Category Archives: Fundraising and Investing

Fintech Scales Vertical SaaS

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Andreessen Horowitz |

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Today, about 90% of public SaaS companies and the 2019 Forbes Cloud 100 have subscription-based revenue models. Now new fintech infrastructure companies have made it possible for SaaS businesses to add financial services alongside their core software product. By adding fintech, SaaS businesses can increase revenue per customer by 2-5x* and open up new SaaS markets that previously may not have been accessible due to a smaller software market or inefficient customer acquisition.

See:  Capital Efficiency During Crisis: The Burn Multiple

This wave is happening first in vertical markets (meaning the market around a specific industry, such as construction or fitness). Vertical software markets tend to have winner-take-most dynamics, where the vertical SaaS business that can best serve the needs of a specific industry often becomes the dominant vertical solution and can sell both software and financial solutions to their core customer base. Moreover, while early vertical SaaS companies – Mindbody, Toast, Shopify – typically started by reselling financial services (primarily payments), they are now embedding financial products beyond payments – from loans to cards to insurance – directly into their vertical software.

With fintech, vertical markets are larger than most realize

Every 10 years or so, we evolve how software is distributed and sold. Each evolution – from on-premise to subscription and bottom-up – has unlocked new markets and grown the overall software market. Until now, these software business models expanded the overall market by growing the user base, from large enterprises to small- and medium-sized businesses (SMBs) and midmarket companies to individual users. But the fintech business model increases the overall market for software in two additional ways:

  1. it increases revenue per user by 2 to 5x* versus a standalone software subscription, and as a result,
  2. it unlocks new verticals where previously the total addressable market (TAM) for software was too small and/or the cost of acquiring customers was too high.

Vertical markets are particularly good candidates for a SaaS+fintech business model. While customers in horizontal markets often try different software vendors, resulting in multiple winners in a market segment, customers in vertical markets prefer purpose-built software for their specific industry and use cases. Once one software solution demonstrates its value, the customer base will consolidate around that company for all its software needs.

Fintech changes the CAC and LTV equation

Fintech also impacts the go-to-market channels for vertical SaaS by growing the revenue per customer and making the product stickier. Put another way: fintech holds, or even lowers, the cost of customer acquisition (CAC), while increasing the lifetime value (LTV). (Read our primer on startup metrics and acronyms.)

See:  Fintech Acquisitions Show Sector Strength Despite Covid-19

Mindbody, for example, earned ~$250/customer per month; while it charged ~$150/month, or ~$1800/year on average for its software plan, it earned an additional ~$100/month from payments revenue.** Thus, payments meaningfully increased the lifetime value (LTV) of the customer, while the cost of customer acquisition (CAC) remained the same, if not lower, since the additional value provided to the customer could accelerate the sale.

Lowering CAC while increasing LTV makes a direct, inside sales go-to-market possible where it previously wasn’t, meaning SaaS companies can acquire new customers that would otherwise have been too expensive. At >$5,000 average revenue per customer, vertical SaaS companies can afford to hire an outbound inside sales team instead of relying on less costly channels, like word of mouth and paid acquisition.

Embedding fintech (rather than just reselling) improves margins and makes the product stickier

The vertical SaaS companies who initially added financial services primarily resold financial services from a third-party. For example, Mindbody offered lending by referring customers to Lending Club.

With new fintech infrastructure players, however, companies can now go from reselling to embedding a variety of financial services, not just payments, directly into SaaS products.

See:  Who needs banks? How tech companies are taking a bite out of financial services

Reselling remains a viable option, and can be easier to launch or used as an on-ramp to embedding financial services. However, embedding results in higher margins and a stickier product overall. It creates a more seamless customer experience: a loan through a familiar interface rather than being redirected to a third-party site. With an embedded service, the software provider can draw on a proprietary set of data – such as contractor sales to inform lending or product information for better warranties – to underwrite risk, factoring in things like seasonality to better tailor the service to each customer’s needs and risk profile. Ultimately, that produces better margins on fintech products and new go-to-market options.

