Fintech

Exclusive: Fintech Yendo raised $150 million in debt and $15 million in equity

Published

8 months ago

16 May, 2024

Exclusive: Fintech Yendo raised $150 million in debt and $15 million in equity

When Jordan Miller founded Yendo, a fintech startup that provides secured credit cards for vehicles, he wanted to dive headfirst into a challenge.

“People want to work on payments or things for very high net worth individuals,” Miller told me over Zoom. “But access to cheap credit, in a way that gives people the tools to finance their daily lives without pressure… It’s a really dirty problem, a Middle American problem. To be completely honest, a lot of predatory lending is illegal in California and New York, where most fintech innovation comes from. Nobody has really solved this problem.

Dallas-based Yendo has now raised $150 million in debt financing, led by i80 Group, and $15 million in equity, Fortune exclusively reports. The startup is growing, with a long waiting list, and plans to expand to all 50 states.

Yendo’s idea is essentially this: Car-secured loans have historically performed well because people need their cars and often own them outright.

“We wanted to find an asset class that was the most universally owned and understood so we could provide the absolute lowest possible cost of capital,” Miller said.

Therefore, a vehicle warranty credit card can help subprime consumers access a prime rate. (Yendo’s fixed APR is 29.88%. For reference, Amex’s variable APR is between 19.24% and 29.99% and Chase Sapphire’s variable APR goes up to 29, 99%.) Yendo’s goal is to provide comparable access to those who would not have previously had Esso. “We are both internally and externally locked into our primary rate,” Millet said. “We literally cannot go beyond the current rate.”

This gets to the essence of the biggest outstanding question: How does Yendo keep its product from becoming predatory? How can they meet the need in the market for truly reliable credit, for everyone?

The argument Miller makes is that Yendo’s entire business model will falter if they have to start repossessing cars with any kind of frequency: that would mean the subscription model has failed.

Wesley Chan, co-founder and managing partner of FPV Ventures, had the exact same question as he was carefully analyzing the company and its underwriting process.

“We sat down, looked at his numbers and said, ‘Who do you let in?’” Chan says. “We’ve talked to the team that underwrites it and they want people who will pay them back. The more they own the car, the more they use it, the more they stay loyal to Yendo, the more money they make… They want people to stay with them forever rather than rip them off.

Yendo’s total addressable market is close to $120 billion, the company estimates, and is subject to the same regulatory review that all banking products undergo, Miller tells me. And the company’s customer “is the everyday working person, between the ages of 35 and 50,” Miller said.

“They live in Waxahachie, Texas, Orlando, Florida, or Auburn, Alabama,” he added. “They’re trying to go to school or figure out how to pay for their kids’ books.”

I spoke with one of these clients, Mela Lewis-Moss, a social worker and mother of five, who was referred to me by the company. She praised the app’s ease of use and told me that, even when she accidentally missed a payment, she didn’t feel stressed: Lewis-Moss felt the company treated that moment as a misunderstanding, rather than as an opportunity to penalize her. . For Lewis-Moss, the text-forwarding nature of the customer experience in Yendo really worked.

“You feel like someone is there for you,” Lewis-Moss said, adding that the texting mechanism is intimate and immediate, and builds trust.

How will Miller know, in the coming years, whether Yendo has succeeded and avoided becoming the predatory lender it hopes to replace? I tell him we should plant a flag and he is direct.

“Killing securities lending is a good indicator of success,” he said.

You might say the goal is to give credit where it’s due, in general.

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
E-mail: alexandra.garfinkle@fortune.com
Submit a Term Sheet Newsletter Agreement Here.

Joe Abrams edited the offers section of today’s newsletter.

BUSINESS BUSINESS

– Alkiraa San Jose, California-based on-demand network infrastructure provider has raised $100 million in Series C funding. Global tiger management led the lap and was joined by Dallas Venture Capital, Geodesic capital, NextEquity Partnersand existing investors.

– Genius covera New York-based provider of integrated insurance technology designed to protect e-commerce customers, has raised $80 million in Series E funding. Spark Capital led the round and was joined by existing investors Alba Capital, Capital of King RiverAND G square.

– Stenoa Los Angeles, California-based developer of court reports and other legal technologies has raised $46 million in funding. Capital of the left lane led the lap and was joined by Trinity Capital AND Rivonia Capital Road.

