Virgin Money Added to Fintech IPO Watch List

IPO Status: Teaser

I track through 3 phases:

– teaser = announced intent, little hard data to evaluate, just what PR wants to tell us. You cannot tease for too long, if no S-1 within 30 days I take them off this list.

– S-1 filed with SEC, hard data available to public

– Public: Mr. Market has delivered an initial verdict.

Headline PR:

“Virgin Money, the banking arm of Sir Richard Branson’s empire, is said to be preparing to announce plans this week for its £2bn London IPO”

Updated IPO Watch List

The Virgin Money IPO story tells us:

1. Fintech is hot – but we already knew that.

2. They won’t fail for lack of capital – raising £2bn

3. The idea of London as the Fintech capital of the world is getting more serious every day.

4. This is classic Richard Branson. He loves taking on industries that have become “fat, dumb and unhappy”. Expect some fun & fireworks.

5. This is what VCs call the “full stack” play. It is a full Bank, fully regulated, able to offer whatever consumers want, but doing it without any legacy baggage – just like Virgin Atlantic and Virgin Cola (and countless other Virgin brands).

That shaggy haired “disrupter before the term was fashionable” does it again.

Oh, wait a minute, it does have some baggage. This is Northern Rock re-born. So, this is maybe more like Citizens Bank and Lloyds Bank IPOs ie a traditional bank. Yet, with a Virgin name on it, methinks it won’t be so traditional. So when we see the S-1, maybe the story is how existing banks are re-inventing themselves to compete against the born-digital ventures.

The 11 Fintech Teams In The Barclays Accelerator

I am in London for the Barclays Accelerator (Powered by Techstars) Demo Day tomorrow when these 11 companies will be demonstrating. Looks like a quality batch. I have made my pre-meeting notes here.


Aire – Enabling financial access for consumers through a next generation credit scoring algorithm. (London, UK)

Lots of people left out by the FICO score. It’s a broken market. Lots of startups going after this.

ClauseMatch – Providing a cloud platform for matching and negotiating master agreements for trading over-the-counter derivatives and commodities. (Arundel, UK)

What happens when OTC trading goes to exchanges? Does this require traders at Big Banks to change behavior?

Crowdestates – Creating a peer-to-peer secured lending platform for residential mortgage deposits. (London, UK)

It’s a problem every young person without rich parents can relate to. Got the problem, keen to hear the solution.

DoPay – Providing financial access to people through their corporate payroll service. (Utrecht, Netherlands)

Don’t understand.

Gust Pay – Making music festivals more cashless using NFC wristbands and smartphone apps. (Cape Town, South Africa)

Love the idea the idea of NFC wristbands instead of the inky stamp to let you back in (showing my age?). But….won’t Apple take this with iWatch?

Katalysator – Providing an in-store experience and payments platform, making it possible to send targeted messages to shoppers based on proximity to products. (Stockholm, Sweden)

As a shopper I would hate this, but I am the world’s most ornery shopper.

Market IQ – Providing actionable intelligence for investment professionals based on both structured (company financials) and unstructured datasets (Social, News, Blogs). (Seattle, USA/Toronto, Canada)

A space I am interested in. Keen to hear whether they use XBRL.

NoviCap – Enabling businesses in credit tight markets to quickly access growth financing by auctioning their outstanding invoices to investors. (Barcelona, Spain)

A space I am interested in. Hi, Frederico.

Tryum – Delivering the Oyster Card for the restaurant industry – a simple, central way to manage loyalty and payments across multiple retailers. (London, UK).

Hmm, Oyster card vs Smartphone?

Virtual View App – Providing augmented reality, together with interactive 360 degree images for social, retail, and commercial use. (London, UK)

Not something I know about.

Wagevance – Providing an ethical and affordable alternative to payday loans, through wage-backed pay advances. (London, UK)

I would love to see this done well. Can they deliver reasonable risk adjusted rates to lenders without gouging consumers?


SIBOS, Ethereum MeetUp and Barclays Accelerator

Fun networking next week, three Fintech events with very different communities:




It will be interesting to see cross-cutting concerns and technologies. I see SIBOS as the leading edge of Fintech 1.0, while Barclays Accelerator will be disruptive start-ups and Ethereum will be the most bleeding edge.

CAN Capital Another Well-Funded Entrant in SME Lending

A commenter mentioned that I had missed CAN Capital when I wrote about OnDeck and Kabbage, so here is my research.

Founded: 1998

Location: NYC

Types of Financing:

  • Merchant Cash Advance
  • Term Loans (via Web Bank)

Web Gleaning (waiting for some entrepreneur to automate the tedious task of copy and paste from multiple sources into a simple Company Intelligence Dashboard, maybe First Rain or DueDil):

Funding from Crunchbase:

$63 Million in 2 Rounds from 4 Investors

Most Recent Funding

$33 Million Series C on January 8, 2014

Interesting: “Seed Round” was $30m in 2012 = 14 years after being founded. Sounds like Growth Equity to me.

Glassdoor: 2.4


IPO: teasing, no S-1

Revenue: N/A

Customer Reviews.

From CardPaymentOptions.

General advice about Merchant Cash Advance:

“Merchant cash advances can seem appealing due to their basic signup requirements and quick time to funding, usually within 7 to 10 days. There is also usually no need for a high credit score, personal guaranty, or lengthy loan application process. But merchants should be aware of a few potential drawbacks to the merchant cash advance industry. Since a merchant cash advance is technically defined as a percentage of future sales rather than a loan, it is not subject to interest rate regulation. This means that you can end up paying much higher rates over the life of a merchant cash advance than with a traditional business loan. Additionally, the unregulated nature of the market means that you should shop around for rates in order to avoid a predatory repayment plan.”

