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LendIt Fintech News: Daily Coverage of Fintech & Online Lending


SoFi to Acquire Galileo Financial Technologies in $1.2 Billion Deal

The $1.2 billion deal will allow SoFi to access new customers and potentially impact SoFi's competitors in the market.

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This morning, SoFi announced they have agreed to acquire Galileo Financial Technologies for $1.2 billion in cash and stock. It is interesting timing given almost all of the news as of late has centered around the coronavirus crisis as many companies focus on staying afloat.

Galileo allows companies to offer financial services to both consumers and businesses such as checking and savings accounts, direct deposits, ACH transfers and bill payments. SoFi is already a customer of Galileo, which powers SoFi Money among other offerings.

According to the press release, Galileo processed over $53 billion of annualized payments volume in March 2020, up from $26 billion in September 2019. It seems like this is a customer acquisition play for SoFi as they look to provide their full suite of financial services products to more customers. Interestingly, the acquisition may also allow SoFi to access international markets through current Galileo partners.

Clay Wilkes, CEO of Galileo provided the below statement as part of the press release:

“SoFi has built a very strong diversified financial services company focusing on a full suite of financial services. These are products that many of our leading fintech clients are asking for. Distributing products through our enterprise class API is the vision behind this combination. I think it’s very powerful…We’re excited to work with SoFi to build on the services that have made Galileo the leading supplier of infrastructure services to leading financial, technology, and fintech companies. With the help of SoFi, we intend to continue to grow with and support all of our existing clients and the product roadmaps that they have defined.”

Galileo will operate as a standalone business collaborating with SoFi and Clay Wilkes will continue to serve as CEO. Wilkes has been founder and CEO of Galileo Financial Technologies since June 2000. The deal is still pending regulatory approval and conditions of closing.

Conclusion

It is great to see one of the leaders in fintech today demonstrate their strong financial situation by making a significant acquisition. This deal has likely been in the works for some time but given the current environment it is still notable that the acquisition is moving forward. It is also going to be interesting to see how this plays out given many of SoFi’s competitors are currently leveraging Galileo. American Banker notes that current customers of Galileo include Chime, Robinhood, Transferwise and Varo Money.

Intuit to Acquire Credit Karma for $7 Billion

The latest fintech mega deal has the maker of TurboTax, Mint and Quickbooks acquiring Credit Karma for a reported $7 billion

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We start out the week with yet another blockbuster fintech acquisition. The Wall Street Journal reported late Saturday that Intuit, the maker of Quickbooks, TurboTax and Mint, is close to a deal to acquire Credit Karma for a reported $7 billion. The deal could be announced as soon as today when Intuit reports earnings after the closing bell. [Update: the deal is now official, here is the press release].

Under the deal Credit Karma would become an independent unit inside Intuit with CEO and co-founder, Ken Lin, remaining in charge. Credit Karma was last valued at around $4 billion two years ago and publicly traded Intuit is valued at around $77 billion. The $7 billion deal is expected to be a combination of cash and stock.

What This Deal Could Mean for Intuit and Credit Karma

Intuit has very strong offerings with Quickbooks for business and TurboTax for consumers. While the personal finance tool Mint was groundbreaking a decade ago it has been left to stagnate since Intuit acquired it back in 2009. There have been precious few new innovations in the past decade. This product also operates in a similar way to Credit Karma in that it makes money by recommending products such as credit cards and personal loans. But Credit Karma has done a far better job of this than Mint has ever done so Intuit clearly sees a lot of upside here. [Read more…]

Visa to Buy Plaid in $5.3 Billion Deal

This groundbreaking deal values Plaid at double the valuation of their last round.

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Fintech companies continue to attract interest from traditional financial institutions and now we have a significant acquisition to start off 2020. Yesterday, we learned that Visa is planning to buy Plaid for $5.3 billion. Plaid is unique in the fintech market today, providing the rails for connections between financial institutions. Many consumers in the US have leveraged their service, but they wouldn’t know it because it all happens behind the scenes. Because Plaid has been successful in making these connections possible, they are the defacto choice for many financial institutions. As of now it seems like this large niche that Plaid has carved out is a winner take all proposition.