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NCFA Jan 2018 resize - Fintech Scales Vertical SaaS The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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FFCON20 Week 8 Fintech Draft Finals: Congratulations to the Winners! SolidBlock and DivDot

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FFCON20 Week 8 Wrap-Up: Fintech Draft

On August 27, the final week of FFCON20, a total of 8 pitching and demo finalists competed with each other to win the title of 2020 Fintech Draft champion.  Each presenting company delivered a short pitch (max 7mins) followed by answering 5mins of Q&A from prominent investor judges and a crowdvote.  Learn more about the finalists here: https://fintechandfunding.com/fintech-draft-finalists/

Pitching Competition Finalists:             

  • WALO App
  • Trust Anchor Group
  • Sneso.ai
  • SolidBlock
  • FundMore.ai

Demo Competition Finalists:

  • Corl Financial Technologies Inc
  • DivDot
  • CycleBit

 

Congratulations to the Pitching Competition Winner!  SolidBlock

2020 Fintech Draft Pitching Winner SolidBlock wide  - FFCON20 Week 8 Fintech Draft Finals: Congratulations to the Winners!  SolidBlock and DivDot

About SolidBlock

While most other markets have been digitized through modern technological platforms, the real estate market is undergoing a massive transformation. Currently, it lacks the advantage of liquidity and remained tedious, complex, slow-moving and costly. SolidBlock aims to build a new asset class based on real estate, combining the stability of the property market growth and efficiency of blockchain-based financial products.

SolidBlock offers a new platform that allows anybody to invest and benefit in the asset class of real estate and to enable them to protect and grow their wealth. As mentioned in her pitch for SolidBlock, CMO and Co-Founder Yael Tamar believes:

"A big part of why real estate is largely inaccessible to most people is that the field is closed by design.  The nature of the investments are highly illiquid and intensive capital is required that individuals don’t have."

SolidBlock enables investors to buy and sell any property at any time anywhere and aims to function like a NASDAQ for real estate.

SolidBlock 3 - FFCON20 Week 8 Fintech Draft Finals: Congratulations to the Winners!  SolidBlock and DivDot

Their ideal scenario is to transform real estate into a tradeable financial product that gives asset owners and investors opportunities through a securitized token offering platform. The SolidBlock platform is fully operational with deals worth over $100 million and extensive pipeline of over $1 billion worth of projects. By using blockchain technology and global network, they've been able to offer a model that lowers capital requirement, attain global reach, and facilitate tradeability and liquidity.

On taxation from transactions, SolidBlock mentions that it is very similar to that of other financial products in which participating investors should expect a similar amount of taxation as typical financial portfolios in real estate. Taxation through the sale of real estate assets would most likely be categorized as capital gains tax, while receiving a dividend on an asset class would most likely be categorized as income tax.

SolidBlock differentiates themselves from competitors by focusing on providing financial solutions and a bridge into the world of DeFi. SolidBlock believes that now is the time to invest in tokenization with blockchain-based securitization providing infrastructure for trade as well as increased demand for liquid products as a result of COVID-19.

Congratulations to the Demo Competition Winner!  DivDot

2020 Fintech Draft Demo Winner DivDot wide  - FFCON20 Week 8 Fintech Draft Finals: Congratulations to the Winners!  SolidBlock and DivDot

About DivDot

Despite a clear transition in the North American payments environment towards electronic payments in the consumer realm, businesses are still heavily reliant on manual, paper-based processes. DivDot is a payment platform that aims to aid in the transition that enables businesses to send and receive no limit payments for a flat fee. It simplifies and automates businesses’ entire payment cycle from payment initiation to reconciliation.

DivDot CEO and Co-Founder Matthew Smith provided data showing that 668 million cheques were processed in Canada and 14.5 billion were processed in the US for 2018, which he believes is crazy in today’s modern digital age. The aim of DivDot is to help digitize business payments by providing a software to power a business’s payment operations. Users would be able to send payment to suppliers, receive payments from customers, move money between accountants, and set-up recurring payments.

