Recent news of deposit products from Aspiration, SoFi and Wealthfront point to a wider trend in the market of fintech...
One of the trends we’ve seen recently is the rapidly shifting digital banking landscape and the focus on serving the...
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·Mike Cagney is the Co-Founder and CEO of Figure, a full stack financial services blockchain company with consumer offerings in market or on the way in lending, banking and more. In late-2019, Figure raised $103 million at a $1.2 billion valuation and continues to grow.
Prior to starting Figure, Mike co-founded and ran SoFi, one of the most successful consumer fintech companies ever.
In this conversation, we discuss Figure’s routes to asset origination and capital markets disruption, Figure’s previously unannounced consumer banking and payments offering, lessons learned building and scaling multiple billion dollar companies and more.
SoFi is becoming one of the US's largest and most comprehensive marketplace lenders. Since launching in 2011 they have originated over $15 billion in loans. They market themselves as a new kind of finance company and recently acquired Zenbanx, expanding their products to deposit accounts. SoFi also offers student loan refinancing, mortgage loans, personal loans, wealth management and life insurance.
In Lend Academy's recent podcast with SoFi, CEO Mike Cagney provides some insight on how the company might be valued on a per customer basis. Mike Cagney says larger banks are valued at approximately $10,000 to $100,000 per customer. SoFi currently expects to have 500,000 customers by the end of 2017 and 2 million customers in the next two to three years; at a value of $50,000 per SoFi customer, this would imply a $100 billion valuation. Source
Renren, a publicly listed company in the US operates a social media platform in China but has also made several fintech investments; investments include LendingHome, Fundrise, Motif Investing as well as a significant stake in SoFi; a year ago Renren announced plans to spin off its minority venture stakes into a new subsidiary; under the plan retail investors would receive a cash payout, losing their exposure to SoFi; Ryan Roberts, director at MCM Partners stated in the Forbes article, “It certainly looks like Joe Chen is trying to strip the best assets from Renren, particularly SoFi. SoFi is basically the entire value of the company right now, the core business has really deteriorated.” Source
Digital only banking startups are finding it hard to scale as their offerings are similar to incumbent banks but with some better tech; with the amount of companies starting to increase these banks should think of focusing on a particular niche to get greater traction says Satya Patel, a partner at VC firm Homebrew; customer acquisition costs and a viable revenue model are two of the biggest barriers for companies; online lenders like SoFi have started to offer banking services on top of lending as a means to offer customers more products after providing an initial service. Source.
In this week’s PeerIQ Industry Update they cover the recent rebound of equity markets after a volatile few weeks, regulatory news and a deep dive on fintech M&A; OnDeck announced they had reached GAAP profitability and it was reported that SoFi missed their internal targets; PeerIQ takes a deep dive on why banks should buy online lenders; some of the key reasons inclined ROE potential for the banks and to avoid potentially losing market share to big tech firms who might enter the space in the next few years. Source.
Fintechs have started to follow the Fed and slash rates on savings accounts by an average of 1 percent; the...
SoFi has announced a new fund following a theme discussed at LendIt USA 2017; SoFi's new fund, the SoFi Prime Income Fund, will target family offices; it has raised $105 million from 33 investors each contributing a minimum of $500,000 and will include SoFi's unsecured student and personal loans; it adds to a Credit Opportunities Fund introduced last year; at LendIt USA 2017 panelists discussed new fund creation by platforms; the industry has begun to favor platform fund development over retail fund development; the complexity of marketplace loans and specifically their liquidity risks have kept them from widespread expansion in the retail fund management industry; challenges such as managing international currencies and using alternative leverage strategies are just a few of the retail fund risks for investment managers. Source
Arthur Levitt, former Chairman of the Securities and Exchange Commission, says the recent scandal at SoFi has cost them approval of their special bank charter; he tells the FT, “So for a company as aggressive as SoFi, I think the chances of that happening were slim. Now they become almost impossible.” Source