Venture capital levels are a telling sign of the health of an industry. This year, headlines have been awash with concerns and skepticism of the alternative lending space, and that’s largely spooked investors. Just this week, Biz2Credit concluded that, as traditional bank lending to SMEs among large and small FIs surges, alternative lending approval rates for small business borrowers continues to slump.
Just look at CAN Capital, said Biz2Credit CEO Rohit Arora in a statement. “CAN Capital, one of the largest and oldest players in alternative lending, has stopped lending money and replaced CEO Dan DeMeo,” he said. “Alternative lenders have lost favor because of the high rates they charge. Meanwhile, they lost much of their competitive advantage of the speed of their decision-making as other types of lenders continue to invest in technology to expedite the loan approval process.”
This week in B2B venture funding activity, though, is bucking the trend, as an alternative lender from the U.S. secured the largest investment round of the week. Is this a fluke, or are things beginning to turn around for the sector?
India’s B2B eCommerce industry saw a bit of venture capital action when Ofbusiness announced a $1.1 million funding round from Zodius Technology Opportunities Fund, reports said Tuesday (Dec. 13). The Series B funding will help the marketplace, geared towards SMEs, expand across India and introduce new products to its platform for small business buyers. Ofbusiness also operates a financial services unit, reports said, to help SMEs finance their purchases.
“We at Ofbusiness are passionate about the SME space given our collective experiences and the opportunity it offers in both depth and scope for innovation,” said Ofbusiness Cofounder Asish Mohapatra in a statement. “‘Profitable’ commerce is how we acquire customers. Credit will lock them in, and gradually, we will add more services in the network.”
Another Indian startup, Indifi, revealed $10 million in Series B funding Tuesday for its small business lending service. Omidyar Network, the investment unit launched by eBay Founder Pierre Omidyar, led the round, which also saw participation from existing backers Accel Partners and Elevar Equity. According to reports, Indifi, which acts as an intermediary between lenders and borrowers, will use the funding to expand its platform and add new members to its team. The company also plans to introduce new loan products and ink strategic partnerships with data vendors.
“Indifi … smartly uses data to improve the credit assessment and the cost of discovery of these MSMEs, which are the two main stumbling blocks as to why traditional lenders are not giving credit to this large fragmented sect,” said Omidyar Network Director of Investments Smita Aggarwal in a statement.
Meanwhile, in the U.S., alternative lender BlueVine — which acts as a marketplace for loans, as well as a direct lender — announced a $49 million Series D funding round to place alternative lending in the top spot for venture capital funding this week.
Lightspeed Venture Partners, Menlo Ventures, 83North, Citi Ventures, Rakuten FinTech Fund and Silicon Valley Bank all participated in the investment, announced Wednesday (Dec. 14). The small business lender said it will use the funds to expand its team and introduce new loan products into its offering. According to BlueVine, it expects to facilitate more than $500 million in small business loans in 2017.
U.S.-based Wire announced $5.8 million in Series A funding from several backers of its blockchain-based cross-border payments platform. Amphora Capital, 9fBank and Baofoo.com in China participated in the funding, while Digital Currency Group, Draper Associates and other backers across Silicon Valley provided funding as well. According to Wyre, it can facilitate international payments in 6 hours or less, making it the fastest blockchain-based global payments tool. It said it will use the Series A funding to expand its services into Europe and Latin America.
Sixa has developed hardware for developers that enables them to keep their desktops in the cloud — without the latency plagued by other cloud-based solutions, the company said. In support of the tool, investors provided the startup with $3.5 million in seed funding, reports said Friday (Dec. 9). Tandem Capital provided the investment, reports said. Sixa’s computer has launched in limited beta but already has a waiting list of thousands of developers, an attractive proposition for investors. The company also said it offers the most up-to-date hardware and software for its developer clients at all times.
Money laundering is morphing into “transaction laundering,” EverCompliant says, and it’s a threat to merchants’ digital accounts that can be infiltrated. To combat the trend, the Israeli company announced $9.5 million in new funding Wednesday (Dec. 14), led by Arbor Ventures, along with Carmel Ventures, StarFarm Ventures and Nyca Partners.
“As eCommerce has evolved, money laundering has morphed into a new digital form,” CEO Ron Teicher said in a statement. “Most concerning is that transaction laundering is occurring right under the noses of regulators worldwide.” According to EverCompliant, it has already identified 2 million unregistered merchants in the U.S. alone. With the new funding, it said it will look to fund its research and development operations, strengthen its position in the U.S. and Europe and launch in Asia sometime next year.
California’s Conversica offers artificial intelligence technology already in use by thousands of companies. Its most popular product, AI Sales Assistant, can name IBM and Epson as some of its clients. Investors seem impressed, as they’ve provided $34 million in Series B funding to the company, reports said this week. The company offers AI tools to help businesses automate marketing and customer engagement processes to generate sales.
Providence Strategic Growth Capital Partners led the investment round, which also saw participation from Toba Capital, Wellington Financial LP and Recruit Holdings. Existing backers Kennet Partners, and its founder Ben Brigham, also participated.