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The DivDot product demo showed how a transaction would work, both for walking through how a customer would send their payment to a business on the platform as well as how a business would pay suppliers. Both of these functions take place in a very straightforward and efficient process. The goal is to provide a simple and secure payment network for businesses to exchange funds while integrating with a large array of financial institutions to draw funds from.

DivDot 2 - FFCON20 Week 8 Fintech Draft Finals: Congratulations to the Winners!  SolidBlock and DivDot

Smith mentions that 70% of businesses today still use checks, partly due to a focus on how accounts want to solve problems rather than the businesses themselves.

Taking feedback from business owners, DivDot believes that business owners have different ideas and want to get paid efficiently and as soon as possible. DivDot is the perfect alternative for its target audience’s needs.


NCFA Jan 2018 resize - FFCON20 Week 8 Fintech Draft Finals: Congratulations to the Winners!  SolidBlock and DivDot The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!



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Start-up JIKO co-founded by ex-Goldman trader is first fintech to complete takeover of a national bank

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CNBC | Hugh Son | Sep 3, 2020

Jiko CEO - Start-up JIKO co-founded by ex-Goldman trader is first fintech to complete takeover of a national bankKey Points

  • A tiny start-up led by a former Goldman Sachs trader has become the first fintech firm to complete the acquisition of a nationally regulated U.S. bank, CNBC has learned.
  • Jiko, a 23-person company co-founded by Stephane Lintner, has closed a deal to purchase Mid Central National Bank, a 63-year old retail bank based in Minnesota, according to people with knowledge of the transaction.
  • Instead of being held in deposits, customer money is swept into Treasury Bills, which are liquidated when a person uses a debit card or withdraws cash from ATMs.
  • The Jiko account generated a 3.3% annualized return last year, far outstripping the nominal rate that most big banks pay, Lintner said. But interest rates have fallen since then as the Federal Reserve slashed rates in response to the coronavirus pandemic.

A tiny start-up led by a former Goldman Sachs trader has become the first fintech firm to complete the acquisition of a nationally-regulated U.S. bank, CNBC has learned.

Jiko, a 23-person company co-founded by Stephane Lintner, has closed a deal to purchase Mid Central National Bank, a 63-year old retail bank based in Minnesota, according to people with knowledge of the transaction. The start-up secured approval for the move from the Office of the Comptroller of the Currency and the Federal Reserve Bank of San Francisco, these people said.

See:  Banks in US Can Now Offer Crypto Custody Services, Regulator Says

The move by Jiko, which bills itself as a new kind of bank, gives it broad access to the highly-regulated U.S. market. Fintech firms have to choose one of three ways to break into this market: acquire a banking institution, apply to become a chartered bank, or partner with an existing lender.

Most of the new breed of online only-banks like Chime and Current chose to team up with existing FDIC-backed institutions, as that is the fastest way to get started. Last month, Varo Money became the first consumer fintech firm to earn a banking charter from the government through an application.

But Jiko, a company that has flown under the radar since its creation in 2016, is the first of the recent wave of fintechs to complete the takeover of a regulated bank, allowing it to offer Americans a broad array of financial services. Lending Club, one of the biggest U.S. providers of personal loans, said it was buying Radius Bancorp in February, but that deal will close in 2021, CNBC reported at the time.

“The move by Jiko represents an important milestone in the maturity and evolution of fintech companies seeking to expand the reach of their products and services,” Acting Comptroller of the Currency Brian Brooks said in a statement. “It demonstrates the value and attractiveness of banks and in particular the federal banking system.”

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NCFA Jan 2018 resize - Start-up JIKO co-founded by ex-Goldman trader is first fintech to complete takeover of a national bank The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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CSA Provide Comments on the Ontario Capital Markets Modernization Taskforce Consultation Report

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CSA | Press Release | Sep 3, 2020

CSA image - CSA Provide Comments on the Ontario Capital Markets Modernization Taskforce Consultation ReportMontreal –  The securities regulatory authorities of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nunavut, Northwest Territories and Yukon (CSA members, or we), today published  an assessment of the Ontario Capital Markets Modernization Taskforce Consultation Report (“Taskforce Report”) issued July 9, 2020.

