large-sized companies. The firm has more than 50 employees, and serves more than 150 corporate and healthcare clients around the country.

Burt is also the founder of an incubator program, Entanglement, also based in Lake Forest. Entanglement provides a forum for local students and community members interested in new technologies. He founded Cera Solutions in 2013, which developed a mobile employee-benefit onboarding solution.

SaveUp is free and available on both iOS and Android, as well as online at SaveUp.com. To use the platform, users link their credit, student loan, savings, and other accounts, and then earn points for every dollar they spend toward either reducing debt or growing savings. Points can then be used to play games and enter contests to win prizes, as well as compete for a $2 million jackpot.

FinovateSpring 2015 Sneak Peek: Part 2

FinovateSpring 2015 Sneak Peek: Part 2

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FS2014_crowd_outsidelunch

FinovateSpring 2015 is just over a month away. Our annual spring conference returns to San Jose, 12/13 May for two days of live demos of the latest in fintech innovation.

Today we introduce you to another seven companies that will be on stage presenting their technical solutions to some of the financial community’s biggest challenges—from improving engagement through mobile and social channels to improving security and reducing friction for business and individual consumers.

Be sure to check out Part 1 of our Sneak Peek series featuring Alpha Payments Cloud, CUneXus, DRAFT, FundAmerica, SayPay, StockViews, and TrueAccord, as well.

Tickets are going fast. Register today and save your spot at our second Finovate show in San Jose.


Bento_logo_box_snaggit_resizeBento for Business provides financial solutions that fit small businesses, combining the security of a bank with the ease and convenience of a modern technology company.

Features:

  • The Bento Prepaid Commercial MasterCard provides small business owners with controls, such as where, when, and how much their employees can spend without putting their owners’ personal credit at risk.

Why it’s great
Bento’s solutions are designed to save owners time and help eliminate expense ‘leaks,’ a type of fraud that can cost them up to 5% of their revenue each year.

Presenters

Bento_FAhamd_cropFarhan Ahmad, Co-founder and CEO

Ahmad was formerly managing director at Barclays and the global head of emerging payments and prepaid for Discover Financial Services. He has held leadership roles at JPMorgan Chase, Bank One and First USA.
LinkedIn

 

Bento_SAnderson_cropSean Anderson, Co-founder and Chief Product Officer

Anderson was formerly senior director of emerging products at Blackhawk Network, where he built and launched their open API platform, launched an offers platform, and developed a prepaid processing platform.
LinkedIn

 


DoubleNetPay_logo_box_snaggit_resizeDoubleNet Pay automatically pays bills and funds savings goals directly from an employee’s paycheck, eliminating guesswork, late fees, and budgeting hassles.

Features:

  • Seamless integration with major payroll processors
  • Allows an employee to simply snap a picture of a current bill stub
  • Employees can easily create, fund, and redeem custom savings goals

Why it’s great
Bills are paid and savings funded automatically on payday, just like payroll taxes.

Presenters

DoubleNetPay_BCosgray_cropBrian Cosgray, Founder and CEO

Cosgray has spent his entire career in financial services. Working with customers across the economic spectrum convinced him of the need to simplify and automate how people pay bills and save money.
LinkedIn

 

DoubleNetPay_CLaird_cropCody Laird, Co-founder and COO

Laird is a financial technology veteran. Prior to co-founding DoubleNet Pay, Cody spent 21 years with SunTrust Bank helping to design and build their current retail banking platform.
LinkedIn

 

DoubleNetPay_BLevy_cropBret Levy, Co-founder and CTO

Levy has been responsible for the architecture of many innovative, highly scalable software systems, most notably the Scientific Games system that powers most state lotteries.
LinkedIn

 


KarmicLabs_Dash_logoKarmic Labs provides API-based payment and SaaS solutions for card issuance (initially commercial market). Karmic offers Dash, FIS, and also uses Karmic’s APIs to offer its own product to FIs.

