Thank you Lucinda Shen for a great piece in Axios and Rex Salisbury for your thoughtful analysis. Much of the credit for the recent growth goes to Tom Botts and his team who have been working tirelessly to make travel more affordable for consumers. Thank you all! #fintech #fintechnews #neobanks
Solo-GP @ Cambrian (pre-seed & seed fintech), ex A16Z (Partner - Fintech)
Upgrade bought a BNPL company last year for $100 million and 2x'd it's revenue from $120 to $240 million. Not bad for 12 months. Some thoughts. #1 multi-product strategy -- Don't think that enough people appreciate what Upgrade is doing. They now have a host of lending products (on top of their bank checking and savings accounts) - credit card - personal loans (debt consolidation, major expenses etc) - home improvement loans and now BNPL BNPL is nice since it adds a short duration product that diversifies their loan pool. #2 capital markets - their capital markets expertise can make adding new products (or acquisitions) accretive quickly. Upgrade has a unique capital markets engine. They send their deposits to credit unions and banks, who in turn use those deposits to fund Upgrade's loans. No one else has cracked a structure quite like this. In particular b/c credit unions are not taxed, Upgrade has access to very low cost of capital. They also have lots of credit unions and banks with whom the partner. This means they have a broader credit box for serving their clients. The company they acquired almost certainly had a narrower credit box with fewer capital partners so they could not as effectively monetize the same leads. These sort of product + capital network effects are what drive aggregation in financial services. It's why banks have lots of products and lots of types of customers and can grown inorganically via acquisitions that are accretive very quickly. Will be interesting to see how Upgrade's strategy and business evolves as they continue to grow!