[jbrown]

From OnDeck's draft IPO filing: OnDeck posted annual losses of $16.8m and $24.4m in 2012 and 2013, and losses of $14.4m in the first half of 2014.

[MCA]

My understanding is closer to $18m for 2014 but that might be to date not just first half.

[CO1]

http://www.ft.com/intl/cms/s/0/a4b83...#axzz3ERIr7iDn

[Sean Cash]

From OnDeck's draft IPO filing: OnDeck posted annual losses of $16.8m and $24.4m in 2012 and 2013, and losses of $14.4m in the first half of 2014.

Even though the loss gap is widening each year, their margins are probably improving since loan volume has been rising significantly. Still, the one thing I hate about all this fintech "disruption" is that the secret sauce seems to be about losing money to acquire market share. Square's losing money, Lending Club is losing money, OnDeck is losing money.

Anyone can succeed at a business where you buy a product for $1 and sell it for 80 cents. These companies bring the ability to scale that "model". It really distorts the market. Anyone charging more than OnDeck is decried as usurious, yet the numbers here prove MCA rates to be in line with rational free market pricing, one where a company can stand to earn a profit.

[@jeannette]

Even though the loss gap is widening each year, their margins are probably improving since loan volume has been rising significantly. Still, the one thing I hate about all this fintech "disruption" is that the secret sauce seems to be about losing money to acquire market share. Square's losing money, Lending Club is losing money, OnDeck is losing money.

Anyone can succeed at a business where you buy a product for $1 and sell it for 80 cents. These companies bring the ability to scale that "model". It really distorts the market. Anyone charging more than OnDeck is decried as usurious, yet the numbers here prove MCA rates to be in line with rational free market pricing, one where a company can stand to earn a profit.

Very well said Sean!

[MCNetwork]

The thing is that On Deck isn't exactly "cheap". After adding on their origination costs, their program buy rates are on par with the large funders. It's one thing to charge a 14.99% 12 month program like IOU Central, but On Deck's programs are much pricier. I think most of On Deck's recent losses are due to the fact that they have been spending an exorbitant amount of money on marketing and infrastructure, but once the renewals kick in and brand awareness increases because of the IPO, On Deck will be in the black. It's just a matter of seeing the forest from the trees. There's a lot of smart money involved in the IPO and there's a very good reason behind it.

[jbrown]

There's a lot of smart money involved in the IPO and there's a very good reason behind it.

The smart money wants to get out because the business model is unsustainable when they don't make money - and my guess is they've run out of "new investors."

[MCAVeteran]

INC had an article on going IPO in the US...

http://www.inc.com/jeremy-quittner/a...lls-story.html

[Guy In The Know]

Remember GAAP vs. Cash when considering "profitability".

I know it pains many of you...but OnDeck is killing it.

[MCNetwork]

Yeah...Noah Breslow will have the last laugh!

[Sean Cash]

The FT.com article states that OnDeck submitted registration documents to the SEC last month confidentially. That would explain why OnDeck went into an immediate Quiet Period mode. I couldn't find anything about the filings on EDGAR, and perhaps this is why:

Confidential submission process for emerging growth companies

Pursuant to what is colloquially known as the “IPO On-Ramp,” issuers that are “emerging growth companies” may submit registration statements to the SEC on a confidential basis prior to formally and publicly filing the registration statements. Some additional clarification on these matters was issued as follows:

- The method of submitting registration statements for confidential submission has been established. Since the SEC’s electronic system, known as EDGAR, does not have a means for confidential submission, all such submissions must be made on paper. In further oral guidance, the staff of the SEC has stated that once a confidential submission has been made, the SEC will call the issuer to let it know to whom the matter has been assigned. As of April 11, 2012, the SEC had received two confidential submissions.

Source and further information about the Confidential Submission process
http://www.nixonpeabody.com/SEC_releases_guidance


"Once the drafting process is done with the SEC, the S-1 has to be made public at least twenty-one days before the company starts its road show, when it goes out to pitch investors. "
- the process as told through Twitter's confidential registration

[Chambo]

The thing is that On Deck isn't exactly "cheap". After adding on their origination costs, their program buy rates are on par with the large funders. It's one thing to charge a 14.99% 12 month program like IOU Central, but On Deck's programs are much pricier. I think most of On Deck's recent losses are due to the fact that they have been spending an exorbitant amount of money on marketing and infrastructure, but once the renewals kick in and brand awareness increases because of the IPO, On Deck will be in the black. It's just a matter of seeing the forest from the trees. There's a lot of smart money involved in the IPO and there's a very good reason behind it.

