PE HUB Wire Highlights, 9.20.18

Advent gears up for next flagship fund; Blackstone to buy minority of New Mountain; What tech M&A knows that VC still doesn’t get

It’s Thursday, Hubsters. How is everyone doing?

Last week, I met with Tim Roach, CEO of Lendr. The Chicago specialty finance company, which he founded in 2011, doesn’t plan on taking any venture capital or private equity money anytime soon, Roach said. Instead, the company has a debt facility withMidCap Financial Trust, part of Apollo Global Management, that allows it to borrow up to $50 million. He hopes to boost that to $150 million in the future.

“I’ve seen too many companies take [funding] too early and then what happens? They don’t own the company anymore,” Roach said.

Unlike many of his competitors, Lendr has been profitable since its founding several years ago. “We’ve made money since day one,” Roach said.

Lendr provides flexible financing for small businesses. It targets companies with revenue from $500,000 to $10 million, Roach said.

Securing a loan is one of the biggest difficulties for small businesses. There are about 30 million small businesses in the U.S., according to the SBA. Only about a third, 10 million, have the ability to secure funding from a bank, Roach said. The rest get turned down, he said.

Getting that financing quickly is another issue for small businesses. Lendr can approve a full-underwrite on a financing in as quickly as 37 minutes but averages about 90 minutes, Roach said. Lendr has also launched a debit card geared for small businesses. The debit card will take into account the seasonality of companies, he said. Lendr suspended payments for customers affected by Hurricane Florence. “Most clients will come back on a reduced payment schedule for a short period of time,” Roach said. “In the past, we have provided additional funding for clients in need to help get their business back on track due to these types of natural disasters.”

Like its competitors, Lendr is partnering with an Illinois bank that will help it bypass state laws and avoid licensing requirements. The company expects to announce the agreement in coming months, Roach said.

Because of this partnership, Lendr doesn’t expect to apply for the OCC’s so-called special fintech charter. The national license allows fintechs to operate across the U.S. without having to comply with state-by-state rules, the Wall Street Journal said. “We’ve decided not to pursue the OCC [charter],” Roach said. “If it makes sense then we’ll do it.”

DealsVonage is buying NewVoiceMedia, a cloud contact center-as-a-service provider, for $350 million. NewVoice, of the U.K., has raised more than $100 million in VC funding, according to PitchBook. Investors include Bessemer Venture Partners andTechnology Crossover VenturesSee our brief here.


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