A commenter mentioned that I had missed CAN Capital when I wrote about OnDeck and Kabbage, so here is my research.
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.
IPO: teasing, no S-1
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.”
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.
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