Features:

  • Robust API infrastructure for commercial card issuance
  • Payment virtualization layer
  • Creates a marketplace of innovative financial technology and SaaS solutions for the commercial market.

Why it’s great
Karmic labs offers API-based payment and SaaS solutions, of which its first product is Dash; the APIs are also used by FIS, a global leader in banking and payments technology, for its own product to FIs.

Presenters

KarmicLabs_RWeidenmiller_new_small_cropRyan Weidenmiller, CEO

Weidenmiller is an entrepreneur who built a top-ranked venture capital fund in China, now working on Karmic Labs’.
LinkedIn

 

KarmicLabs_CAgerton_crop2Chris Agerton, CTO

Agerton was previously at Google, and was a founding engineer at Pinterest, responsible for developing high-availability architecture at Scribd.
LinkedIn

FIS_TLand_FS15Troy Land, Group Executive of Emerging Commerce, FIS

Land is the group executive of emerging commerce at FIS within the retail payments division; he holds expertise in business and product development.
LinkedIn

 


SizeUp_logoSizeUp: SizeUp FI (financial insitutions) is big-data for small businesses. It enables FIs to provide their customers with business intelligence through the FI’s own website.

Features of SizeUp FI:

  • Enable your FI’s customers to :
    • Compare their business performance with that of industry competitors
    • Find customers, suppliers, and competitors
    • Discover best locations to advertise

Why it’s great
SizeUp FI delivers a deeper business-customer partnership through success assistance; “sticky” client engagement; FI services awareness; and big-data insights that SMEs couldn’t previously access.

Presenters

SizeUp_AUbalde_cropAnatalio Ubalde, CEO and Co-founder

Ubalde is a successful entrepreneur leading Software as a Service (SaaS) ventures focused on data-driven solutions for small businesses and economic development.
LinkedIn

 

SizeUp_TBarron_cropThomas Barron, VP Business Development

Barron has developed corporate partnerships for 15 years from Fortunte 500 companies to 5-person startups. He previously worked at Visa developing strategic partnerships.
LinkedIn

 


Stratos_logo_snaggitfromboxStratos consolidates cards into one dynamic card, making payments secure and smart. Stratos Digital Card Issuance Platform allows cards to download instantly, digitizing physical fulfillment.

Features:

  • Ensures virtual top of wallet, increases consumer engagement and loyalty
  • Provides secure card and wallet data
  • Eliminates costly physical card fulfillment

Why it’s great
Starts card working with Stratos Digital Card Issuance Platform to reinvent, not only your wallet, but also cards—just like the iPod and iTunes reinvented your CD collection.

Presenters

Stratos_TOlson_cropThiago Olson, Co-founder, CEO

Olson worked at CERN and the Department of Defense and is a leader in next generation payments. He graduated with honors in engineering and physics at Vanderbilt.
LinkedIn

 

Stratos_HBalanon_cropHenry Balanon, Co-founder, CTO

Balanon brings technical leadership and expertise to Stratos from his previous experience as co-founder of Detroit Labs, a leading mobile-app agency.
LinkedIn

 


TickerTags_logoTickerTags connects trending social content to investable companies through the monitoring of 250,000+ crowdsourced Tags that have the potential to impact a company’s business.

Features:

  • Track social velocity and sentiment of products/brands driving your investment
  • Create your own Tags to associate with Tickers for personalized trending notifications
  • It’s free

Why it’s great
We are a community-maintained platform intent on democratizing information-flow by evolving new monitoring from view-limited tickers to social -monitored tags.

Presenters

TickerTags_CCamillo_cropChris Camillo, Co-founder, CEO

A pioneer in social arbitrage investing, Camillo’s audited portfolio has averaged 84% annual returns over the past 8 years.
LinkedIn

 


Trulioo_logoTrulioo’s bank-grade AML/KYC identity-verification product, GlobalGateway, enables businesses to perform frictionless ID verification for 3 billion people in more than 40 countries via 140 data sources.

