Future Goldmine or Roadkill? Partnerships abound in Alternative Business Finance Space

abf-wl2015x200 There have been a significant number of partnerships announced in the last year or so around alternative business finance.  Below is a sample of some that are still evolving and another smaller subset of those that were announced and went NO WHERE.

  • GT Nexus - Seabury
  • BaswareMastercard
  • BaswareArrowGrass
  • Tungsten Network – Insight Investment
  • TauliaGreensill
  • TauliaCitibank
  • C2FO – Citibank, Fifth Third Bank
  • QuickbooksOndeck
  • Regions BankFundation
  • Ariba - PrimeRevenue
  • Nipendo / Integrated Finance
  • Ariba / SAP/ Discover -  linking buyer centric apps (ERP/ECC, eProcurement, etc.) to payment & settlement capability for all spend types
  • ...and many more.

We have covered many of these extensively on Trade Financing Matters and Spend Matters.

Already DOA (Dead on Arrival)

It is understandable why these partnerships occur.  In many cases, the vendor offers a platform that can provide the partner the ability to broker or invest in these assets that spin-off.  These platforms may have valuable data, for example, the combination of a purchase order, invoice and invoice approval provides a combination of invaluable information to the broker or end investor. Many of the above partnerships rely on networks eliminating the cost of origination and credit monitoring by tying finance to an approved invoice on a transactional level.

In some cases, the platform is able to provide an online application and data collection capability linked to funding parameters by the entity funding the loan to reduce the cost of origination, sourcing deals, and underwriting credits.  That is the model banks are now going down with small business lending and the likes of Fundation, Quickbooks, and others.

Many of these partnerships are still in early days and it is hard to say whether there will be a real scalable business opportunity.  Time will tell.  But there is no doubt that Big Network + Big Data = Interest by Non Banks.  Trying to access private funds, while having advantages in regulatory capital and compliance relative to their bank brethren, present their own set of challenges.  For one, investors commit capital and want it deployed; there is nothing worse than having a large network where most of the assets are self-funded by corporates themselves.  Second, asset management fees can eat a significant portion of gain, for example, $500M AUM  requires 15% to 20%  to cover 2%/20%

We will be closely following these and other partnerships as part of our Alternative Business Finance Index

Visit here to get a free listing.  If you think you should be included on our upcoming Watch List, Contact me at dgustin at tradefinancingmatters.com and we can chat exchange some thoughts.

 

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