September 16, 2013
By Bob Coleman
Editor, Coleman Report
We sat down with Noah Breslow, CEO, OnDeck Capital, (https://www.ondeck.com/) to discuss the doubling of their debt capacity to main street. Read the interview and the press release below.
Bob Coleman: We’re talking with Noah Breslow; the CEO of OnDeck Capital out of New York. Noah, welcome; congratulations. I understand big news to be announced on Monday.
Noah Breslow: Yes, the big news for us really is the expansion of the credit capacity that OnDeck has available to lend . . .
Bob: Now, is this a venture fund, or is this a bank participation fund?
Noah: It’s a bank participation. This is on the debit side of the business, not the equity side of the business. So OnDeck, you know, historically we have about a $120 million balance sheet capacity . . . We’re announcing on Monday is a new credit facility of over $130 million that will be added to the existing facilities . . .
Noah: bringing our capacity to about $250 million.
Bob: Great. Who are the banks involved?
Noah: We have three main banks involved, all bringing something different to the table – Deutsche Bank, Square One Bank out of North Carolina, and Key Bank.
Bob: Great! Congratulations.
Noah: So the great thing there is each one has an expertise. Square One Bank does a lot of venture funded companies; Key Bank is a SBA lender; and Deutsche Bank does a lot of asset-backed lending. So we really felt that each one of those parties brought something to the table.
Bob: And the numbers are staggering. In around a little less than five years, $600 million to Main Street; and you’re telling me you’re going to do a Half a Billion next year?
Noah: Yeah, half a billion actually this year in 2013. Yeah, that’s the current base for this year; business is growing 150% year over year right now. With all the metrics really locking in where we want them to be; so, a lot of growth. And I think it speaks to, you know, Main Street is hungry for a different way to access capital.
Bob: Let’s talk about that. We’re still in a supply vs. demand argument. The bankers I talk to say hey, it’s a demand issue, we just don’t have enough qualified borrowers walking in through the door. Main Street’s saying no, no, no; it’s a supply issue; I can’t get credit. I met with Gordon Brock, who was kind enough to be on my panel for America’s Small Business Development Company this week in Orlando, and he is saying – you know, we’re talking about the problems and the consensus was, you know the number one problem? Credit scores are still low.
Noah: You know, it’s an interesting thing to look at these different components and how they measure up in meeting the problem. And what we would say is that it’s not a problem of credit capital, it’s a problem of time and cost. You need a platform that can efficiently deliver the capital from Wall Street to Main Street.
Bob: Well said. You guys have done a great job on speed to market . . .
Noah: You can come to our website now and very efficiently click your way through; in ten minutes you can get approved for up to $3,500. If you need $250,000, you can get that in a couple of hours. So it’s a hundred times faster than the traditional banking process. We think this is kind of the missing link in getting capital out there. Capital markets are very, very eager to put money to work its asset class. We had five term sheets for this credit facility; very competitive process; better terms than we’ve ever had before. So we think that side of the equation looks really good. Then you obviously have to reach the Small Business Borrowers; they’re very fragmented, very verticalized by their industries. We’re really focusing a lot – a lot of Gordon’s time is really focused on that right now.
ONDECK CLOSES OVER $130M IN INCREASED CREDIT FACILITY COMMITMENTS;
150% 12-MONTH GROWTH SURGE DRIVES DOUBLING OF DEBT CAPACITY
Funding to Fuel Small Business Lending Demand
NEW YORK, September 16, 2013 – OnDeck (www.ondeck.com), the technology-powered Main Street lender, announced today that it has received funding commitments for credit facilities totaling over $130 million, with participation from Deutsche Bank, Key Bank and Square 1 Bank. OnDeck’s management team has now raised nearly $300 million in equity and debt financing in the last 12 months alone from prominent firms including Google Ventures, Institutional Venture Partners, and a $100 million lending syndicate led by Goldman Sachs in 2012. The new credit facilities enables OnDeck to deploy more funding and develop more flexible financing options to meet the rapidly expanding demand small businesses have for working capital.
OnDeck pioneered the short-term working capital loan with daily ACH repayment six years ago, disrupting the merchant cash advance industry and spawning many industry followers. The company’s advanced technology platform provides a fast and convenient way for small businesses across America to secure the financing they need to grow. OnDeck leverages big data to more efficiently and accurately determine the creditworthiness of a small business, enabling more approvals than models that rely solely on personal credit scores. To date, OnDeck has deployed over $600 million in capital to tens of thousands of businesses nationwide, across 700 different industries.