Features:

  • Builds confidence and trust by preventing fraud and identity theft
  • Saves time, money, and resources through automated online ID-checks
  • Eliminates barriers to market entry

Why it’s great
Trulioo’s GlobalGateway provides advanced analytics from cyber and traditional data sources to verify identities online by powering fraud and compliance systems worldwide, increasing trust and safety.

Presenters

Trulioo_SUfford_cropStephen Ufford, Founder, CEO

Ufford has founded four data-focused startups over the last decade while working in the role of CEO. As a serial entrepreneur, he challenges the status quo and if it’s broken, he likes to fix it.
LinkedIn

 

Trulioo_AKvitnitsky_cropAnatoly Kvitnitsky, Director of Corporate Development

With solid startup and corporate experience, Kvitnitsky leads strategic partnerships and data acquisition for Trulioo.
LinkedIn

Dealstruck Raises $8 Million in Funding, $50 Million for New Credit Facility

Dealstruck Raises $8 Million in Funding, $50 Million for New Credit Facility

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In an investment that brings its total lending capacity to more than $100 million, direct lender Dealstruck has raised $58 million in new funding. The funding comes in the form of a $50 million credit facility led by Brevet Capital Management and the completion of a Series A round led by Trinity Ventures.

Co-founder and CEO of Dealstruck Ethan Senturia said, “Recent IPOs by alternative lenders validate an increasing need for new sources of growth capital. We look forward to building on our growth to date by setting even more businesses on the path to becoming bankable.”

The funding will be used to provide funding to small businesses across the country. Dealstruck has loaned more than $50 million since inception, and says it is the fastest online direct lender to reach and surpass the “$50 million lent” milestone.

Dealstruck_FS2014_stage_full

(Left to right): Dealstruck CTO Russell McLoughlin and CEO Ethan Senturia presented at FinovateSpring 2014 in San Jose.

Talking about his firm’s investment, Doug Monticciolo of Brevet Capital focused on Dealstruck’s role in supporting small businesses, which Monticciolo called “an important engine of economic growth.” Added Noel Fenton of Trinity Ventures, “When small businesses succeed, it’s a win for everyone. Dealstruck is poised to help thousands of small- and medium-sized businesses grow.”

Operating in 43 states, Dealstruck offers three loan products: a term loan, an asset-based line of credit, and an inventory line of credit. Term loans are available up to $250,000, with lines of credit available as high as $500,000. Approved loans are funded within 48 hours.

Dealstruck made its Finovate debut at FinovateSpring 2014 in San Jose, where it demonstrated its Investor API. The company was founded in July 2012 by Ethan Senturia, CEO, and Russell McLoughlin, CTO, and is headquartered in Carlsbad, California.

Finovate Alumni News

On Finovate.com

  • Dealstruck Raises $8 Million in Funding, $50 Million for New Credit Facility
  • BBVA Taps Dwolla for Real-time Money Transfers

Around the web

  • Vouch launches its social network for credit. See Vouch at FinovateSpring 2015 in San Jose.
  • Retail Week features Zooz as its Start-up of the Week.
  • Vermont Federal Credit Union partners with Insuritas to open and manage turnkey insurance agency.
  • Optimal Payments integrates Jumio’s Netverify into its NETELLER stored-value service.
  • BillGuard launches custom categories capability.
  • Taulia Launches Research Arm, Taulia Labs.
  • Norway Registers Development agrees to take 80% stake in Etronika.
  • PayNearMe partners with online rent payment network RentMoola to enable landlords to take rent in cash online.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Debuts: StreetShares Helps Small Businesses Raise Capital

Finovate Debuts: StreetShares Helps Small Businesses Raise Capital

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StreetShares is a specialist in what the company calls “affinity-based social lending.” The idea is to take crowdfunding a step further by connecting small business owners in need of capital with investors with shared affinities. The first shared affinity StreetShares has been able to serve is the veteran and veteran-owned business community.

Calling the platform “Shark Tank Meets eBay,” business owners on StreetShares pitch their business to interested, accredited investors who compete for the opportunity to fund the loan.