What they are saving by removing ISO's and automating, they are losing in increased default rates.

Come on....80% of their submissions never even speak to an underwriter?

[Chambo]

Yeah...Noah Breslow will have the last laugh!

I wonder what his golden parachute looks like?

[Guy In The Know]

[QUOTE=Chambo;11381]What they are saving by removing ISO's and automating, they are losing in increased default rates.

Don't let facts get in the way of a good rant Chambo!

[JayBallentine]

I think most of On Deck's recent losses are due to the fact that they have been spending an exorbitant amount of money on marketing and infrastructure, but once the renewals kick in and brand awareness increases because of the IPO, On Deck will be in the black. It's just a matter of seeing the forest from the trees. There's a lot of smart money involved in the IPO and there's a very good reason behind it.

1. Agree with you about marketing spend; bidding up PPC.

2. On this business of awareness... 54% of small business owners read at an 8th grade level and wouldn't know an IPO from HBO. An IPO may work for a company like Box.net to give it added legitimacy as it seeks to expand it's enterprise business, but OnDeck is marketing to "Joe the Plumber."

3. About that "Smart Money." Online lenders have undoubtedly used the power of math and technology to create "rosy" scenarios. They then peddle these scenarios and get investors to bite on them. Some investors get into anything the next investor is getting into. "$462 billion overall market and all of my competitors are in? Hell I'm in too." They EXPECT to lose 90% of the time, so anyone in OnDeck expecting to win is a fool... However, when they lose the loss is justified to LP's; "$462 billion overall market that doesn't seem like it'll be consolidating anytime in our lives."

[Franklin]

1. Agree with you about marketing spend; bidding up PPC.

2. On this business of awareness... 54% of small business owners read at an 8th grade level and wouldn't know an IPO from HBO. An IPO may work for a company like Box.net to give it added legitimacy as it seeks to expand it's enterprise business, but OnDeck is marketing to "Joe the Plumber."

3. About that "Smart Money." Online lenders have undoubtedly used the power of math and technology to create "rosy" scenarios. They then peddle these scenarios and get investors to bite on them. Some investors get into anything the next investor is getting into. "$462 billion overall market and all of my competitors are in? Hell I'm in too." They EXPECT to lose 90% of the time, so anyone in OnDeck expecting to win is a fool... However, when they lose the loss is justified to LP's; "$462 billion overall market that doesn't seem like it'll be consolidating anytime in our lives."

For the 8th Graders (like me) reading this forum, can you spell out what LP's means?

[JayBallentine]

For the 8th Graders (like me) reading this forum, can you spell out what LP's means?

Hahahahahah - love the self deprecation.

LP's = Limited Partners; Investors in a Venture Capital Fund.

[Franklin]

Thank you sir.

[isaacdstern]

FT reported that OnDeck posted annual losses of $16.8m and $24.4m in 2012 and 2013, and losses of $14.4m in the first half of 2014.

Are you kidding me.....

does this remind anyone else of the dot com bubble of the late 90's

company losing money hand over fist going goes public and flops on their face

Insane!

[freddy]

Reminds me of the mortgage issues of the early 2000's, the internet bubble of the 90's, Wall St. Junk in the 80's...
In the end - the companies that will remain and gain strength are the companies that are fiscally responsible without looking for "Short-cuts" as a way to acquire "Short-term" business and income.

Also reminds me of the steroid era in baseball - records were smashed, record setting contracts and attendance - but where is Sammy, Mark and Barry these days? They all made money during the pumped up period - but I can bet you that the majority of these players all had the mentality of the junkies, webbies and home busters - they thought the money would keep on rolling in, they would be unstoppable and they would ride the wave forever.

We are in it for the longhaul - together with our partners (ISO's) we intend to be here for a long time.