My take:

CAN Capital is fundamentally in the Merchant Cash Advance (MCA) business. I assume that they do Term Loans as a Lead Gen deal with Web Bank ie when they get a customer who does not want MCA, they bring the lead to Web Bank. MCA is high-growth at moment, because retailers have few options, but the APR% is very high, so one assumes most retailers look at MCA as a necessary evil to be replaced as soon as possible (true for my personal random sample of friends who are retailers).

Card Payment Solutions lists 7 companies offering Merchant Cash Advance. I did a quick check on Crunchbase to see which ones received VC funding. One – Merchant Cash & Capital got $75m in Debt from a PE fund, which is not really VC. The other 5 don’t have any VC listed.

Kabbage is also trying to fix the broken small business lending market

I have already reviewed OnDeck, because they are one of three on my Fintech IPO watch-list.

The good news for small business owners: lots of startups are going after this space and competition is good.

The bad news for small business owners: you still pay a lot more than seems reasonable when base rates are so low.

Kabbage must be doing something right – or be very good at pulling the wool over investor’s eyes (which seems unlikely). From Crunchbase:

Funding Received

$465.4 Million in 10 Rounds from 13 Investors

Most Recent Funding

$50 Million Series D on May 5, 2014

Kabbage is a big data play. Basically you allow Kabbage access to a lot of sites that have financial data on your business and it automatically aggregates that, applies some algorithms to create a credit score. That works from an adoption POV, because we are used to granting sites access to our data on Facebook, LinkedIn and Twitter, so its no such a big stretch to add access to our bank account, accounting system, credit card processor etc.

So, how does Kabbage compare to OnDeck? This site has done the testing. They also added PayPal Working Capital, but I don’t view that as a mainstream option as it is only for advances against PayPal revenue. Their summary:

Kabbage is Perfect for the 1 or 2 person eBay, Amazon, or Etsy merchant. They are approximately half the cost of a traditional merchant cash advance.

Rate is 8 % – 24%. That is a pretty wide spread. Zero origination fee. No personal guarantee. Kabbage looks like a good entrant into a huge broken market.

To disrupt the Credit Card business with Bitcoin, innovate on Credit

The Card part has gone digital; it has disappeared into our mobile phone. The plastic will soon seem as antiquated as (insert name of your favorite long dead technology). To young people and to the 70% of the world that is unbanked today, the plastic part of a credit “card” will be nothing more than something you read about in history books.

Once money is digital, transfers can be instant and free. Welcome, Bitcoin.

That leaves the Credit part.

Consumers don’t care about those 2.9% Credit Card fees. That is a Merchant problem. Even Merchants can get reduced fees easily by using Debit Cards rather than Credit Cards. This has been an area of regulatory tussle, but the simple reality is there is no logic in charging 2.9% for the ability to connect to a bank account and withdraw money.

The Apple payment changes the game for small transactions, basically replacing the few notes that you give the barista with a wave of your phone. It works because it is small transactions only. So small scale cash transactions (whether that cash is paper/coins or digital) is problem solved.

That leaves larger transactions where cash is not attractive to the consumer. You want to pay for it over time. Maybe that time is 30 days or maybe it is longer. Now that Peer to Peer Lending is going to prime time (signaled by the Lending Club IPO), there is no reason why lending could not be applied to transactions at the point of sale. It is only a question of some big data and a decent API, the kind of tech problem that is relatively easily solved.

The crazy brilliant IBM Adept fork of Ethereum

Another update as of June 2016 in italics

Since writing this an aeon ago (in Sept 2014), much has happened and much has not happened. So this is an update as of end Jan 2015.


– many more people are connecting the dots between re-decentralization and Internet Of Things.

– many more announcements from IBM and Samsung and Ethereum.

Not Happened:

– any shipping products.

The last point will bring out the skeptics, but I am sticking with two convictions:

1. Crazy brilliant move by IBM. The need for decentralization in IOT is immediate but more long term in finance. IBM gets to make money now in IOT and learn more to make money in finance later.

2. Ethereum is the platform to bet on. There is a lot of debate on this score, but the two big reasons why people are skeptical of Ethereum look less compelling with each passing day:

A. Ethereum is not shipping yet. Yes, but it is getting closer every day. Sure, they could still fail to ship working code, but that does look more unlikely with every passing day.It is shipping now. Obviously it is still a work in progress (but so is every tech product that does not die). Today the preponderance of evidence is that Ethereum will work.

B. Ethereum does not use Bitcoin. It uses Ether. Link A + B and you get cries of Scam! Now that Bitcoin price is falling below its mining costs, the idea of a Blockchain platform that divorces Blockchain from Bitcoin looks increasingly smart. (No, I have not bought Ether, so this is not a pump and dump post).Ethereum DAPPS (some examples here) do also use Bitcoin as the crypto currency. It is wrong to look at it as Ether vs Bitcoin – it is more like “horses for courses”.

Original Post in Sept 2014:

This will be a short post, as I am still getting my head around the implications of this announcement that IBM is creating a fork of Ethereum called Adept (news release as pf Jan 2015  here).

I have been fascinated by Ethereum for some time. (Index to all Ethereum related posts on Daily Fintech are here).

I had a thought about how Ethereum connects with Internet of Things in relation to the professionalization of sharing economy services such as AirBnB here. This is worth reading and the need I was expressing there has been realised in (which represents the best use case of decentralised smart contracts in the wild).

All I know now about the IBM announcement is:

  • This is a massive validation for Ethereum. A company of the scale of IBM ($98 billion of revenue last year) does not get involved with bleeding edge technology like this on a whim.
  • This demonstrates what an amazing company IBM is. To be able to operate simultaneously at the level Fortune 500 Board/CXO and at the level of bleeding edge technology that is usually only understood by a few developers is very, very cool.