Israeli fintech company BlueVine announced today the completion of a $102 million financing round. The round came a month after the company declared that it was expanding from providing online loans to comprehensive banking services for small businesses in the US. Together with the current round, BlueVine has now raised a total of $242 million. The company declined to disclose the company valuation for its financing round.
Leading the round was Israeli growth fund ION Crossover Partners, a new investor in BlueVine. The fund was founded last year by ION Asset Management, and has since invested in the most recent financing rounds by Monday.com and Fiverr, after which the latter held its IPO, and in storage company Infinidat.
Other new investors in BlueVine's round were OG Tech Partners, controlled by Eyal Ofer; Vintage Investment Partners; MUFG Innovation Partners, controlled by Japanese firm MUFG Bank; and Maor Investments. Existing investors who participated in the financing round were 83North Venture Capital; Silicon Valley Bank's SVB Capital fund; Citi Ventures; Nationwide Ventures; and M12, Microsoft's venture capital fund.
CEO Eyal Lifshitz, CTO Nir Klar, and Moti Shatner, who is no longer active in the company, founded BlueVine in 2013. The company now has over 300 employees: 100 in its Tel Aviv development center and the rest in the company headquarters in Redwood and at other locations in the US.
BlueVine's management says that following its financing round, the company is planning to enlarge its staff to at least 400 by the end of 2020. As part of this BlueVine plans to add dozens of engineers and developers specializing in data science and artificial intelligence to its development team in Tel Aviv.
Since it was founded, BlueVine has provided online credit services for small and medium-sized businesses in the US, enabling them to receive cash advances on unpaid invoices and a line of credit for periods of 6-12 months. The services are based on technology developed by the company for gathering information about the customer from online sources in order to expedite the decision on granting credit. Among other things, BlueVine accesses the customer's bank account data and the leading quality and reliability ratings in the US. The company also analyzes texts on websites and social media networks in order to test attitudes towards customers requesting a loan.
Last month, BlueVine launched a new online current accounts service for small and medium-sized businesses in the US, in addition to its existing credit service, entitled "Business Banking." "We began with a number of credit products, because we realized that there was a very big gap in the market in the US for in credit to small businesses. In time, however, we saw that banking for small businesses in general was defective, not just credit," Lifshitz told "Globes."
In contrast to a supervised bank, BlueVine cannot use deposits to make loans, and it therefore also raises lines of credit. The company currently has $400 million in available lines of credit, and has granted over $2.5 billion in credit to its 20,000 customers to date. "We don't disclose our revenue, but as of the end of 2019, we will already be over $100 million, and we grew by over 100% this year, in comparison with last year," Lifshitz says.
"Because the banks aren't meeting the needs of small businesses, these businesses are turning to third parties for these things. They come to me for credit, to players like PayPal for clearance, to companies offering payments to suppliers, and even for checkbooks. The result is that a small business gets its financial services from six different service providers who don't communicate with each other, and has a very disconnected and uncomfortable experience," Lifshitz adds.
"We realized that the real opportunity lies in solving problems end-to-end, and although we aren't a bank, we are creating complete banking services here: a number of end-users, interfacing with external systems for payments to employees and suppliers, clearance services, and so forth," Lifshitz says in explaining the change made by the company. "We're not becoming a supervised bank, but in the services that we offer to our customers, the aim is to be a completely end-to-end banking service."
"Globes": Are you considering the possibility of become a supervised bank in the future?
Lifshitz: "It's possible that it will eventually be right for us to become a bank or buy a bank, but not now."
BlueVine currently cooperates with banks providing it with infrastructure and regulatory supervision, while it provides the online services to its customers. The lines of credit and loan products are granted through Celtic Bank, and the banking services, including the current account, are provided by The Bancorp Bank. Both Celtic Bank and The Bancorp Bank are members of the Federal Deposit Insurance Corporation (FDIC). The account includes BlueVine's Mastercard business debit card issued by The Bancorp Bank.
How do your relations with the banks work? Do they accept your assertion that their services is no good?
"A lot of banks have also invested in us: Citibank, Silicon Valley Bank, MUFG Bank, and Nationwide Ventures, which used to hold a bank. They invest in us because they are familiar with our claim - that the banks are not serving small businesses well - from the field, and they know it's true."
Founders: Eyal Lifshitz, Nir Klar, and Moti Shatner
Employees: Over 300, including 100 in Israel
Offices: Tel Aviv and California
Capital raised: $242 million
Main investors: Nationwide Ventures, ION Crossover Partners, M12, Citigroup, Lightspeed Venture Partners, SVB Capital, 83North Venture Capital, and Rakuten FinTech Fund
Published by Globes, Israel business news - en.globes.co.il - on November 19, 2019
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