Daily News Digest Featured News

Tuesday March 28 2017, Daily News Digest

global fintech vc investment

News Comments

United States

United Kingdom

European Union

China

  • 41 people locked up for fraud case in China. AT: “This is both a good time and a bad time to be in P2P lending in China. Good if you’re ethical, bad if you’re not. I suspect we’ll see a lot more arrests this year.”

India

Africa

Middle East

News Summary

United States

CreditEase Wealth Management Announces New Investments in the US Marketplace Lending Platforms (PR Newswire), Rated: AAA

CreditEase Wealth Management announces today that its Offshore Private Credit Fund (“OPCF”) has invested a total of US$30 million in two transactions with OnDeck and LendingHome, after making its first investment in Avant and Prosper last year. OPCF raised US$80 million from its Chinese clients in late 2015 which will be fully deployed by end March 2017.

OPCF is the first Chinese offshore fund to invest in loans issued by western platforms. OPCF provides Chinese high net worth and mass affluent investors the opportunity to spread risks across different geographies with exposure to Western private credit. It is also a natural fit for CreditEase Wealth Management clients, given that they are already familiar with the P2P asset class having exposure to it in China.

Marketplace lending has emerged as a new asset class with attractive returns compared to other fixed-income products and low correlation to equities. Against a backdrop of bank deleveraging and de-risking, the global marketplace lending market is expected grow to US$150-490 billion by 2020, according to a recent report published by Morgan Stanley.

The state of fintech funding, in five charts (Tearsheet), Rated: AAA

Total global funding to fintech companies fell to 47.2 percent to $24.7 billion in 2016 from $46.7 billion the year before, according to KPMG’s quarterly fintech funding report, The Pulse of Fintech, which came out in February 23. Deal activity dropped to 1,076 from 1,255 the year before.

VC deal volume is down, but dollar value keeps growing

The number of venture capital deals fell to 1,436 last year from 1,617 in 2015. However, those deals continued to increase in value, rising to $17.35 billion globally in VC investment from $15.64 billion the year before.

global fintech vc investment
Early stage deals are down, late stage deals are up
According to CB Insights, seed investments fell to 29 percent at the end of 2016 from 35 percent the year before, while Series D investments rose to 7 percent, showing that while investment volume is still larger among younger companies, interest in those startups slipped over the last year while interest in more established, developed companies grew.
Private equity is emerging as an additional source of fintech investment
The value of private equity deals in fintech fell by about $7 billion between 2015 and 2016, but deal volume rose to 112 from 99.
Corporates and startups are more open to working together
The venture arms of financial institutions increased their participation in fintech startup investment to $8.5 billion (17 percent of deals) in 2016 from $4.9 billion (14 percent of deals) the year before.
corporate vc participation

Online lender Elevate is heading for an IPO (Business Insider), Rated: AAA

The company is offering 7.7 million shares at $12 to $14 each, it said in an updated filing on Monday. It has also put aside 1.15 million shares that the underwriters have the option to purchase. At the top of the range it would raise about $124 million.

The company plans to list its shares on the New York Stock Exchange with a ticker of ELVT. UBS is leading the deal with Credit Suisse and Jefferies.

Online retailers now armed with free fraud prevention resource to combat data breaches (XOR Data Exchange Email), Rated: AAA

Austin-based data and analytics startup XOR Data Exchange is introducing a free resource for online retailers to identify and prevent account takeover attempts caused by the increasing frequency of data breaches that include account login credentials.

XOR’s Compromised Identity Exchange Basic platform allows e-retailers insight into the level of identity theft risk associated with a specific customer based on the number and types of data breaches the individual has been impacted by, whether or not those breaches are producing fraud, and if the individual’s stolen information is available for sale on the Dark Web. Participating retailers will also receive details about recent data breach activity and format of any compromised account passwords in order to implement authentication measures as needed to ensure a purchase is being made by the rightful person.