CSA members welcome the opportunity to provide feedback on the Taskforce Report as part of the CSA’s ongoing mission to deliver a harmonized securities regulatory system, while retaining the regional flexibility and innovation that characterize Canada’s system of provincial and territorial regulation.

“Given the integrated nature of securities markets and the role of the CSA, it is imperative that the CSA members contribute their expertise and analysis to this consultation,” says Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers.

“We are pleased to see that there is a meaningful degree of congruence between the Taskforce proposals and the CSA’s current business plan. However, a key opportunity not identified in the Taskforce Report is Ontario’s adoption of the passport rule, implemented by all other CSA members more than a decade ago to provide market participants with streamlined access to Canada’s capital markets.”

Within the Taskforce Report, 13 of the 47 proposals reflect key CSA priorities or mirror pending CSA policy projects outlined in the 2019-2022 CSA Business Plan and in the June 2020 CSA Interim Progress Report. Another 19 proposals raise policy topics that have either been addressed in previous policy work or in recently adopted policy changes, or may be considered as part of the CSA’s future policy work.

See: 

Ontario capital markets task force proposes big changes

NCFA Open Letter: Government should collaborate with Fintechs

View more NCFA Advocacy initiatives

We support the proposal that Ontario adopt automatic reciprocation provisions which have already been adopted by most other CSA members. However, we strongly believe that a key opportunity for increased efficiency of our securities regulatory system would be Ontario’s adoption of the passport rule. The adoption of this rule would significantly reduce regulatory burden for Ontario market participants whose principal regulator is located elsewhere in Canada. The passport rule creates a single window of access to capital markets across the country, and it covers prospectuses, exemptive relief applications, registration, credit rating organizations and applications to cease to be a reporting issuer.

In the CSA’s view, the Taskforce should set aside three particular proposals from its final recommendations as CSA members have either previously considered and rejected the proposal following detailed policy analysis or the proposal appears to lack broad investor and/or market benefit. Finally, the CSA urges caution if the Taskforce decides to pursue six proposals that aim to change enforcement mechanisms, as those proposals risk reducing the efficacy of the Canadian securities’ regulatory regime and undermining investor protection.

The Ontario Securities Commission (OSC) is not participating in the CSA members’ response to the Taskforce Report as the OSC is in a position to provide input to the Taskforce through other channels.

You may read the CSA members’ collective analysis of the Ontario Capital Markets Modernization Taskforce Report here.

Source:  here

 


NCFA Jan 2018 resize - CSA Provide Comments on the Ontario Capital Markets Modernization Taskforce Consultation Report The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Intro to yield farming and the latest developments in DeFi

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Coinbase Blog | Justin Mart | Jul 24, 2020

DeFi yield farming - Intro to yield farming and the latest developments in DeFiDeFi and the Yield Farming Phenomenon

DeFi protocols exploded in all metrics over the last month, passing $3B in Total Value Locked (TVL), triggered by the launch of the Compound governance token ($COMP) and subsequent “yield farming.”

What is Yield Farming?

Most crypto protocols are designed to be decentralized. For base-level networks (like Bitcoin and Ethereum), this is achieved through Proof of Work, where anyone can be a miner and earn some BTC or ETH in exchange for helping secure the network. In so doing, control of the network is more or less democratic (one CPU one vote).

But how do projects built on Ethereum achieve decentralization? One path is to hand over governance in the form of tokens to the users of a protocol, effectively turning users into stakeholders. This is precisely what Compound (an autonomous borrow/lend protocol) pioneered. They are releasing $COMP tokens, which provides governance rights over the Compound protocol, to the users of the network, distributed pro-rata according to how much they use the protocol.

