Double-Digit Funding Rounds for Fintech Startups BlueVine, Chime, Marqeta

[Updated 6/11/18, 11:13 am. See below.] A trio of Bay Area fintech companies announced fundraising rounds in the double-digit millions over the past week to help build out their alternative services in small business lending, consumer banking, and payment cards.

Silicon Valley venture capital firm Menlo Ventures led two of the funding rounds.

BlueVine, an online lender to small and medium-sized businesses, said Tuesday it raised $60 million in a Series E equity funding led by Menlo Ventures, which first backed the Redwood City, CA-based startup in 2015. BlueVine declined to say what company valuation was agreed on by the investors. The online lender serves businesses that are ready to take on new customers, but need capital to meet growing demand.

BlueVine, founded in 2013 by CEO Eyal Lifshitz, extends business lines of credit to smaller businesses, and also advances cash to them based on the revenue they expect to receive from customers who owe them money. That long-practiced lending method, based on billings, is called invoice factoring, or invoice financing.

BlueVine itself relies on a total of $300 million debt financing, secured over the past year, to broaden its customer base and lend on a larger scale. Last month, BlueVine said Credit Suisse had approved a $200 million credit facility for the company.

With its new capital, BlueVine plans to expand both of its existing financing methods, and also to develop new services for small and medium-sized businesses. BlueVine has raised its business line of credit limit to $250,000, up from $150,000 last year, and now advances cash based on invoices as large as $5 million. The company anticipates that its total lending to smaller businesses, since it began providing funds to customers, will exceed $1 billion this year. About 10,000 companies have used BlueVine financing at least once. The company currently serves only U.S. customers, in transactions involving U.S. dollars.

The range of interest rates for BlueVine’s 12-month business line of credit is 10.7 percent to 47.1 percent. A customer who borrowed $10,000 at an interest rate of 20 percent would pay $2,000 in fees after 12 months, in addition to repaying the principal. [Paragraph added to provide information on BlueVine’s interest rates.]

BlueVine declined to disclose whether it has reached profitability.

Menlo Ventures was joined in the fundraising round by previous BlueVine investors and new investors including SVB Capital, the equity investing arm of Silicon Valley Bank. BlueVine says it has now raised a total of more than $500 million in equity and debt funding.

Menlo Ventures also has a stable of consumer fintech companies in its portfolio, including New York-based financial planning app creator Betterment, blockchain and Bitcoin-based payments platform BitPay (based near Atlanta, GA), and San Francisco-based no-fee online bank Chime, the second company to announce a big funding round led by the VC firm in recent days.

Chime secured $70 million in a Series C financing round in which Menlo Ventures was joined by previous investors Forerunner Ventures, Aspect Ventures, Cathay Innovation, Northwestern Mutual, Crosslink Capital, and Omidyar Network, TechCrunch reported May 31.

Chime announced in mid-May that it had opened more than a million accounts for customers, and processed transactions worth more than $4.5 billion, while sparing consumers monthly fees, overdraft charges, and other costs imposed by traditional banks. Chime says those charges amounted to more than $34 billion in 2017. Instead of relying on fees, Chime says it makes money when its customers use their Chime debit cards, which are offered under a partnership with Visa. When the Chime Visa Debit Card holder makes a purchase, Visa charges the merchant a processing fee or “interchange fee,” and shares a portion of that fee with Chime.

Marqeta, a sort of back-office platform for retailers and other clients that want to create their own credit cards and other payment vehicles, announced Tuesday that it raised $45 million in a funding round led by San Francisco-based Iconiq Capital, a private investment firm that serves family offices and other organizations. Iconiq was joined by Goldman Sachs and Marqeta’s prior investors. The company’s fundraising total is now $116 million.

Oakland, CA-based Marqeta is a developer’s workshop for clients who want to create customized payment cards under their own brands. Its cloud-based card issuing and processing technology supports card systems for clients including Instacart, Square, Affirm, Kabbage, and Alipay. Last year, Marqeta also released a digital wallet software development kit for Apple Pay and Google Pay.

Stock photo by scanrail, courtesy of Depositphotos.com.

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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