The Startups: Who’s shaking things up (Week ending February 14, 2016)

fintech startups shaking things up

[alert type=yellow ]Every week, Tradestreaming highlights startups in the news, making things happen. The following is just part of this week’s news roundup. You can get these updates delivered direct to your inbox by signing up for the Tradestreaming newsletters.[/alert]

Startups raising/Investors investing

BBVA shuts in-house venture arm, pours $250m into new fintech VC Propel Venture Partners (TechCrunch)
The bank is shutting down its in-house venture arm, BBVA Ventures; and it is taking BBVA Ventures’ portfolio, the $100 million fund it had allocated to the group, and another $150 million, and putting all of it into a new VC called Propel Venture Partners.

More reading: What’s behind the BBVA restructuring (American Banker)

East Coast credit fund puts $250m to work on real estate crowdfunding’s Patch of Land platform (Finovate)
The investment comes in the form of an agreement to buy loans in a “forward flow arrangement,” and represents the credit fund’s first move into the P2P marketplace lending space.

WorldRemit gets $45m at a $500m valuation go grow its mobile money transfer business (TechCrunch)
A year after raising $100 million, London-based startup WorldRemit has picked up more funding. To compete against the likes of Western Union in the world of money transfers — and tap a remittance market that the World Bank estimates will be worth $610 billion in 2016 — the company has added another $45 million to its coffers.

Riskified nabs $25 million to fight ecommerce fraud (VentureBeat)
The Tel Aviv-based company promises its clients, which include Burberry and Viagogo, “instant, guaranteed approvals and peace of mind.” The Phoenix Insurance Company, NTT DOCOMO Ventures, and existing investors Genesis Partners and Entrée Capital also participated in the round. To date, Riskified has raised at least $31 million

Cloud data provider, Xignite closes $20m round (BusinessWire)
Xignite, the leading provider of market data cloud solutions for financial institutions and financial technology companies, today announced that it has raised $20.5 million in a Series C funding round led by Tokyo-based QUICK Corporation, part of the Nikkei Group and Japan’s largest financial information provider.

Robin And Saul Klein’s Localglobe backs online mortgage advisor Trussle (TechCrunch)
London-based Trussle, which raised £1.1 million, challenges the traditional mortgage broker with a tech-driven solution that advises customers on the best deal available, and helps manage the mortgage process if they choose to proceed.

As population becomes more diverse, funding options grow (Locavesting)
Diverse forms of capital are searching to invest in diverse types of entrepreneurs. Here are some various types of funders that invest in entrepreneurs from various backgrounds…

The Startups: Who’s shaking things up

LendingClub models misfire as loan write-offs top forecasts (Bloomberg)
A chart on one of the slides shows that write-off rates for a portion of five-year LendingClub loans were roughly 7 percent to 8 percent, compared with a forecast range of around 4 percent to 6 percent.

Fintech firms want to open accounts at the Bank of England
Payments and technology firms want the right to open bank accounts at the Bank of England, a right traditionally only given to banks and one which gives them access to the payments system

Berkshire Hathaway and Munich Re backstop Lemonade, startup P2P insurer (Intelligent Insurer)
“Consumer trust in the insurance system is at the heart of the insurance business, and is essential to the success of any new venture. With this collection of leading reinsurers, Lemonade’s customers will know this innovative venture is backed by some of the best and most established in the industry.”

Zenefits CEO ousted, compliance saga takes a turn: what’s next for the company? (Insurance Thought Leadership)
The CEO is out at Zenefits (one of the hottest fintech/insurtech/any tech startups) after it was found that 83% of the policies the company sold were done by unlicensed employees. Oops.

Britain’s ex-regulation chief thinks fintech P2P lending losses are going to be huge (BusinessInsider)
But according to Adair Turner, the former Chairman of the Financial Services Authority, which was abolished in 2013 to make way for the Financial Conduct Authority, consumers are taking huge risks when lending and borrowing via P2P services and the future fallout could be terrible.

With 35,000 Investors, This Scrappy Craft Brewer is Just Getting Started

craft brewery and crowdfunding

This post was originally written by Amy Cortese, Founder and Editor of Locavesting, a leading site for local investing news, education, and resources

What is it about a locally brewed, hop-infused beer that makes people so eager to part with their money? Microbrewers have been crushing it in crowdfunding—both on rewards-based sites such as Kickstarter and Indiegogo as well as investment crowdfunding platforms like Localstake and CraftFund.Large_brewdog-logo

Now, a colorful Scottish brewer called Brewdog has hit a new crowdfunding milestone by raising £10 million ($15 million) in its latest “Equity for Punks” crowdfunding campaign—a sum it claims is the world’s largest equity crowdfunding raise to date.

That’s all the more remarkable given the fact that it was funded by thousands of small investors and conducted largely on the company’s own web site. As with its previous crowdfunding campaigns, Brewdog has bypassed not just traditional banks but the crowdfunding establishment, too, preferring to run its own campaign (although it recently listed a minibond offering on British site Crowdcube as well).

“Equity for Punks is all about shortening the distance between us and the people who drink our beer, and enabling us to keep putting passion in people’s beer glasses without resorting to begging funding from big monolithic banks who don’t care about the beer,” said CEO James Watt inannouncing the £10 million milestone.

The campaign, which was launched last April and will continue until April 2016, is seeking a total of £25 million.

In many ways, Brewdog is a paragon of the collaborative age. It’s counter-culture ethos and punk sensibility play to the crowd, and it has leveraged that support to grow from a scrappy operation to one spanning several countries.