Sounds good, right? Two observations:

See FFCON20 Related Videos:

Enhancing Traditional Banking and Payments Through Digital Assets

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Rise of Decentralized Finance

Anatomy of Digital Securities

Road to Crypto Approval and What it Means for Fintechs

 

 

  • $COMP governance tokens hold value. Compound is the leading DeFi borrow/lend protocol, and governance rights over this network are powerful.
  • Distributing $COMP pro-rata to users of the protocol is free yield. It’s an added bonus just for using Compound.

When $COMP was released, the token quickly appreciated in value owing to Compound’s leading position in the DeFi ecosystem. The community quickly realized that adding assets to Compound and/or borrowing against them resulted in significant interest rates due to the additional $COMP being distributed (topping 100% APY at some points).

Ergo, the practice of using a protocol to earn native platform tokens is known as “yield farming.”

What Happened with Compound

Yield farming drove a flood of capital into Compound — in a single week in mid-June nearly half a billion dollars was added to Compound, driving total value locked (TVL) from $100M to over $1.7 B at the peak. $COMP similarly opened trading around $80 and exploded to over $300.

COMP total value locked - Intro to yield farming and the latest developments in DeFi

However, not all metrics are as honest as they appear. With Compound, it’s possible to recursively invest your capital, multiplying your yield. It goes like this:

  1. Add 100 USDC as collateral to Compound (earning interest + $COMP)
  2. Borrow 70 DAI against your 100 USDC collateral (paying interest but earning $COMP)
  3. Trade 70 DAI for 70 USDC (bonus: on a DEX)
  4. Repeat Step 1

DeFi composability adds another dimension, where it’s also possible to stack your yield across different protocols. For example, you could lock DAI in Compound, and deposit your compound-DAI tokens into Balancer for additional yield farming.

Popular DeFi tracker defipulse.com does some cleaning on reported TVL to account for these effects. As of July 23, 2020 they report Compound’s TVL at $550M.

See:  Could Bitcoin on DeFi displace banks? Yes

Yield Farming is Not Without Risk

In efficient markets, increased yield is reflective of increased risk. While DeFi is a largely inefficient market today, outsized DeFi yields are still indicative of additional risk:

  • Smart Contract risk: Smart contracts are prone to exploits, with several examples just this year (bZx, Curve, lendf.me). The surge in DeFi has led to millions in value being slammed into nascent protocols, increasing the incentive for attackers to find exploits.
  • System design risk: Many protocols are nascent and the incentives can be gamed. (E.g., Balancer, where FTX was able to capture >50% of the yield due to a simple flaw)
  • Liquidation risk: Collateral is subject to volatility, and debt positions are at risk of becoming undercollateralized in market swings. Liquidation mechanisms may not be efficient, and could be subject to further loss.
  • Bubble risk: The price dynamics of the underlying network tokens (like $COMP) are reflexive because expected future value follows usage, and usage is incentivized by expected future value.

In general, DeFi protocols with significant capital are honeypots for exploits. In just one week, the Balancer protocol was gamed by an exchange, changed its protocol rules, got hacked, and saw the token price go up 3x! In some ways DeFi is still the wild west — be careful out there.

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NCFA Jan 2018 resize - Intro to yield farming and the latest developments in DeFi The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Statement on Modernization of the Accredited Investor Definition

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SEC | Chairman Jay Clayton | Aug 26, 2020

accredited investor definition - Statement on Modernization of the Accredited Investor DefinitionToday, the Commission adopted final rules to modernize and add much needed flexibility to the definition of “accredited investor” by adding new categories of qualifying individuals and entities that have demonstrated financial sophistication such that they should not be excluded from the very large, multifaceted and important private capital markets.  The private capital markets are important to investors and issuers of various types, as well as our economy more generally.  The accredited investor definition is the principal test for investor participation in significant segments of our private capital markets.  It also plays an important role in other state and federal securities law contexts.

