FunKite CEO Alex Schwartz discusses his 2024 origination and capital deployment expectations with Nathan Latka.
Assertion Not checkable as stated
Schwartz: 90% of merchant defaults are orchestrated by debt settlement companies
“Nine out of 10 of those deals that go into defaults are not because the merchant is running into issues. They're going in because they get the debt settlement companies call them and say, basically stop paying. We're going to negotiate for less, right?”
Insight
Schwartz: Revenue-based financing should be evaluated by capital cost, not APR
“The better way to look at this is, is the cost of capital. So, you know, I'm getting 90,000 dollars. I got to pay back a 100,000 dollars. My cost of capital is 10,000 dollars. That's the true way to look at this. And cause there is no term and that's really, r…”
Assertion Partly supported
Schwartz: LendingClub operates as consumer lead generation, not direct business funding
“So Lending Club is really not a funder.
It's a lot of them are like kind of lead gen.
So you're, they're gathering, they're telling you they're doing it, and then they send it out.
But Lending Club is not really a business funding.
They do it more personal stu…”
Disclosure
Schwartz: FundKite avoids trucking and bail bondsmen due to industry distress
“There's some industries that we don't cater to at the moment... Like transportation and trucking. They're really in trouble. Those guys are really having a big hard time right now. Getting by. We don't do bail bondsman. So truckers, transportation, and we've p…”
Disclosure
Schwartz: FundKite's receivables discount rate ranges from 10% to 28%
“Typically it can range from anywhere from 10 to about 28% discount. So depending on the risk factors that we're facing.”
Disclosure
Schwartz: FundKite discounts balances for 30-day repayments rather than restructuring deals
“No, we don't restructure them, and I've never seen it explode in a way where they just pay back like that. However, you know, if a merchant comes back in 30 days and says, look, I just want to repay the receivables now, we just give them a discount on the bala…”