Chief Executive of Visa Al Kelly noted on an investor call that the acquisition will help Visa expand access to other fintech firms and also accelerate their movement outside of cards. While Plaid has already become a successful fintech company on their own, the credibility of the Visa name is likely to help them reach even more customers. Plaid last raised a round in 2018 at a $2.65 billion valuation. It may sound like a lot to pay for a company, but Visa’s market cap currently stands at around $420 billion. Interestingly, both Visa and Mastercard had participated in a $250 million round. Other investors in previous rounds included Andreessen Horowitz, Kleiner Perkins, Index Ventures, Norwest Venture Partners, Coatue Management, Goldman Sachs, NEA, American Express, Citigroup and Spark Capital.

Writing on the Plaid blog yesterday, CEO Zach Perret said that Visa was the one to approach them and he also explains how the acquisition will work:

We were very impressed by the Visa team from the minute they approached us. They share our vision for the future of financial services and have deep respect for the developer community we support. They want us to operate as an independent business unit so we can keep doing what we do best. We’ll be able to lean on their brand, resources, and international footprint if doing so can benefit our customers, our partners, and the markets we serve.

This deal is welcome news for the fintech community and it is going to be fascinating to watch where Visa takes Plaid from here. And what does this mean for broader fintech? Will this be the year that traditional finance makes fintech acquisitions a priority? The answers will be forthcoming as we see how the rest of 2020 shapes up.

Credible Sells Majority Stake to Fox Corporation for $265 Million

Lending marketplace, Credible Labs, has reached a deal to sell 67% of the company to media giant Fox Corporation

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There is some big news out of Australia today. Credible Labs, based in San Francisco but listed on the Australian Stock Exchange, has reached an agreement with Fox Corporation (yes, that Fox) to sell 67% of the company for $265 million. This values the company at $397 million which is a 31% premium over the stock’s closing price on May 28, the day before receiving the offer from Fox. Fox Corp. will also provide $75 million in growth capital over the next two years.

Founder and CEO Stephen Dash (you can listen to my 2016 interview with him here) is an Australian who moved to San Francisco in 2012 to start Credible. He will remain head of the newly formed Fox subsidiary and will exchange shares equal to 33% of Credible’s outstanding common stock into units of this subsidiary.

I sent Dash a message last night but he did not respond by the time of publication. However, he did say this in the press release:

Fox Corporation’s record of innovation and focus on audience engagement will further enhance Credible’s position as a leading consumer finance marketplace in the United States, creating opportunities for organic growth and the expansion of the Credible platform. Credible’s industry-leading user experience, combined with FOX, will provide greater impact and scale for consumers.

New York-based Fox Corporation is actually a newly created media company controlled by the Murdoch family. It was formed out of the Disney acquisition of 21st Century Fox and it began trading on Nasdaq earlier this year. It includes Fox’s television properties such as Fox News, Fox Business Network and Fox Sports.

Here is what Fox CEO Lachlan Murdoch said about the acquisition: [Read more…]

It’s Official: Kabbage To Acquire Orchard

The tech focused small business lender, Kabbage, has announcement the acquisition of Orchard, the leading loan analytics provider in the online lending space

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It was the worst kept secret in fintech. There were rumors flying around during LendIt Fintech earlier this month and then Bloomberg published this story a couple of weeks ago about the pending deal. Well, today it became official. In a press release this morning it was confirmed that Kabbage, the leading tech-focused small business lender, will acquire Orchard.

I met Matt Burton, the CEO and Co-founder of Orchard, at the very first P2P lending meetup in New York in early 2013. This was before Orchard even existed but right away it was clear that we both shared a true passion for the burgeoning online lending space. I invited Matt and his fellow co-founder, Angela Ceresnie, to speak at the very first LendIt in June of that year. I still remember their presentation on institutional investing and how they were building tools to make the investing process easier. Orchard was officially founded in August 2013 and since then they have gone on to become the leading connector of capital between loan originators and institutional investors.

It was back in February when I first heard rumors that Orchard was for sale. I was a bit surprised because they had closed a $15 million Series C just a few months before. They had also recently released their new Deals platform to facilitate both primary and secondary market loan transactions. But from what I have heard, and the Bloomberg article seems to confirm this, their new platform has failed to get the traction they had hoped.