The test for individuals to qualify as accredited investors has largely remained unchanged for over 35 years. This test relies exclusively on a person’s income and net worth.  If you make enough money or have sufficient assets, you are eligible to participate, and if you do not, you generally are not eligible.  The Commission’s use of income or wealth as the exclusive proxy for an individual’s financial sophistication and ability to assess and bear risk has long been unsatisfactory.  Individual investors who do not meet the wealth tests, but who clearly are financially sophisticated enough to understand the risks of participating in unregistered offerings, are denied the opportunity to invest in our private markets.  For example, using only a binary test for wealth disadvantages otherwise financially sophisticated Americans living in lower income/cost-of-living areas.

See:  SEC Proposes to Update Accredited Investor Definition to Increase Access to Investments

Moreover, businesses – particularly smaller and early stage businesses, those in geographic areas with lower concentrations of accredited investors, or founders without a wealthy friends-and-family network – are unable to seek investments from otherwise financially sophisticated individuals to access much needed seed and growth capital.  When small and medium-sized businesses often, and increasingly, rely on local sources of capital, particularly at the seed and initial growth stages, these restrictions are limiting and almost certainly stifle opportunity. It has been noted that these wealth-based limits on opportunity can have a disproportionate impact on minority- and women-owned businesses and other underrepresented founders.

With respect to the Commission’s updates for institutional investors, we have received broad, almost universal support for our modernization efforts, including our long overdue recognition of tribal governments, governmental bodies, and family wealth management vehicles as sufficiently sophisticated to participate in the private markets.   In light of that support, I will focus the remainder of my comments on the individual investor test and a few issues that have been raised.

We are expanding the definition of accredited investor to include an alternative to the wealth test for natural persons — specifically, persons who hold certain professional certifications and designations and other credentials from accredited educational institutions.  The Commission will be able to designate these by Order based on a number of criteria.  The initial certifications include the Financial Industry Regulatory Authority, Inc. (FINRA) Licensed General Securities Representative (Series 7), Licensed Investment Adviser Representative (Series 65), and Licensed Private Securities Offerings Representative (Series 82) certifications.  There is no doubt persons who have successfully obtained these certifications – and maintained them in good standing – are sufficiently financially sophisticated to participate in the private markets.

See:  Comment Period Ends on Proposal to Update the US Definition of an Accredited Investor. So Who Said What?

During the notice and comment period, there have been several criticisms of these modest, incremental efforts to modernize our accredited investor rules that I would like to address.  It has been suggested that expanding the accredited investor definition to include these clearly sophisticated persons will result in more private financings.  Some think this is a positive development, some think it is negative.

When you look more closely, and in particular recognize that there are many segments in the private markets and many types of private financing, it is only positive.  Any expansion in private financing due to these amendments, given the limited nature of the expansion of the accredited investor definition, is likely to be most meaningful in the area of small, local business financing.

Adding clearly financially sophisticated persons to the pool of persons eligible to participate in these financings is a laudable and unassailable policy goal.  Of course, many have asked us to go much further in expanding the pool of eligible investors, citing, for example, the wealth gaps faced by underrepresented founders and the importance of improving access to capital for underserved businesses and communities.

See:  RegCF Online Investment: Highest Monthly Activity in July; Small Firms Most Affected by COVID-19 Find Ready Investors and Capital

A number of commenters on the Commission’s efforts in the private markets space have noted that women, minority and other underrepresented entrepreneurs, as well as those outside of the coastal urban areas where traditional venture capital investment has been more focused, often do not have an existing network of wealthy friends and family and, as result, struggle to access capital.

Our Small Business Capital Formation Advisory Committee continues to explore how we might better serve these important segments of our markets.  These are important issues to consider, and I hope that our Small Business Capital Formation Advisory Committee and our Investor Advisory Committee will continue to aid the Commission in seeking improvements to the definition and other areas of regulation that will enhance access to capital in these areas.

