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OnDeck Seeks to Raise $150 Million in Initial Public Offering

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Alternative small business lender OnDeck has announced plans to raise $150 million in an initial public offering.

According to analysis from The Wall Street Journal, the IPO could value OnDeck at $1.5 billion. The Journal also suggested that the $150 million number for the IPO was likely a “placeholder amount” that will probably change. 

While the company understandably has few words to share about its impending IPO, OnDeck CEO Noah Breslow has said a number of interesting things about the future of his company and the small business community it serves. Asked about the future of the alternative lending industry over the next 10-20 years in an interview with NPR this summer, Breslow replied: “I think it loses the designation of alternative.”
“I think just like today I buy a plane ticket online with Maybe 20 years ago I would have talked to a travel agent. You know – we are going through that entire cycle. We’re probably in year five of a 20-year journey in terms of lending.”
OnDeck reported more than $107 million in revenue in the first three quarters of 2014, and a net loss of $14.4 million. The revenue figure represents a year-over-year gain of 2.5x.

Here are a few key metrics to keep in mind:
  • OnDeck will trade on the New York Stock Exchange (NYSE) under the ticker symbol, ONDK
  • Lead underwriter is JP Morgan Stanley
  • Originated more than $1.7 billion in loans to 25,000 small businesses
  • Raised more than $170 million in venture capital funding, and more than $300 million in debt financing
  • Collected more than 4 million customer payments
  • Previous investors include:
    • RRE Ventures
    • Institutional Venture Partners
    • Village Ventures
    • SAP Ventures
    • First Round Capital
    • Google Ventures
    • Tiger Global
Also underwriting the IPO were Deutsche Bank Securities, Merrill Lynch, Morgan Stanley, and Pierce, Fenner & Smith.
OnDeck’s IPO news comes just a few months after the IPO filing of peer-to-peer lender, Lending Club (another Finovate alum). This reflects both a continued strong investment pace in fintech innovators in general, as well as a particular passion for alternative lenders. OnDeck earned the investment dollars of a number of major fintech-savvy venture capitalist firms and individuals such as PayPal co-founder Peter Thiel and former American Express CEO, James Robinson.
What are people saying about the IPO? At places hardcore investment websites like Seeking Alpha, the questions are all about the sustainability of growth and the potential for profitability in the near-term. Over at Inc., Jeremy Quittner sees challenges and advantages for OnDeck as opposite sides of the same coin, considering the company’s “balance sheet lender” business model as a “risk” and its capacity for generating significant income from interest a “reward.”
OnDeck recently presented at FinDEVr San Francisco 2014, introducing its frictionless, extensible, and powerful API. The company announced its plan to partner with Worldpay in August, and reported in June that it’s small business lending platform had a $3.4 billion, 22,000 job impact on the economy. In March, OnDeck raised $77 million in a round led by Tiger Capital. The New York-based company was founded in 2007 and was last on the Finovate stage for the spring 2012 show in San Francisco.