So, what will become of Matt Burton and his team? Some clues are provided in the press release:

Orchard’s CEO and co-founder, Matt Burton, as well as Chief Analytics Officer and co-founder, David Snitkof, will both join Kabbage in leadership roles upon the closing, helping oversee technology integrations and future innovations. In total, Kabbage will add more than twenty Orchard employees who are predominantly focused on advanced analytics, data science and engineering to its New York City office.

[Read more…]

LendingPoint Expands Into Point of Sale Lending by Acquiring LoanHero

Online near prime lender LendingPoint to boost expansion into point-of-sale with acquisition of LoanHero.

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It’s not often we report on acquisitions in fintech. From my perspective this is because the industry is still relatively young despite some of the interesting innovation happening. A vast majority of traditional financial services companies are still figuring out their strategy to infuse tech into their businesses. More often, we see the successful companies continuing to raise rounds of financing. Today’s acquisition announcement though didn’t come from a traditional financial services firm, it was a fintech acquiring another fintech.

LendingPoint is a balance sheet lender serving the near prime segment. They have been around since 2015 and in a relatively short time they have established themselves as one of the leading players. They now have acquired LoanHero, a company operating in the point of sale space. LoanHero first came on our radar when they were selected as a finalist for PitchIt at LendIt in 2015.

Last year when we checked in with a number of PitchIt finalists, we learned that the company was in talks with national and regional banks which would be the key to scaling the business. According to the press release, LoanHero signed with hundreds of merchants across medical, dental, and home improvement. With the acquisition LendingPoint plans to accelerate their expansion into point-of-need and point-of-sale financing.

Tom Burnside, co-founder and CEO of LendingPoint stated:

LoanHero’s merchant platform is the perfect complement to our consumer portfolio. The combination of the two companies doubles our origination channels and current customer base and triples the number of consumers we can serve, with credit and payment solutions for folks with credit scores from 450 all the way to 850. We’ve been so impressed by the energy and talent of the LoanHero team, and we look forward to working with them to dramatically improve access to credit for a large and underserved segment of consumers and merchants, whenever they need it.

Combined the companies have issued almost 70,000 loans totaling $500 million.

Conclusion

The point of sale space is fascinating and is a vertical that has led to some very interesting businesses. One concern for many online lenders is high customer acquisition costs and in point of sale finance that challenge can be mitigated since acquisition of customers is primarily through partnerships with merchants. It’s going to be interesting to see where LendingPoint goes from here as they expand their product offerings.

Marketplace Lending Predictions for 2016

I stare into my crystal ball and provide predictions for the year ahead as well as review my predictions from one year ago.

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Crystal ball - 2016 predictions

Happy New Year everyone. Here is my annual predictions post where I review my previous years predictions and make some new ones for the new year.

Review of my 2015 Predictions

  1. Lending Club will issue $10 billion in new loans and Prosper $4.1 billion
    I was a bit optimistic on my loan volume predictions. While both companies had a great 2015 Prosper came in at $3.7 billion for the year, below my $4.1 billion projection. We won’t know Lending Club‘s final numbers until their next earnings call in a few weeks but we do know that they did $5.8 billion through Q3. So, if they keep a similar growth rate to previous quarters I would expect around $2.5 billion in Q4 for $8.3 billion in total loans for the year. Still a great year but below the aggressive numbers I projected.
  2. Prosper will remain a private company
    I got this one right. Prosper remained a private company with not even a whisper of an IPO for them in 2015.
  3. There will be two new marketplace lenders completing an IPO
    This one I got completely wrong. Given the state of the IPO market today compared with 12 months ago it is not surprising that no other U.S. based marketplace lending went public in 2015.
  4. A new platform will launch targeting non-accredited investors
    I was only partially right on this one. While several new platforms contacted me throughout the year with their intention to launch for retail investors the only offerings that actually launched in 2015 were from existing real estate platforms Groundfloor and Fundrise.
  5. A midsize bank starts their own marketplace lending platform
    This was an interesting one. While I also did not get this one right there was more talk about the banks role and response to our industry in 2015 than ever before. We did see news break in June about the intention of Goldman Sachs to create their own platform but nothing has materialized on that front yet. I think I was just a year early on this (see prediction #4 below).

I also predicted that Lending Club would make two acquisitions and I was dead wrong on that as well. Lending Club is biding their time on acquisitions but clearly they will grow their borrower base at some point through acquisitions. I am confident that the predictions I got wrong will all come true in the near future, some in 2016 as you can see below.

