Just a little note this week stemming from a curious marketing tactic employed in a press release from Irish fintech originator Wayflyer. On Wednesday, Reuters reported that the revenue-based specialty finance lendtech for e-commerce businesses had renewed a second $300M credit facility with J.P. Morgan. Aside from the obvious, that Wayflyer is well on its way to becoming a best-in-class fintech originator for working capital and inventory loans in the e-commerce space, was the emphasis of management on where the capital came from. Reuters reported management having said that the credit facility being sponsored by JPM “underscores the security of [Wayflyer’s] finance base as clients focus more on the source of revenue-based lenders’ funds after the collapse of Silicon Valley Bank.” For all the press releases I’ve read on new funding for SMB and consumer originators, this is the first time I can recall having seen such a pronounced emphasis on the provenance of the capital being used. This doesn‘t hold true for private credit funds, but for traditional bank backers, this is the first time I’ve seen an originator explicitly bang the drum of “our money is safer than the other’s because its money comes from a smaller bank.”
Wayflyer management expanded on its rationale in an attendant release picked up by Fintech Finance News. There, Aidan Corbett, Wayflyer Co-founder and CEO, commented, “Now more than ever, ambitious e-commerce businesses need the support of trusted partners to fulfill their growth potential…This renewed vote of confidence from one of the world’s largest and foremost financial institutions will allow us to help even more e-commerce businesses seize this opportunity, and gives us a huge boost in a market where other providers are losing their access to credit.” (emphasis added)
As this is the first time I’ve witnessed a fintech originator explicitly using the capital source to market its product as better than the competition’s with a “our money is safer than their money” slogan, it’s not clear to me that this constitutes a new trend. However, if the rationale for this emphasis on the source of the capital is a function of actual feedback and concerns from the SMBs taking the loans, it has some interesting implications.
The first being that it evidences a new risk factor in an SMB’s assessment of non-bank, fintech originators, and by extension, a new feature of the SMB lending process whereby the SMB is adopting its own diligence on the originator, as opposed to simply seeking approval and funding, no questions asked. The second implication being that it’s another headwind for the world’s smaller banks – those whose names aren’t Goldman Sachs, JP Morgan, or Deutsche Bank – in trying to deploy capital to creditworthy businesses. The notion that smaller bank capital isn’t as “safe” as the largest institutions is a dangerous idea, whose narrative, if it gains purchase, ends up being a potential threat to profitability.