“We are bringing the ‘peer’ back to peer-to-peer lending in the U.S. market,” StreetShares CEO Mark Rockefeller said, in explaining P2P lending’s origins in Great Britain and its evolution in the U.S. “We are talking about veterans funding veterans; female executives funding female executives; alumni from one school funding fellow alums from the same school.”

StreetShares’ stats:

  • Founded in July 2013
  • Headquartered in Reston, Virginia
  • CEO Mark Rockefeller, COO Mickey Konson, and CTO Ben Shiftlet are co-founders
  • Raised more than $1 million in funding
  • Maintains 12 FTEs
  • Provides small business loans of up to $50,000

The story

The idea behind StreetShares originated from the concept of the GI Bill, which gave millions of servicemen returning from World War II the opportunity to buy homes, start businesses, and raise families, giving birth to a true middle-class in America.

StreetShares_FEU2015_stage

(Left to right): COO Mickey Konson and CEU Mark Rockefeller presented StreetShares at FinovateEurope 2015.

And while the circumstances have changed since 1945, many of the challenges remain: entrepreneurs, many of them veterans, still struggle to raise the capital help get their businesses off the ground or to move to the next level in terms of growth and expansion.

This is where StreetShares comes in. The company believes that businesses are more likely to get funded by (a) investors who have some sense of connection with the borrower and (b) investors who feel as if they know exactly where a business is headed and how it plans on getting there.

Add to this the extensive information about applicants provided to potential investors—and located on each applicant’s “tile”—and an investor has everything needed to make a lending determination. This includes information on the business itself, with links to websites and social media; a pitch with the ability to attached additional information, including spreadsheets, background on the applicant; and information on the status of the bidding for that company’s loan.

StreetShares_screenshot1_full

What do businesses need in order to apply for a loan via StreetShares? SMEs can apply online or by phone, and any U.S. citizen-owned business that has been in operation for at least a year is eligible. Businesses must earn a minimum amount of revenue, be incorporated, and have a business guarantor “with reasonable credit.” More information on the application is available at StreetShares.com.

Individuals with “accredited investors” can participate on the platform. Accredited investors need a StreetShares account, and must have an income of $200,000 or more ($300,000 for a couple), or have a net worth of $1,000,000, excluding the value of a primary residence.

At FinovateEurope 2015, StreetShares showed its auto-invest feature. Auto-invest enables the platform to make investments for the investor based on a set of prearranged criteria such as risk-tolerance level, affinity type, interest rate, bid amounts and more. Once set, the platform bids on open loans on the investor’s behalf. The investor can review the bids in the invest tab, as well as in the investor portfolio.

StreetShares_screenshot_3_full

The future

StreetShares believes three key factors distinguish it from others in the SME lending space. The first, and most prominent, is the use of social affinity groups to “build bonds of trust” between borrowers and lenders. This trust results in lower-cost loans. The second factor is a fully transparent platform in which all investors, retail and institutional, compete for loans fairly side by side. And the third factor is co-investment, in which StreetShares puts its own capital to work as a co-investor on each loan that is made.

The company remains focused on expanding its capacity to provide loans, especially in the below-$100,000 category, which Rockefeller says is a $136 billion market. “We think lending is about risk and risk is about data,” Rockefeller said from the Finovate stage in February. “But what if we could tap into human trust, and apply that to lending. We think we have a way.”

That way has been brightened by news last month that StreetShares has picked up a $200 million commitment from Direct Lending Investments, Community Investment Management (CIM), and Eagle Bank Corporation to help fund loans. Speaking for Direct Lending Investments, Brendan Ross said, “Our mission is to put money to work funding small businesses. We are excited about this business partnership with StreetShares and the unique business owners they serve.”


Watch StreetShares demo its technology live at FinovateEurope 2015.

