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Income-share agreements or ISAs have been gathering force as an alternative financial model for students, particularly at non-traditional schools like coding boot camps and trade schools. We’ve done some pretty deep dives into the space over the years in terms of how these loan products incentivize students and colleges to work together for better professional outcomes. Given their novelty though, one of the largest barriers to wide adoption remains the lack of capital for these models.
That’s starting to change, and companies like Blair are leading the charge.
Blair told TechCrunch that it has raised $100 million in a new debt facility to fund what it is dubbing “Blair Capital” to fund ISAs at partner institutions. The money came from an undisclosed investor, which was described by Blair CEO Mike Mahlkow as an “institutional capital partner with more than $10 billion under management.”
My colleague Mike Butcher first profiled Blair when it was coming out of YC back in summer 2019. When Blair first got started by co-founders Mahlkow, Constantin Schreiber, and David Nordhausen, it was focused exclusively on the direct-to-consumer market for ISAs. The idea was that students would go to Blair and secure an ISA with a set amount of upfront cash to cover tuition and cost of living, and then choose a school to attend. Underwriting was based on the future income potential of the student.
Blair’s technology platform allowed it to service ISAs for students, such as collecting their payments, tracking their requirements, and giving them updates on their remaining terms. But to really scale up the platform, Blair needed capital to actually underwrite ISAs and increase loan volumes on its platform.
So it looked to raise a debt facility — and then COVID-19 hit. “It was very, very, difficult to raise any kind of debt capital for direct-to-consumer ISAs,” Mahlkow explained in the milieu of a pandemic. But, “we got a lot of inbound demand from education institutions,” and particularly from alternative schools like coding boot camps.
Blair’s team. Photo via Blair.
So Blair rejiggered its platform (now dubbed Blair Servicing) away from D2C lending to being a technology servicing layer for schools offering ISAs as part of their programs. From there, it constructed Blair Capital, this new $100 million facility which can be used by its partner schools to fund their own ISA programs. That means these schools won’t have to raise their own debt capital for their ISAs if they don’t want to.
Unlike Blair’s original approach focused on consumers, underwriting for ISAs is now based on the quality of an individual school, and even more specifically an individual program. So rather than underwriting a person, Blair knows that certain programs have a given return profiles and can underwrite terms of the ISA to fit that risk.
Terms can vary widely between programs. Mahlkow explained that the company more or less has merely floors and ceilings on terms but otherwise is flexible. For instance, the company won’t do income shares above 20% (and often gets queasy even going near that number), and there are repayment caps and limits on repayment time periods as well, with most ISAs it offers being between 1-2 years or a maximum of three years.
Alternative schools with track records of student achievement can use Blair Capital right away. For newer schools without the same operating history, Blair will help guide those schools to build the early track record they need so that the company can underwrite their ISAs in the future. Either way, all schools can use Blair Servicing to handle their loans.
The school dashboard within Blair Servicing. Photo via Blair.
Blair Servicing takes a percentage fee of the money that flows back from an ISA after graduation, while Blair Capital takes an origination fee plus joins in the upside of the ISA itself. The goal is to incentive-align the loans for all parties involved.
The company, which is based in SF, remains lean at six employees. With $100 million capital to fund ISAs though, it hopes to have an outsized impact on this burgeoning industry.
Source: https://techcrunch.com/2021/02/08/blair-launches-100m-facility-to-fund-isas-for-students/
Micromobility startup Helbiz, which now operates across Europe and the USA, is merging with a special purpose acquisition company (SPAC) to become a publicly listed company, giving it a war chest to potentially roll-up smaller competitors in the space, as well as the resources to expand into “cloud” or “ghost” kitchens as part of a move into food delivery.
Helbiz intends to merge with GreenVision Acquisition Corp. (Nasdaq: GRNV), in the second quarter of 2021. The combined entity will be named Helbiz Inc. and will be listed on the Nasdaq Capital Market under the new ticker symbol, “HLBZ.”
The transaction includes $30 million PIPE anchored by institutional investors and approximately $80 million in net proceeds will be fed into Helbiz’s micro-mobility and advertising businesses, which have 2.7 million users.
