Thoughts on OnDeck Capital IPO

New York City based OnDeck Capital filed for their IPO.

This is how they describe themselves “OnDeck powers the growth of small business through lending and technology innovation”.

I’m excited about this upcoming IPO for several reasons.  First, this is going to be a positive event for the NYC tech scene, including several NYC based VCs who invested early and many of the employees (216 based in NYC per LinkedIn). Secondly, I’ve been in the financial services sector for over 15 years and haven’t seen many financial related IPOs, so that is nice to see and it is a trend.  Lastly, since the market downturn of 2008, majority of banks have lost their appetite to lend to small business, so this is a much needed product, which is one of the main drivers of their growth.

Some highlights:

  • They have choose the NYSE and will be traded under the symbol ONDK
  • Company started in 2007
  • Major investors are RRE (15.4%), IVP (14.4%), Village Ventures (10.8%), SAP Ventures (10.1%), First Round Capital (6.5%), Google Ventures (6.3%), and Tiger (6%)
  • Top line revenue has grown over 2.5x over the last year.  $107.6M (2014) vs $42M (2013).  Both figures are for 9 months.
  • They are at a $143.4M annual revenue run rate
  • Net loss has shrunk in the last year, which is great news considering revenue has grown over 2.5x.  $14.4M (2014) vs $18.8M (2013).   Both figures are for 9 months.
  • While sales/marketing expense has gone up, it is going up at a slower rate of 1.6x compared to revenue which has grown at 2.5x:  $21.8M (2014) vs $13.6M (2013).  Both figures are for 9 months.
  • Loans originated: $788.3M (2014) vs $290.9M (2013).  Both figures are for 9 months.
  • They are originating more loans (both number and dollars) directly vs indirectly.  43% (2014) vs 19.4% (2012).  This is % of total dollar volume loans.
  • 15+ day delinquency ratio has gone down from 8.9% (2012) to 5.4% (2014).

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