A new entrant joined the private business credit world in June, as wealth management and financial technology firm Yieldstreet launched its newest vertical. With long-time business partners Barbara Anderson and Larry Curran forming the core of the new group, Yieldstreet Private Business Credit aims to grow right alongside its borrowers and investors.
At the end of June, wealth management platform Yieldstreet launched a private business credit group and chose industry veterans Barbara Anderson and Larry Curran to lead the way for the new vertical.
The new group is built on the back of i2B Capital, a firm Curran and Anderson formed in 2016 after working together at VION Receivable Investments. Anderson says the focus at i2B was to lend to growing borrowers by raising capital on Wall Street.
“We had just seen so many small and medium sized companies that needed capital to grow. And we wanted to be that senior secured asset-based lender that would help the $2 million and $3 million borrower become a $20 [million] or $30 million borrower,” Anderson says. “Like our growing companies, we ran out of capital ourselves and were looking for a new funding source and that’s when we reengaged with Michael Weisz at Yieldstreet.”
Anderson and Curran already had a working relationship with Weisz and Yieldstreet, having collaborated on several potential transactions previously. With the success of i2B Capital providing what Anderson and Curran both call a “proof of concept,” launching a private business credit vertical just made sense.
“Yieldstreet is a growth-oriented fintech company and they were looking for a platform that they could scale,” Anderson says. “We provided that diverse asset class approach together with our fundamental belief that financing growing companies is the best way to grow an asset-based platform.”
Both Anderson and Curran are clear that their focus at Yieldstreet is on growing businesses. But they don’t just want to be there at the start of that growth, they want to be in for the long haul along with their investors. This is what makes the Yieldstreet private business credit platform unique, Anderson and Curran say, noting that as their borrowers grow, so do their investors and Yieldstreet itself.
“It just seemed like there’s a voracious appetite for well underwritten, collateralized deals that produce high single, low double digit predictable income, which is what we do,” Curran says. “And we thought we just needed to figure out how to do what Barbara and I do here at Yieldstreet.”
“Very often the lender that finances a borrower at $3 million is not the same lender that finances them at $30 million,” Anderson says. “And borrowers often spend more time raising capital than growing their businesses, and we want our management teams to be focused on growing their business and not worried about where the capital is going to come from to support them.”
Just as there is a wide variance in the deal sizes for this new group, there is also variance in the transaction types and terms it offers. These include first in last out facilities, growth capital facilities, direct lending as well as participation with other secured lenders. When it comes to terms, although the group wants to grow alongside its borrowers, it can provide terms of as few as six months all the way up to 48 months.
“We have a number of tools in our toolbox. We can be direct. We can be a participant. We can acquire assets directly. We can acquire portfolios of loans or leases directly,” Anderson says. “So we have a number of ways that we can creatively structure transactions to achieve the common goal of growing our borrowers and growing our investment in those growing borrowers. This also makes us an ideal partner for banks, finance companies, family offices and funds in our industry who are seeking incremental capital to continue funding their own growing borrowers.”
Anderson and Curran’s business partnership is the core of Yieldstreet’s private business credit vertical, which joined the company’s already established units in art, marine and real estate. However, Anderson and Curran took very different roads to find each other.
Anderson comes from a credit-focused background. After completing her 18 months of credit training, she spent time as a loan officer at a commercial bank before going on to senior management positions in factoring and inventory lending, ultimately landing at VION Receivable Investments, a global distressed debt buyer, where she and Curran became colleagues.
As Anderson was climbing the ranks in the banking world, Curran took a different trajectory, saying, “I always seem[ed] to find myself in some sort of a crisis.” He got started working at an NASD broker dealer on the West Coast when the savings and loan crisis hit in the late 80s. Then he became a debt buyer before launching a technical training business in the Southwest. After running that business for 10 years, he returned to debt buying as a head of OSI’s portfolio acquisitions and, in 2008, just as the Great Recession set in, he helped found VION Receivable Investments.
Curran was already familiar with Anderson, as they had collaborated on receivable appraisals and liquidations while she was at her former employer, National City Bank, but when he made Anderson VION’s first hire, they were finally on the same team officially. In the next 12 years, together they built a successful business at VION before co-founding i2B Capital together and launching a new vertical with Yieldstreet.
“Larry challenges me every day to think outside of my own ‘box.’ In doing that over the last 12 years that we’ve been together, I’ve grown as a lender, as a business leader and as a colleague, and for that, I’ll be forever grateful,” Anderson says. “Larry is a visionary and he constantly challenges me to expand my thinking about our business and our clients’ businesses and that’s what I like the most about working with him.”
“Barbara is like having a professor that’s teaching a master class every day and our entire team is learning from her,” Curran says. “She’ll communicate and over-communicate, and it has evolved into a great complement for our business because she is the master professor on all of the logistics of how we get our deals through the process.”
Anderson and Curran’s different experiences, approaches and areas of expertise are reflected in their roles with Yieldstreet. As managing director, Curran takes a more “high level” look at the deals the private business credit group brings to the table. This means weighing the impact on borrowers, investors and Yieldstreet itself. Meanwhile, as senior director and head of underwriting, Anderson screens and structures deals and coordinates due diligence, underwriting, documentation and funding.
A Billion Dollar Business
Despite launching in a period of immense uncertainty due to the COVID-19 pandemic, Yieldstreet’s new group has hit the ground running. Since launch, in addition to receiving plenty of attention on social media, the new group has already had several offerings and is looking to close on three or four of them in August, according to Curran. In fact, the group closed and funded its first two transactions in July for a total of $18.1 million, one in short-term supply chain finance and the other in a two-year bridge loan.
“I think people will love our message because we really have this two-sided marketplace,” Curran says. “At a time where there’s a pandemic, people are scared and the stock market is volatile, and we have this unique balance where we have seekers of income that want to invest in the notes that we provide on the platform here at Yieldstreet. We also have borrowers that need a reliable capital source that can grow with their business.”
“We’ve been very fortunate to have great visibility into the marketplace,” Anderson says. “I think as businesses start to come back online and they start the recovery process from being shut down or curtailed during the pandemic, they will begin thinking about growing their companies again. I think the third and fourth quarter is going to get even busier for us, and we’re excited for that opportunity.”
Curran adheres to the mantra of beginning with the end in mind. Yieldstreet’s ambitions go well beyond these first few months and that gets back to how much it wants to focus on growth. Anderson does not shy away from the group’s ambition to help in that regard, as she hopes to build on the long-term growth partnerships she and the group form with its borrowers.
“I think private business credit can be a billion-dollar business at Yieldstreet,” Anderson says. “I’m excited about the opportunity to pursue that goal and leverage all of the relationships Larry and I have cultivated in the industry to achieve it [in] the near term. Now that we have already closed our first two deals in July, we are hopeful that they will launch on the platform for our investors in August. And that’s a great testament to all the folks here that worked so hard to get us up and running, to get the word out and to support our efforts, so we could get several transactions done early in our execution plan. Now we’re looking forward to our first launches, and from there, the sky’s the limit.” •
– By Phil Neuffer, Managing Editor, ABF Journal