Helbiz says the merged entity will have a valuation of $408 million, and by run Helbiz’s existing management under CEO Salvatore Palella.
Palella said: “Through this transaction, we’re committed to fulfilling our vision in revolutionizing transport by using micro-mobility to become a seamless last-mile solution.”
He further revealed to me that the company plans to establish ‘ghost Kitchens’ in Milan and Washington DC later this year, with the aim of introducing a 5 minute delivery time.
Helbiz has tried to differentiate itself from other players like Lime and Bird by offering e-scooters, e-bicycles, and e-mopeds all on one platform.
Key to Helbiz’s offering is an integrated geofencing platform that tends to appeal to city authorities who don’t want scooters left in random places, as well as a swappable battery that enables easier charging of the devices. Its subscription service allows users to take unlimited 30-minute trips on its e-bikes and e-scooters every month.
In Italy, the company currently operates a fleet of e-scooters and e-bicycles in Milan, Turin, Verona, Rome, Madrid, Belgrade, and in the U.S. it operates in in Washington, DC, Alexandria, Arlington and Miami.
David Fu, Chairman, and CEO of GreenVision, commented: “Helbiz has distinguished itself as the only company to offer e-scooters, e-bicycles, and e-mopeds all on one user-friendly platform… Helbiz has a proven and capital-light business model that combines hardware, software, and services with extensive customer relationships.”
Late Friday, Oscar Health filed to go public, adding another company to today’s burgeoning IPO market. The New York-based health insurance unicorn has raised well north of $1 billion during its life, making its public debut a critical event for a host of investors.
Oscar Health lists a placeholder raise value of $100 million in its IPO filing, providing only directional guidance that its public offering will raise nine figures of capital.
Both Oscar and the high-profile SPAC for Clover Medical will prove to be a test for the venture capital industry’s faith in their ability to disrupt traditional healthcare companies.
The eight-year-old company, launched to capitalize on the sweeping health insurance reforms passed under the administration of President Barack Obama offers insurance products to individuals, families and small businesses. The company claimed 529,000 “members” as of January 31, 2021. Oscar Health touts that number as indicative of its success, with its growth since January 31 2017 “representing a compound annual growth rate, or CAGR, of 59%.”
However, while Oscar has shown a strong ability to raise private funds and scale the revenues of its neoinsurance business, like many insurance-focused startups that TechCrunch has covered in recent years, it’s a deeply unprofitable enterprise.
Inside Oscar Health
To understand Oscar Health we have to dig a bit into insurance terminology, but it’ll be as painless as we can manage. So, how did the company perform in 2020? Here are its 2020 metrics, and their 2019 comps:
- Total premiums earned: $1.67 billion (+61% from $1.04 billion).
- Premiums ceded to reinsurers: $1.22 billion (+113%, from $572.3 million).
- Net premium earned: $455 million (-3% from $468.9 million).
- Total revenue: $462.8 million (-5% from $488.2 million).
- Total insurance costs: $525.9 million (-8.7% from $576.1 million).
- Total operating expenses: $865.1 million (+16% from $747.6 million).
- Operating loss: $402.3 million (+56% from $259.4 million).
Let’s walk through the numbers together. Oscar Health did a great job raising its total premium volume in 2020, or, in simpler terms, it sold way more insurance last year than it did in 2019. But it also ceded a lot more premium to reinsurance companies in 2020 than it did in 2019. So what? Ceding premiums is contra-revenue, but can serve to boost overall insurance margins.
As we can see in the net premium earned line, Oscar’s totals fell in 2020 compared to 2019 thanks to greatly expanded premium ceding. Indeed, its total revenue fell in 2020 compared to 2019 thanks to that effort. But the premium ceding seems to be working for the company, as its total insurance costs (our addition of its claims line item and “other insurance costs” category) fell from 2020 to 2019, despite selling far more insurance last year.
Sadly, all that work did not mean that the company’s total operating expenses fell. They did not, rising 16% or so in 2020 compared to 2019. And as we all know, more operating costs and fewer revenues mean that operating losses rose, and they did.
Oscar Health’s net losses track closely to its operating losses, so we spared you more data. Now to better understand the basic economics of Oscar Health’s insurance business, let’s get our hands dirty.
