May 5, 2017

Peer-to-Peer Lender Goes Public
The IPO market for online lenders has been very quiet over the past year. However, China Rapid Finance just raised $60MM through an ADR offering on the NYSE. While public market valuation of $350MM is much lower than the private market value of $1B the company achieved a few years ago, it is still a sign that things have calmed down somewhat in this sector. Market reception over the next few months may indicate whether or not the other Chinese lenders waiting in the wings will also go public while they can.

Increasing Focus on Overdraft Fees
The general consensus has been that banks will face heavy pressure from regulators on overdrafts fees. However, fintech startups may not give regulators the chance. Dave, a friendly bespectacled bear, will look at your account and warn you if he thinks you are trending towards overdrafting. Dave will also offer you an interest-free, small dollar loan as a way to avoid the overdraft, thus stripping the banks of the overdraft fee revenue. Officially, the revenue model for Dave is a $0.99/month subscription plus donations; however, the original privacy policy said they would share your data for marketing purposes. The privacy policy has since changed. The company behind Dave has raised $3MM in a seed round, including investors such as Mark Cuban and SV Angel.

Real Estate Incumbents Join Together to Fund Startups
A new venture firm was announced this week – Fifth Wall Ventures, focusing on real estate technology. The unique aspect of the $212MM fund is that it includes some of the largest legacy players in real estate, including CBRE, Lennar, Host Hotels, Equity Residential, and more. The fund acts as a pooled strategic investor by finding startups that can eventually partner with its LPs. As most fintech companies are building technology to sell to incumbents, this model could work well in the banking and in general financials services for those banks who don’t want to set up their own fund.

No One Wants A Loan
I found a great episode from the archives of The Purposeful Banker podcast from PrecisionLender. The episode explores the “Jobs To Be Done” framework in a banking context through an interview with its two creators. Serves as a great reminder for both banks and fintech startups to focus on the customer and what they are trying to accomplish (and “get a loan” is not on the list!).