Martin Dickie and James Watt
Martin Dickie and James Watt

Brewdog was founded in 2007 by Watt and Martin Dickie, who sold their small batch beer from the back of a van in NorthEast Scotland, accompanied by their dog, which inspired the young brewery’s name. Today, the company has grown to more than £30 million in sales and 350 employees. Its brews, such as Punk IPA and Vagabond Pale Ale, are sold in more than 50 countries, including some 30 Brewdog-owned craft beer bars. It’s building a new eco-friendly brewery in Scotland, and earlier this month broke ground on a new $30 million brewery in Columbus, OH that will serve as its U.S. headquarters.

Most of this was accomplished without the help of banks or venture capitalists (although bank loans financed its first brewing operation in 2007). Instead, Brewdog has relied on the support and engagement of its customers and fans.

“Our crowd is our business’ most valuable asset,” says Watt, a law graduate and former trawler captain. “It underpins everything that we do.”

Crowdfunding was a natural for the Brewdog founders. Just 24 when they started Brewdog, they did what many in their generation have done: they documented and shared their journey into business on social media. In need of capital and wanting to put their fans at the heart of what they did, they offered shares to the crowd through a DIY equity crowdfunding campaign back in 2009—a year before there were any commercial crowdfunding platforms in the UK, and three years before the US would pass the JOBS Act. More than 1,300 people invested.

The self-styled punk businessmen blazed a new trail that others have subsequently followed. But none have done it with such success.

Brewdog followed its first DIY raise with two more, in 2011 and 2013—the latter raising £4 million in oversubscribed issue. With six months to go in its current campaign, the company boasts 35,000 investors.

Throughout, the formula has remained essentially the same: egalitarian offerings with minimum investments under £100, and a social media-fueled campaign with attention-getting pranks, which have included dropping taxidermy “fat cats” from a helicopter over London (pictured above), driving a tank down a Camden street, and posing in the window of a Red Light District.


The Equity for Punks IV prospectus is part manifesto, part financial disclosure. It begins with this declaration:


The minimum investment is £95, which buys you two shares. In return for their investment, “punk shareholders” receive voting shares (although company founders own 75% of the stock), and perks such as a lifetime discount on Brewdog products and an invitation to the company’s popular annual general meeting, or AGM. The company says all profits will be reinvested back into the company.

The exception is the minibond offering on Crowdcube. The Brewdog Bond confers the same perks and discounts, but for the first time offers a steady dividend of 6.5% over the four-year life of the bond. The bond requires a minimum investment is £500.

“The financial benefit of crowdfunding is one of the less important aspects in the overall scheme of things,” says Watt, “These investors are not only our best customers, they are also our best ambassadors.”

The crowd engagement goes beyond funding. Brewdog crowdsources the location of its bars as well as its small batch brew selections (the crowd has favored brews including Pumpkin Head and Dead Metaphor).

Brewdog’s success has prompted some grumbling from the crowdfunding establishment. And, as with many private investments, the pay off for investors is uncertain. The shares are not listed on a stock exchange, so for now are illiquid (although Brewdog says investors can sell them once a year on its proprietary trading platform). The shares do not pay dividends. And according to the FT, Brewdog is valued at a lofty £305 million, implying a trailing price-to-earnings ratio of 115. On top of that, Brewdog lists the usual laundry list of risks in its prospectus.

Still, none of that has stopped tens of thousands of people from owning a piece of Scotland’s fastest growing beer maker.

Wisdom of the crowd? Or drunk on Kool-Aid? Only time will tell. But for now, the punks are having a ball.

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Finding Opportunities Outside the Stock Market [course]

I got great feedback from my interview with Locavesting’s Amy Cortese.  People are frustrated with the stock market and many are looking for new alternatives for their investment dollars.

I decided to put together a mini-course on alternative investing and the greater Slow Money movement.

What you’ll learn

In the Finding Opportunities Outside the Stock Market mini-course, you’ll learn

  • the move afoot to create local stock markets
  • how to invest in private companies without needing to be SUPER wealthy
  • why many investors are investing in farmland and how they’re doing it
  • how to make money while investing in your local economy

How to get the course

Go here to access your course on alternative investing.

With volatility, should investors be thinking beyond existing stock markets?

With all this roller-coaster riding on the ride that is today’s stock market, I was taken by a conversation I had with Amy Cortese, author of Locavesting.

The conversation centered on the after-effects of landmark legislation creating a two-tiered framework of investor classes:

  1. accredited investors (the rich)
  2. the rest of us

This bifurcation of the investor population basically enables the rich to invest in private companies while the rest of us are relegated to investing in public markets (essentially, our current stock exchanges). Continue reading “With volatility, should investors be thinking beyond existing stock markets?”

Beyond the stock market, local investing — with Amy Cortese

Lending Club's Renaud Laplanche on marketplace lending

If last week’s terrible market has gotten you jittery, check out this episode of Tradestreaming Radio with Amy Cortese.

Amy is a best-selling journalist and author of Locavesting: The Revolution of Local Investing and How to Profit From It, a book all about the potential in investing local, why it’s good for small businesses, neighborhoods and investors and the new platforms enabling investors and local businesses to transact.

She joins us to discuss:

  • how investors are tapping into local opportunities and profiting
  • why many investors are adopting the “slow money” model
  • how some local businesses scale globally and how investors can ride their successes
  • crowdfunding’s potential for businesses and investors
  • which local investing platforms are really taking off
  • the future of investing locally Continue reading “Beyond the stock market, local investing — with Amy Cortese”