Ifeoma Ozoma, a former Pinterest employee who alleged racial and gender discrimination at the company, is co-leading new legislation with California State Senator Connie Levya and others to empower those who experience workplace discrimination and/or harassment. Introduced today, the Silenced No More Act (SB 331) would prevent the use of non-disclosure agreements in workplace situations involving all forms of discrimination and harassment.
“It is unacceptable for any employer to try to silence a worker because he or she was a victim of any type of harassment or discrimination—whether due to race, sexual orientation, religion, age or any other characteristic,” Levya said in a statement. “SB 331 will empower survivors to speak out—if they so wish—so they can hold perpetrators accountable and hopefully prevent abusers from continuing to torment and abuse other workers.”
This proposed bill would expand the current protections workers have through the Stand Together Against Non-Disclosures Act, also authored by Levya, that went into effect 2019. Ozoma, along with former coworker Aerica Shimizu Banks, came forward with claims of both racial and gender discrimination last year. They eventually settled with Pinterest, but the STAND Act technically only protected them for speaking out about gender discrimination. This new bill would ensure workers are also protected when speaking out about racial discrimination.
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“It was a legal gamble,” Ozoma told TechCrunch about coming forward with claims of both racial and gender discrimination, despite having signed an NDA. Pinterest could’ve decided to sue both Ozoma and Banks, Ozoma said, but that would’ve required the company to admit wrongdoing.
“Technically, we weren’t [supposed to talk about racial discrimination] and that’s what most companies bank on,” she said.
It’s a long road ahead for the bill, which needs to be passed by the legislature and ultimately signed into law by CA Governor Gavin Newsom, but it would represent a monumental shift in the tech industry, if passed.
“It would be huge and not just for tech, but for your industry as well,” she told me. “I believe that we don’t have real progress unless we approach things intersectionally and that’s the lesson from all of us.”
Lost amongst all the IPO chatter of the mega-unicorns are a crop of companies reaching their stride, often flush with capital, ready with big plans, and still with some time before they go public. This group of companies are what we’re calling our $50 million annual recurring revenue (ARR) group, though we’re not too strict on that revenue figure.
Close enough will do.
A little bit ago we kicked off the series by looking at OwnBackup and Assembly. Today we’re continuing the series, digging into SimpleNexus and PicsArt. Next up is and Synack, and we have an interview with Kaseya on deck. The latter company is a bit oversized for our cohort, but we’ll figure out what to do with our notes from that chat in due time.
As a reminder, we’re looking at startups that are around the $50 million ARR mark because our 2020 exploration of $100 million ARR companies wound up merely taking looks at companies, like Lemonade, that were going public in short order. We’ll still do the occasional piece on the group, but we’re focusing on smaller firms this year.
So, into the breach with notes on SimpleNexus and PicsArt, drawing on public information concerning their fundraising history and product, and interviews with both companies. Let’s see what we can learn from their growth!
SimpleNexus
SimpleNexus is a Utah-based technology company that provides digital mortgage software. The company most recently raised $108 million in January of this year, a Series B that we sadly lack a valuation for.
The company is growing quickly, with founders Matt Hansen and Ben Miller telling TechCrunch that they expect to scale from $30 million to $58 million in the next 12 months. That puts the the company comfortably into our new group.
SimpleNexus’s product is sold to banks and other financial institutions, helping provide a hub — a simple nexus, if you will — providing consumers a single login to manage their home-buying process from search to purchase. The software itself is sold on a SaaS basis, often white-labeled to banks.
But while SimpleNexus has seen success with its current model, claiming to touch around one in every eight mortgages, its founders told TechCrunch in a video call that they have bigger aspirations. Hansen, who is also the company’s CEO, said that in the future its service could stick with customers after they buy a home, perhaps helping them connect utilities, find appraisers, and manage their home.
TechCrunch was curious about the company’s recent capital raise, and how it may impact SimpleNexus’s ramp to nearly $60 million in revenue by January 2021. Per the company, it wasn’t looking for capital, but after receiving some inbound offers to sell its entire business, which weren’t what its founders wanted, it decided to raise more external capital instead. Insight, which led the round, was excited about their company, the founders said, thanks to its customer growth and revenue expansion.