“Our technology is solving America’s number one small business challenge: access to capital. These credit facilities allow us to broaden our reach to more businesses seeking financing,” said Noah Breslow, chief executive officer, OnDeck. “Our ability to deliver a fast and simple funding solution to the millions of small businesses nationwide, including approval within hours and funding the same day, has solidified OnDeck’s leadership position.”
The company’s industry innovations and rapid growth attracted the nation’s leading banks. The current financing round, driven by OnDeck’s advanced credit models and strong portfolio performance, has resulted in substantially improved financing terms from prior facilities.
“KeyBank is excited to partner with OnDeck, a leader in technology powered small business lending,” said Rian Emmett, managing director, Lender Finance, Key Equipment Finance. “We’re impressed by how effectively OnDeck deploys capital and their commitment to small business owners—it was a natural fit for our structured finance platform.”
“OnDeck continues to revolutionize the way small businesses access capital,” stated Richard Suhl, senior vice president, Asset Based Lending, Square 1 Bank. “We’re pleased to partner with a company that shares our mission of supporting entrepreneurs and the small business community, and we look forward to supporting the company’s growth as it evolves and expands its service offerings.”
Howard Katzenberg, chief financial officer, OnDeck, added, “We are pleased to have worked with esteemed banks such as Deutsche Bank, Key Bank and Square 1 Bank on this new financing. It’s a key accomplishment for the company, one that underscores OnDeck’s proven solution to helping Main Street thrive.”
To learn more about OnDeck, please visit: www.ondeck.com
Launched in 2007, OnDeck uses data aggregation and electronic payment technology to evaluate the financial health of small and medium sized businesses and efficiently deliver capital to a market underserved by banks. Through the OnDeck platform, millions of small businesses can obtain affordable loans with a fraction of the time and effort that it takes through traditional channels. The company’s proprietary credit models look deeper into the health of businesses, focusing on overall business performance, rather than the owner’s personal credit history. The OnDeck system also provides a critically needed mechanism for financial institutions and other business service providers to efficiently reach the Main Street small business market.
OnDeck has deployed over $600 million in capital to tens of thousands of businesses across 700 different industries. The company is growing at greater than 100% annually, and was recently named to Forbes’ 100 Most Promising Companies in America list and the Inc. 500/5000 for a second year in a row. The company also has earned an A+ rating with the Better Business Bureau. OnDeck is financed by some of the nation’s leading venture capital firms, including Google Ventures, SAP Ventures, RRE Ventures and Institutional Venture Partners.
For more information, please visit: www.ondeck.com. For more information, follow OnDeck on Twitter @OnDeckCapital
About Key Equipment Finance
Owned by KeyBank, Key Equipment Finance is one of the largest bank-based equipment finance providers in the U.S. The company provides tailored equipment lease and finance solutions for commercial clients and government entities. Through its vendor services unit, equipment finance programs are developed for manufacturers, distributors and resellers in the U.S., Canada and Europe. Key Equipment Finance also provides lease capital markets support for corporations looking to optimize risk and revenue. Through its lender finance unit, the company provides structured facilities to various sectors of the specialty finance market, including but not limited to: equipment finance and leasing companies, asset based lenders, transportation lessors, and small business and middle market lenders and finance companies.
Headquartered outside Denver, Colorado, Key Equipment Finance manages $8.5 billion in assets and originates nearly $4 billion of equipment financing annually. The company has management and operations bases in Albany, New York; London, England; Frankfurt, Germany; Madrid, Spain; Milan, Italy; Paris, France and Toronto, Canada. The company, which supports clients in 17 countries, employs approximately 500 people worldwide and has been in the equipment financing business for 40 years. For more information, visit http://www.KEFonline.com/
About Square 1 Bank
Square 1 Bank is a full service commercial bank dedicated exclusively to serving the financial needs of the venture capital community and entrepreneurs in all stages of growth and expansion. Square 1’s expertise, focus, and strong capital base provide flexible resources and unmatched support to meet our client’s needs. The bank offers tailored products and solutions aided by the latest in technological innovations. Square 1 has offices coast to coast in Austin, Boston, Denver, Durham, Los Angeles, New York, San Diego, Seattle, Silicon Valley and Washington, DC. For more information, visit www. square1bank.com.