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NCFA Jan 2018 resize - Statement on Modernization of the Accredited Investor Definition The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Ahead of Busiest Holiday Shopping Season on Record, Loop Launches First-Of-Its-Kind Line of Credit for Growing eCommerce Brands

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Lending Loop | Thiago De Oliveira | Aug 25, 2020

Lending Loop offers credit to ecommerce brands - Ahead of Busiest Holiday Shopping Season on Record, Loop Launches First-Of-Its-Kind Line of Credit for Growing eCommerce BrandsCanadian fintech Lending Loop has launched an innovative line of credit offering after observing the rapidly changing landscape for small businesses.

TORONTO, ON, Aug 25th, 2020 -- Lending Loop, Canada’s leading small business lending platform, today announced the creation of a new brand “Loop” (getloop.ca) to support growing eCommerce brands. With Q4 2020 expected to be the busiest time for online sellers in history, many brands are searching for cash in order to stock up on much needed inventory - Loop has the solution.

See:  Digital Financial Inclusion in the Times of COVID-19

Loop now offers a new line of credit that is specifically focused on scaling eCommerce businesses who need working capital support to assist with their growth. Loop allows brands to integrate the line of credit with their existing technology in order to provide access to a “real-time credit limit”. Unlike with other finance & lending providers where you typically have to re-apply for funding or wait for an annual re-evaluation, this new offering is a modern approach to funding that offers fast growing direct-to-consumer brands in Canada a dynamic credit limit based on the real-time performance of their eCommerce store.

The move to create a new product that supports eCommerce brands was largely fueled by the shift in consumer behaviours that was brought on by the pandemic.

“COVID-19 has undoubtedly changed the small business landscape and the effects are likely to continue to be felt for years to come” explained Cato Pastoll, CEO. “After the initial chaos caused by the pandemic, we witnessed a rapid increase in business activity for both existing clients who were already selling online as well as those who started offering online shopping options for their customers. Our many conversations with experienced eCommerce entrepreneurs made it clear that there is a significant funding gap and our goal quickly became creating a product that is both founder-friendly and affordable” he explained.

Loop’s new line of credit provides financing to eCommerce companies that meet a minimum eligibility requirement of $5,000 average monthly revenue and at least six months of consistent revenue history. Loop believes that selling equity or giving up a percentage of your sales in order to manage cash flow is a bad deal for entrepreneurs. Businesses can get a credit limit for no cost by requesting access at getloop.ca

See: Lending Loop Surpasses $50 million Milestone and helps thousands of Canadian Businesses and Investors

Features and benefits of Loop’s new line of credit include:

  1. A dynamic credit limit which automatically adjusts every month based on reviews of real time performance to enable fast growing brands to continue to access working capital.
  2. Industry leading interest rates with borrowing costs starting at 1% per month to help with cash flow and improve product margins
  3. A highly flexible payback structure to minimize any pressure on cash flow
  4. The ability to pay suppliers & vendors directly which saves time and save cost on traditional bank transfer and foreign exchange fees
  5. An easy online 10 minute application and receive a credit limit in as little as 24 hours.
  6. A semi-annual interest rate review to ensure businesses are always accessing the best rate possible

About Lending Loop: Lending Loop has worked with almost 1,000 businesses across Canada, helping them to access over $75 Million of fast and affordable financing. Our mission is to provide entrepreneurs and founders with the financial products that make things simpler and easier while supporting them financially so they can focus on growing their business.

View release:  here


NCFA Jan 2018 resize - Ahead of Busiest Holiday Shopping Season on Record, Loop Launches First-Of-Its-Kind Line of Credit for Growing eCommerce Brands The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Ahead of Busiest Holiday Shopping Season on Record, Loop Launches First-Of-Its-Kind Line of Credit for Growing eCommerce BrandsFF Logo 400 v3 - Ahead of Busiest Holiday Shopping Season on Record, Loop Launches First-Of-Its-Kind Line of Credit for Growing eCommerce Brandscommunity social impact - Ahead of Busiest Holiday Shopping Season on Record, Loop Launches First-Of-Its-Kind Line of Credit for Growing eCommerce Brands

CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!



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