May 4, 2018

GreenSky Files for Largest US Fintech IPO in 3+ Years
Atlanta-based GreenSky, which likely became the most valuable fintech company earlier this year when it raised $200 million from PIMCO at a $4.5B valuation*, has filed for an IPO. GreenSky provides a point-of-sale lending platform for merchants in the home improvement, furniture, and elective medical fields. GreenSky only provides the technology and administration – they work with a network of banks to actually fund the loans. Banks such as Fifth-Third, SunTrust, and Regions have invested in GreenSky and/or are partnering by buying loans or offering the technology platform through their bank mobile apps.

GreenSky is allegedly looking to raise up to $1 Billion at a valuation of around $5 Billion, which mirrors the $900 million that LendingClub raised on its IPO in 2014 at a $5.5 Billion valuation (though the stock price rose 50%+ on the first day and it closed with a market cap of $8.5 Billion). GreenSky’s $5 Billion number compares to previous valuations of $4.5B (2018), $3.6 Billion (2016), and $2 Billion (2014). Unlike most VC-backed fintech companies, GreenSky has actually been profitable for years – the company made $94MM in 2015, $125MM in 2016, and $139MM in 2017. They reported having 11,000 active merchants and have facilitated $11 Billion in volume to 1,600,000 borrowers since launch. With the underwhelming performance of the marketplace/online lenders going public a few years ago (Lendingclub and OnDeck), GreenSky may be the boost the industry needs to show there are still blue skies in the fintech world.

*SoFi would be very competitive for the title of most valuable fintech company. While the company last raised a VC round in 2017 at a $3.8 Billion pre-money valuation, they were in potential acquisition talks for much more than that. Allegedly, a foreign bank had offered to buy them for $6 Billion and Charles Schwab had offered $8 Billion, but SoFi wanted to hold out for $10 Billion. We’ll have to wait for SoFi’s potential IPO in 2019 to find out how the market will value to two contenders.

The Macro Case for Cryptocurrencies
The rise and fall of cryptocurrency prices has created many headlines, celebrating, and hand-wringing over the past 6 months. That volatility is one aspect of crypto that is keeping it from realizing one potential use case – as a store of value. The idea of a store of value the first key use case that Elad Gil lays out for cryptocurrencies in general. Most of the activity in the past year has viewing crypto as an investment, but Elad takes a step back and evaluates a few other use cases, including competing with offshore accounts, smart contracts, and persistent digital goods (for example, there is already an Ethereum-based R.A.R.E. digital art community). Nothing earth-shattering or new is in the post, but it is a great reminder to step back from the hype of ICOs think through the macro trends and opportunities in this space.

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The British Are Coming, The British Are Coming…
London-based Revolut announced a monster $250MM round led by Yuri Milner’s DST Global. Revolut claims to have 2 million customers after three years in business, and that they are signing up to 8,000 new users per day. They also claim that 250,000 of those are daily active users, and they process $1.8 billion in transaction per month. Apparently not content with growth prospects in Europe, Revolut wants to enter the US by the end of 2018. Around the same time, N26, the German-based mobile bank, raised another $160MM co-led by Allianz and Tencent. The company will use the capital to help fund continued expansion. Already in 17 European countries, N26 will be competing more directly with Revolut by, of course, entering Great Britain and the US by the end of 2018.

As paths converge on the US, both N26 and Revolut will have the incredibly difficult job of crossing the pond and competing not only against each other, but also against the US-based banks which have largely been immune to international competition thus far.  With no clear leaders at the moment, it will be a race between domestic incumbents (looking at you Goldman and Chase), foreign startups, and domestic startups. Should be fun to watch…

Tenacity
Fantastic article by Leda Glyptis – nothing specifically fintechy in here, but a great reminder of what it takes to be an “overnight success”. Sample: In life and business, we often find ourselves wanting the thing but not the toil of making it, the destination without the effort of getting there, the opportunity without the hard work, the tenacious folk without the actual tenacity. Needless to say, it doesn’t work like that. I can guarantee you that every thing you consider a success from the outside is a mixed story from the inside. The amazing platform the rival bank launched that has you green with envy, is a project five years in the making, with many brutal fights, set-backs and late nights in the office when good people wanted to give up because it didn’t feel like it was worth it.