Following the implementation of EMV chip technologies in U.S. payment cards, retailers and card issuers have reported an increase in card not present (CNP) and online fraud, with some studies reflecting a 3-to-1 surge in growth. Combined with increasing frequency of data breaches that include login credentials, consumers carry increasing risk of experiencing identity theft in the form of account takeover across multiple online platforms.

By implementing this free version of XOR’s Compromised Identity Exchange, which was initially introduced in May 2016, retailers that process online transactions for customers are able to determine the level of identity theft and account takeover risk associated with approving a specific transaction or fulfilling an order. For many of these retailers, customer payment and shipping information is automatically saved for convenience, putting these individuals at risk of identity theft.

Global Debt Registry to Utilize TransUnion Data to Expand eValidationSM Services within Online Lending (Global Debt Registry Email), Rated: A

Global Debt Registry (GDR), the asset certainty company known for its loan validation expertise, today announced it will be utilizing data from leading credit information provider, TransUnion, to extend the range of GDR’s eValidationSM services for investors and issuing creditors in the online lending industry.

By combining GDR’s expertise in real validation of underlying loan data with trusted third-party information providers such as TransUnion, investors obtain greater insight and confidence in their online lending portfolios than achieved in traditional verification programs.

With TransUnion data, investors can obtain in-depth validation of their online lending portfolios while minimizing the exposure of risks associated with managing and protecting confidential consumer data. Additionally, originating creditors are able to leverage an independent third-party service made possible by GDR’s use of TransUnion data to validate certain account data on loans provided to them by online lending platforms. Similarly, warehouse lenders have greater and much needed transparency into these pledged assets and can do so within the current FCRA/GLBA regulatory framework.

ID Finance Joins Mintos Marketplace,  Places Unsecured Loans in Spain Under MoneyMan Brand (Crowdfund Insider), Rated: A

ID Finance, a data science and digital finance company, announced on Monday it has officially joined peer-to-peer lender Mintos and has already begun placing personal unsecured loans issued in Spain under its MoneyMan brand on the lending platform’s marketplace. 

ID Finance claims it is now the largest online lender in Russia and it currently operates Kazakhstan, Georgia, Poland, Spain, and Brazil.

A community banker’s fintech ‘aha’ moment (American Banker), Rated: A

While watching the game on television, the president and chief executive of Reading Cooperative Bank saw a commercial for the online lender Social Finance. She decided to try out its loan process for herself right then and, before the game came back on screen, her application was approved. She had an $89,000 personal loan.

“If they can deliver that quickly and that seamlessly, they are going to take all of the best customers with the best credit scores,” Thurlow said. “We are going to be left with the lower credit scores.”

The incident prompted her $513 million-asset bank in Reading, Mass., to accelerate its mobile efforts. It is testing some new functions now — like account opening on its mobile app — and Thurlow said she is happy with the results so far.

Invest Efficiently with a Lending Club or Prosper IRA (Lend Academy), Rated: A

Both Lending Club and Prosper allow you to open up retirement accounts. You can also transfer money from an existing IRA to either company which can be done at any time.

The losses or charge offs from loans are capital losses. Investors are able to deduct $3,000 a year of capital losses (Federal). Any losses over $3,000 are carried over to future years. There also may be a limit in capital losses you can claim each year at the state level.

Lending Club Prosper IRA

IRAs are available with Lending Club’s preferred custodian, Self Directed IRA Services, Inc. (SDIRA). There is an annual account fee of $100, but this is covered by Lending Club if your initial investment exceeds $5,000. Lending Club will continue to cover this fee in subsequent years if your investment in Lending Club notes exceeds $10,000 or more.

Prosper, like Lending Club offers IRA transfers, rollovers and annual contributions. Prosper will also cover your first year IRA account fee to the custodian with a $5,000 contribution. If you have at least $10,000 invested on your one year anniversary, they will continue to pay the account fee. Prosper’s preferred IRA custodians are Millennium Trust and Equity Institutional.