My 2016 P2P Lending Predictions

Now on to this year. I am going to see if I can improve on my somewhat dismal performance from 2015. Here are several predictions I feel confident making for 2016. [Read more…]

Funding Circle Acquires Zencap, Expanding Their Reach To SMEs

Funding Circle will now offer loans in 5 different countries across Europe and the United States.

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FundingCircle_Buys_Zencap

Samir Desai, co-founder and CEO of Funding Circle, the world’s largest marketplace for small business loans, made a big announcement today at LendIt Europe 2015. They will be acquiring Zencap, an SME lender based on Germany. Zencap has only been around for just over a year, but they have been very successful thus far.

Earlier this year at LendIt USA 2015, Zencap claimed to be the fastest growing small business marketplace lender in Europe. Over the last 17 months, they have lent more than €35 million to 520 businesses. Although Zencap’s growth is impressive, the most important part of this news is that Funding Circle will go from offering loans in just two countries (UK and the US) to offering loans in 3 more: Germany, Spain and the Netherlands. This will solidify Funding Circle’s spot as the leading global brand in the small business lending space. [Read more…]

Prosper Makes its Second Acquisition, a Personal Finance Company Called BillGuard

Prosper has acquired BillGuard, a personal finance analytics company based in Israel, for $30 million

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Prosper Acquires BillGuard

There is big news out of Prosper this morning. They have made their second acquisition this year (in January they bought a healthcare lender) and it is not what you might expect. They have purchased BillGuard, a personal finance analytics company with offices in Tel Aviv and New York. BillGuard is not a lender; its core product is an app that helps consumers track spending and detect possible fraudulent charges.

This was not the kind of acquisition that I expected out of Prosper so yesterday I chatted with CEO Aaron Vermut to find out more. He was, not surprisingly, very enthusiastic about this deal saying it will give Prosper an edge in many new ways.

What does BillGuard actually do?

Before I get to Aaron’s comments let’s explore BillGuard. Funnily enough, I have been a user of BillGuard’s free service since 2011. One of the cool features that drew me to the product back then was their crowdsourced technology where they would use the crowd to flag any possible fraudulent charges on your credit card bill. When someone detects a fraudulent charge from a merchant this flows through to others who use that same merchant. Over the years, it has been useful to me catching the occasional questionable transaction.

Today, BillGuard offers far more than just this crowdsourced technology. They have a full service personal finance app (highly rated on both the Android and iOS stores) that helps consumers with budgeting, tracking expenses, credit monitoring and even identity theft. It is kind of like Mint and LifeLock rolled into one product. They have 1.3 million registered users and have flagged over $70 million in fraudulent transactions for their users.

How does BillGuard fit with Prosper?

[Read more…]

Prosper Makes Its First Acquisition – a HealthCare Lender

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Prosper Acquires American Healthcare Lending

More big news from Prosper today and this story is very significant. Prosper has completed their first acquisition – American Healthcare Lending (AHL) – for $21 million in cash.

As the name implies AHL is for patients looking to finance their medical procedures. Founded in 2009 in Salt Lake City, Utah, they work in a number of verticals within health care: cosmetic surgery, fertility, spine and neuro surgery, behavioral health, just to name a few. They are not actually a lender as such; rather they have developed a cloud-based patient financing platform that is integrated with a variety of lenders including Prosper.

This is from the AHL website:

American HealthCare Lending sits at the intersection of the healthcare, technology, and financial services markets and we are using technology to bring innovative financial services solutions to a massive healthcare problem. Our patient financing platform allows healthcare providers nationwide to Make Healthcare Affordable™ for patients every day by offering high-dollar installment loans to individuals with good credit.

This acquisition all started when AHL became a referral partner of Prosper last year. AHL is an innovative young company that appealed to the executive team at Prosper. They are looking to disrupt financing in the healthcare industry in a similar way Prosper is looking to disrupt the broader consumer lending industry.

AHL works directly with a number of lenders, including Prosper, but their main innovation occurs inside the doctors’ offices. The patient can enter their information on the spot and get a decision on their loan instantly. The maximum loan size is $100,000 and loan terms go up to 7 years. Obviously the loans they refer to Prosper would fit within Prosper’s loan terms – a maximum size of $35,000 and a maximum loan term of 5 years.

A Strong Position in the Medical Financing Market

[Read more…]

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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