 

Finovate Alumni News

On Finovate.com

  • Finovate Debuts: LockByMobile Lets Cardholders Lock Out Fraud
  • ZenPayroll Raises $60 Million in Round Led by Google Capital
  • FinovateFall 2015: Ladies and Gentlemen, Launch Your Applications!
  • Finovate Debuts: Pirean’s “Access: One” Keeps Access Management Simple

Around the web

  • Feature on automation in debt collection highlights Global Debt Registry and True Accord. See True Accord at FinovateSpring 2015 in San Jose.
  • Ripple adds dropdown customizations to its price charts.
  • Huffington Post: Trulioo, Making Trust Online an Option.
  • Callcredit Information Group partners with Trulioo. Check out Trulioo at FinovateSpring 2015.
  • GMC Software Technology Named SIIA Software CODiE Award Finalist.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Debuts: Telenor Banka’s Synergy of Telco and Banking Brings Financial Innovation to Serbia

Finovate Debuts: Telenor Banka’s Synergy of Telco and Banking Brings Financial Innovation to Serbia

Telenorbanka_homepage_full

Telenor has leveraged its success as a telecommunications company to build the first fully online and mobile-direct bank in Serbia, Telenor Banka. For its Finovate debut, the company teamed up with Asseco SEE to demonstrate its Automated Online Handset Loan powered by ASEB Multichannel Solution.

The solution enables customers to easily apply for a loan to purchase a new mobile device. Using a combination of banking and telecommunications transaction data, offers are customized, relevant, and likelier to be used.

Telenor Banka facts:

  • Opened in September 2014
  • Has 130 employees
  • Part of the Telenor Group with 186 million mobile subscriptions in 13 markets

The story

The “Tele” in Telenor stands for Telco, which is a large part of what Telenor Banka brings to the table. The bank was founded in 1996 as ALCO bank, but changed its name and ownership to Telenor Banka in 2014, when it became a member of Telenor Group. The goal was to provide the citizens of Serbia with modern and innovative mobile and online financial services through Telenor Banka.

Telenorbanka_FEU15_stage

At left: Martin Navratil, chairman of the executive committee for Telenor banka, presented at FinovateEurope 2015.

The presented innovation platform enables Telenor Banka’s customers in Serbia to get customized offers by two industries in one place— telecommunications and banking. The demo version of the solution is an example of a fully automated and personalized online offer of purchase loans for smart devices, personalized to the customers’ needs in real time.

While the company anticipates adding other service providers to this centralized dashboard, the current technology already offers customers conveniences such as a bill pay solution called “Bills on Click”; P2P payments to a phone number or email; and, launched in Dec 2014, the interest-free loans for purchasing smart devices from Telenor.

And in partnering with Asseco SEE, Telenor Banka has extended this service a step further with its Automated Handset Online Loan. The access to banking and telecommunications data alerts the platform that a bank customer may be in the market for a new smartphone. Moreover, the platform can extend a loan to the bank customer that not only offers rates and terms that are compatible with the customer’s financial situation, but also personalized telecommunications services and products that would make the most sense given the customer’s history.

Moving back and forth between the Telco and the banking functions of the platform is seamless for both the customer on the front end and the bank on the back end. Credit scoring, AML and KYC all take place on the platform, and relevant agreements and contracts from both the telecom and the bank are generated immediately for the consumer.

The future

Telenor Banka followed up its Finovate debut with a major milestone: the company celebrated its 50,000th account opened, making Telenor Banka one of the fastest-growing banks in the CEE region. According to Martin Navratil, chairman of the executive board and managing director, Telenor Banka is “focused on providing easy-to-use financial services and shifting from traditional banking to innovative, customer-oriented mobile solutions.” The technology demonstrated in February is scheduled to be available in the second half of 2015.

Telenorbanka_FEU15_stage2

Seven months after its launch, the company has enjoyed growth of more than 50% a month, and sees its future very much focused on continuing to serve the Serbian market. “We will probably see examples of other services expanding to a smartphone user-interface as well,” Navratil said. “The more players joining the arena, the faster the market will develop and move forward.”

Read our Finovate Debut feature of Telenor Banka’s FinovateEurope 2015 partner, Asseco SEE.


See Telenor banka’s live demonstration from FinovateEurope 2015.