Is Kabbage Buying Out Rival OnDeck? (Crowdfund Insider), Rated: B

Kabbage is growing while OnDeck seems to be on a downward trend, and given last years negative analysis of the online lending marketplace, it makes some sense that Kabbage will soon make an offer to buyout OnDeck.

So will Kabbage attempt to buy out OnDeck? Maybe, but the more important question is whether OnDeck will agree to it and at what terms.

Bloomberg columnist Gillian Tan thinks that OnDeck most likely won’t agree to a standard buyout based on the fact that OnDeck’s earliest investors still own 45% of the company.

OnDeck did see a slight uptick in its shares last week when speculation of a buyout was first reported on and the recent hiring of former Morgan Stanley COO Jim Rosenthal to its board of directors might be a sign that things will improve.

Potential Applications of Blockchain For Real Estate (Lend Academy), Rated: B

What’s most interesting to me is how companies are applying technology to real estate and one of the big opportunities is bringing blockchain technology to real estate.

One of the keys to the adoption of blockchain for real estate is to demonstrate the cost savings and reduction of risk. As larger companies start to adopt the technology Ragnar believes the rest will follow. Chicago’s Cook County is currently running a pilot program with velox.RE for transferring and tracking property titles as well as filing liens.

For boutique real estate investors or even homeowners there is also an opportunity on a smaller scale to increase the efficiency and lessen the cost of the home buying process. For instance, closing costs can be reduced by reducing the friction that is currently involved in real estate transactions.

Panelists also highlighted the opportunity of the technology being applied to crowdfunding. There are three perceived benefits:

  • Accepting bitcoin for payment will allow for investments from across the world, big and small
  • Payments can be automated to investors in the property
  • The blockchain can provide proof of real estate ownership
United Kingdom

P2P Real Estate Lending Marketplace Relendex Reaches Milestone with Full FCA Authorisation (MarketWatch), Rated: AAA

Relendex, a peer-to-peer (P2P) commercial real estate lending marketplace that directly connects creditworthy borrowers to investors, has reached a significant milestone with full authorisation from the Financial Conduct Authority (FCA). The regulation demonstrates the rigour and governance of the platform and will allow Relendex to launch its new Innovative Finance ISA giving retail investors unparalleled tax efficient lending to the U.K. commercial property market.

Relendex, an early mover in security-backed commercial property lending for investors, specialises in innovative finance through its nimble P2P marketplace lending platform technology and ultimately improves accessibility of established and secure asset classes into the direct retail and institutional investor market. Their commercial approach and automated secondary market provides much needed liquidity to lenders. Relendex has sustained zero defaults on its loan book to date (http://www.relendex.com).

Reaching this important milestone in Relendex’s real estate lending development with full FCA approval is testament to its commitment to support U.K. economic growth with fast and flexible financing options for Britain’s commercial property businesses. Whilst providing creditworthy borrowers with access to much needed credit and at the same time providing investors attractive and secured returns that are delivered through Relendex’s leading technology.

Obtaining ISA manager status on the back of this full FCA approval is the next step for Relendex allowing them to be one of the first movers in offering the Innovative Finance ISA to retail investors – the tax free wrapper and P2P investments that is forecast to propel the industry into the mainstream.

LendInvest and Pepper UK announce industry-first partnership (LendInvest), Rated: AAA

LendInvest, the online mortgage lender, and Pepper UK, one of the country’s leading specialist loan servicing companies, have agreed to form what is believed to be the industry’s first partnership between a UK online property finance marketplace and an outsourced loan servicing business.

Under the terms of the partnership, Pepper UK will take responsibility for servicing all new loans originated by the LendInvest team. The LendInvest team will service existing loans until the autumn at which point these loans will be migrated to the Pepper team for continuity of service. All loans that require special servicing (e.g. arrears or expiries) will continue to be handled by the LendInvest team.

