For weeks the FinTech industry has been managing fears and anxieties over the future of the novel alternative finance space. Soon after Lending Club revealed its ex-CEO may have artificially inflated the company's lending volumes, the U.S. Treasury Department released its report on the sector and concluded that the market would likely benefit from greater oversight from regulators.
Talk soon emerged that the alternative lending industry would fail to live up to its once lofty expectations — investors would pull out, and the market would be nothing more than a temporary, minute threat to the traditional banking industry.
Was the finserv space exaggerating threats to alternative finance? This week sure seems to hint that the answer is "yes," considering alt lending startups not only received the most venture capital this week, but they also received the highest funding rounds of any other B2B FinTech industry.
Find out which alt lenders secured $77 million in venture capital, as well as the other startups across the U.S., Europe and Asia that followed suit with their own investment rounds.
B2B startup D3 Banking provides financial institutions and non-banks with technology to strengthen their digital banking strategies for their own individual and corporate customers. Investors on Monday (June 27) provided $10 million to D3 Banking for it to further its research and development operations, reports said.
West Partners provided the funding and, in a statement, president Dennis O'Brien pointed to the firm's ability for "long-term growth and success" in its efforts to help banks offer online and mobile banking services.
"D3 Banking's Commitment to replacing siloed, disparate channels with a consistent digital banking experience that uses data and analytics to provide Amazon-like financial services to the consumer makes this partnership an obvious choice," he said.
India's alternative SME finance market scored the spotlight this week with an impressive $32 million investment led by Bertelsmann India Investments, along with other backers Darrin Capital Management, Mayfield India, Saama Capital and India Quotient.
Lendingkart's Series B funding round, which follows last year's $10 million raise, will be used to enhance its capabilities around data analytics, and to strengthen the technology behind its platform to build out better mobile support, reports said. The firm said it also plans to spread out further into India.
Five Star Business Finance
India's alternative lending industry scored yet another win this week with a nearly $25 million investment from Morgan Stanley Private Equity Asia. Like Lendingkart, Five Star said it would use the funding to expand across India, focusing on the southern region of the country, reports said.
The alternative bank diverges from other alternative lending players, however, as it operates physical branches in India; reports said the firm has 67 branches, and it will look to expand that number up to 250 by 2019. While its flagship service is providing small business loans, the company also recently entered into the housing finance space.
Metropolitan Equity Partners placed a solid $20 million in the U.S. alternative lending space this week, too. The funding landed at Bizfi, a small business lending marketplace integrated into other alternative lenders including Funding Circle, Kabbage and Bluevine.
Bizfi also provides its own funding through the platform, reports said. With the new investment, the startup said it will boost its existing funding programs, work to accelerate the speed at which its small business users get their working capital loans, and launch a national marketing campaign to raise awareness of the brand.
Support for Bizfi – and the major funding volume provided to this space this week – emerged despite some doubts among investors for the alternative lending sector. Metropolitan Managing Partner Paul Lisiak acknowledged this challenge in a statement.
"While the FinTech industry has experienced some recent headwinds, our confidence in both Bizfi and its place in the alternative financing industry has never been stronger," he said.
There's been talk that Brexit may force London's FinTech scene to ditch the U.K. and move elsewhere in the European Union, mainly Germany. Small business accounting software startup Smacc is one reason why the country is so attractive to the FinTech startup community. The firm announced a $3.8 million Series A funding round this week.
Smacc provides SMEs with an automated accounting and financial management platform; the company can automate data capture from receipts to manage expenses, and uses machine learning to streamline invoice tracking, liquidity, and other financial metrics. The investment round was led by Cherry Ventures, Rocket Internet, Dieter von Holzbrinck Ventures, Grazia Equity and angel investors, reports said.
Enterprise intelligence service provider Compass is switching things up a bit. On Wednesday, the company revealed a $1 million seed funding round, marking the first push to pivot its business model toward eCommerce companies that need data analytics to improve sales and performance.
Reports noted that Compass' shift in direction is subtle, as it had already been focusing on data aggregation from major online companies like PayPal, Stripe and Google Analytics. Businesses feed their data streams into Compass and, in exchange, get access to that database. Compass is now seeking to focus these data streams in the eCommerce sector to help other businesses compete with existing industry leaders like Amazon.
New Enterprise Associates, PROfounders and other backers participated in the funding round, according to reports.