– May Healtha company based in Menlo Park, California and Paris, France developing a treatment designed to restore ovulation in women with polycystic ovary syndrome, has raised $25 million in Series B funding. Bpifrance AND Trill Impact Ventures they led the round and were joined by the founding investor Sofinnova partner.

– Port laboratoryan Athens, Greece-based developer of accounting software for marine operations has raised $16 million in Series A funding. Atomic led the round and was joined by existing investors Notional Capital, Adventure friends, Speedinvest, The pierand other.

– trawaa Berlin, Germany-based energy purchasing and management platform for small and medium-sized businesses has raised €10 million ($10.8 million) in seed funding. Balderton Capital led the lap and was joined by AENU and existing investors Speedinvest, MagneticAND TinyVC.

– Recall.aia San Francisco-based developer of AI technology for video conferencing has raised $10 million in funding. Ridge Ventures led the lap and was joined by Industry initiatives, Y combinator, IrregEx, Capital Bungalow, Hacking VCand other.

– Orange magazinea San Francisco-based developer of electric vehicle chargers has raised $6.5 million in seed funding. Monaco Re Ventures AND Climate they led the tour and were joined by Baukunst, Lincoln Properties Ventures, Crow SealsAND Space Cadet Initiatives.

– Layera San Francisco-based company designed to help software companies integrate accounting and accounting features directly into their platforms, has raised $2.3 million in pre-seed funding. Better initiatives of tomorrow he led the ride and was joined by others.

– c/sidea San Francisco-based cybersecurity platform that monitors and protects third-party scripts has raised $1.7 million in pre-seed funding. Scribble Ventures led the lap and was joined by Roar Ventures, Kathy Korevec, Dan Scheinmann, Jason Warnerand other.

– Numraan AI-powered automation platform for finance and accounting teams based in Dublin, Ireland, has raised €1.5 million ($1.6 million) in funding. Elkstone led the round and was joined by angel investors.

PRIVATE HORSE RIDING

– CallRevusupported by Serenti Capitalacquired Total CX, a Houston, Texas-based customer communications platform for automotive dealerships. Financial terms were not disclosed.

– Gregory FCAsupported by Copley Equityacquired BackBay Communications, a public relations firm based in Boston, Massachusetts and London, United Kingdom, for the financial services industry. Financial terms were not disclosed.

– Hansonsa portfolio company of Capital of the Huronacquired Manufacturers of primary importance, a roofing, replacement window and siding contractor based in Virginia Beach, Virginia. Financial terms were not disclosed.

– PANOS brandsa portfolio company of HKWacquired The Santa Barbara Smokehouse, a smoked salmon producer based in Santa Barbara, California. Financial terms were not disclosed.

EXITS

– Capital of Avathon agreed to acquire Top professional traininga Franklin, Tennessee-based professional training platform for physical therapy, occupational therapy and speech-language pathology, from Greybull Management. Financial terms were not disclosed.

– Sweets estatesa portfolio company of Bain Capitalacquired Kenny’s Big Cakesa cream based pie manufacturer located in Smyrna, Georgia, from Partner Kaho. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

– Actiona Washington, D.C.-based nonprofit has raised $152.5 million for its digital transformation fund focused on financial institutions serving small businesses.

– Shillingthe venture capital division based in Lisbon, Portugal Draycott SCRhave raised €50 million ($54.4 million) for their first Opportunities Fund focused on companies digitizing healthcare, SaaS, e-commerce and other industries, and other technology companies.

PEOPLE

– Diversified compass (New York: CODI)a private equity firm based in Westport, Connecticut Alex Mayes to the vice president.

– VC Pillara venture capital firm based in Boston, Massachusetts, promoted Parker McKee, Tony KulesaAND Thomas de Vlaam collaborate.

– RF Investment Partnera New York-based private equity firm, hired James Bishop as director and Daniel Kim as an associate. Previously, Bishop was with Golub growth AND Kim was with Frontier growth.

Source

Related Topics:Fintech private capital risk capital Terms sheet

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

6 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

6 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

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Fintech

M2P Fintech About to Raise $80M

Published

6 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

Source

Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

6 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

Today

To come
Aveni Assistance
Aveni Detection

Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”