So, this REALLY proves a point. Being first matters BIG TIME. A few years ago online lending was hot and money flowed into that space because it was NEW. No history. Alas, like anything, many of those early firms have suffered with the inevitable ‘flaws’ in the business model coming to light. So, now capital raising in that sector is……..well, difficult. Why? Because these new online lending firms have to explain how they are “different” from the earlier firms (think Lending Club, On Deck, etc). When you’re first everything is “perfect”. When you come in late you have to explain why the “leaders” ran into problems and how you are different. So picky.
- “Bluevine CEO Eyal Lifshitz says every investor now asks how online lending startups will not end up like Lending Club or OnDeck, two early pioneers who have struggled since going public
- It’s a change from 2015 when the online lending space was at its peak of fundraising
- Some people believe a lot of startups will get acquired eventually
Online lending startups looking to raise money now have to answer one important question that didn’t get asked much in the past: how do avoid the fate of early pioneers like Lending Club or On Deck, which have lost nearly 80 percent of their value since going public in 2014.
At least that’s what Bluevine CEO Eyal Lifshitz has experienced in his meetings with venture capitalists in recent years. Bluevine, an online lender that focuses on small businesses, last did an external round in 2016 and has raised a total of $188 million since its founding in 2013.
“I absolutely needed to have a very compelling story on why we’re not the same as our public market comparables,” Lifshitz said. “That is not something I needed to deal with three years ago.”
Their declines have weighed down online lending startups, pressuring them to show how exactly they’re different from their predecessors…”
Full story at CNBC