Lendable secures £100 million investment to grow its consumer loan marketplace (Lendable Email), Rated: A

Lendable announced today a £100 million investment by Waterfall Asset Management, a global credit investor.

Based in London, Lendable has developed proprietary, automated underwriting technology to offer instant decisions, transparent rates and competitive pricing on small consumer loans. The platform has generated market-leading returns to investors, and will continue to add further private and institutional investors in the coming months.

HMRC applies to shut down more businesses as it pursues unpaid tax (SmallBusiness.co.uk), Rated: A

HMRC applications to wind up businesses in order to recover unpaid tax rose 12 per cent last year, up to 3,906 in 2016 from 3,485 in 2015, says Funding Options, the online business finance supermarket.

Funding Options says that if HMRC is successful in obtaining a winding up order from a court, the business concerned will be forced to close, and its assets liquidated to pay outstanding tax bills.

Funding Options has warned that in addition to being wound up, businesses face other debilitating consequences if they cannot afford to pay tax bills on time. HMRC also has the power to seize business assets and levy substantial penalties on businesses that fail to pay their tax arrears.

European Union

Blockchain startup Humaniq announces alpha release of mobile app (EconoTimes), Rated: AAA

Blockchain startup Humaniq announced the alpha release of their mobile app that is focused to tackling the global issue of financial exclusion for people across the world, who do not have bank accounts.

The application on iOS and Android will have various unique features, which have not been before with banking apps. The app software will have biometric ID for unlocking the app or verifying the transactions, as well as to replace the entire sign up process. The Humaniq app builds user profiles that are based on facial and voice recognition algorithms.

With the launch of the app initially, the blockchain company will focus on developing the core banking services of the app, such as remittance payments and P2P lending. The app will support various cryptocurrencies including bitcoin and ether, apart from Humaniq’s own tokens known as HMQ.

China

41 Peopled Locked Up for Baiyin Wealth Co. P2P Fraud in China (Crowdfund Insider), Rated: AAA

In what is being described as Shanghai’s “first and high profile” peer to peer lending fraud case, 41 people associated with Baiyin Wealth Co. have been imprisoned according to China News. The case included the theft of approximately 700 million yuan or about USD $10.2 million. Sentences were said to range from 6 to 8 months with some individuals receiving a reprieve.

India

Fintech startup Perpule raises $ 650k from Kstart Capital (India Times), Rated: AAA

Fintech startup Perpule has raised $650,000 in a funding round led by Kstart Capital, the sister concern of VC firm Kalaari Capital, reports Shadma Shaikh. The round also saw participation from venture fund Venture Highway and Raghunandan G, cofounder of TaxiForSure. “Our vision is to ensure waiting in queues is a thing of the past.

Banks should team up with FinTech startups, says Rana Kapoor (India Times), Rated: A

Universal banks need to explore partnerships with entities such as payments banks, small finance banks and FinTech startups to achieve a more financially included society, said YES BankBSE 0.49 % Managing Director Rana Kapoor, while he warned banks against strategies of trying out indigenous solutions.

Africa

Bitbond & BitPesa Announces New Partnership: Seeks to Improve Financing of SMEs in Africa (Crowdfund Insider), Rated: AAA

German-based SME lending platform Bitbond and African payment services provider BitPesa announced on Monday they have formed a new partnership to improve access to African SMEs financing.

BitPesa pays local currency out to the borrower’s preferred payment option within minutes. The integration between the companies is currently live in Kenya, Nigeria, Uganda, and Tanzania.

Middle East

Fintech startups compete in the growing Middle East market (ImpactAlpha), Rated: A

The small financial technology, or fintech, sector in the Middle East is expected to grow from about 100 startups in 2015 to as many as 250 by 2020, according to a new report.

Half of today’s fintech startups are based in the United Arab Emirates, but the Fincluders Startup Challenge in Amman, Jordan from May 3-4 may help change that.

Authors:

George Popescu
George Popescu
Allen Taylor
Allen Taylor

About the author

Allen Taylor

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