Tag Archives: profitability

FInance, News

MarketFinance rides embedded lending wave to boosted revenue and profitability

  • MarketFinance announces a year of profitability with revenues increasing 133% in 2021
  • Growth was boosted by product development and its role as delivery partners for the British Business Bank lending schemes, CBILS and RLS, alongside strategic partnerships with Barclays and other fintechs
  • MarketFinance’s fintech platform offers the fastest credit decisions in market, with 100% of applications processed in under 24 hours
  • To build on this growth, MarketFinance is developing lending APIs and investing significantly in embedded finance models, as it targets unicorn status

London, UK – 31st March 2022 – MarketFinance, the leading fintech payments and credit provider, today announced an increase of 133% in revenue, which saw the business hit profitability in 2021, as it invests further in its embedded finance products and digital lending APIs.

MarketFinance’s growth is driven by a surge in demand for working capital over the pandemic from SME borrowers, facilitated by the fintech’s successful roll out of the government-backed Coronavirus Business Interruption Loan Scheme (CBILS) loans and its accreditation as a delivery partner of the Recovery Loan Scheme (RLS). Both schemes saw the company handle over £2.1bn in digital applications with the fastest speed of decision in the market – currently 100% of applicants hear back in less than 24 hours. This growth has been achieved in tandem with the company’s moves to double down on existing strategic partnerships with Barclays Bank UK Plc and international cash management experts Ebury. MarketFinance is also launching new strategic partnerships with Azets, the largest Top 10 regional SME Accountancy and Business Advisory firm, and FTSE 250 enterprise merchants across various sectors.

The fintech saw a close to ten-fold increase in monthly borrowing applications since the pandemic and was able to provide businesses with the quickest ‘time to yes’ on the market via their digital application process. 2019’s £20m-30m volume in submitted monthly applications leapt to an average of £300m per month through 2021, reaching £725m in one month at its peak. Last year MarketFinance advanced over half a billion pounds across its product offering that spans invoice finance, business loans and flex loans, and approved credit limits worth £286m.

MarketFinance has been focused on providing frictionless finance to B2B businesses, in partnership with blue chips, start-ups and public bodies alike for over a decade. The company has benefited greatly from its strong track record of successfully embedding lending services on a cross-sector basis, where MarketFinance’s lending product is integrated within Barclays Online Banking, enabling hundreds of millions of pounds in funds loaned to businesses through the partnership since 2018.

Looking ahead, MarketFinance is building on this growth by developing its lending APIs and investing further in embedded finance models through integrations with software platforms, accountancy platforms, digital banks and B2B marketplaces, as it targets unicorn status. In Q2 2022, MarketFinance will debut its latest digital payments and credit offering for businesses and B2B marketplaces as the next step in its embedded finance strategy.

Anil Stocker, CEO at MarketFinance, commented: “In a market where profits often come second to growth, we are extremely proud to say we have reached this important profitability milestone. Our track record as a B2B credit provider over the last decade, together with our focus on refining our lending APIs, and working towards launching more payment and credit options for B2B marketplaces, stands us in good stead to build a much larger company. We’re still very early in our long-term journey.

“MarketFinance is focused on leading the B2B embedded finance market and transforming it in the same way that Klarna has transformed consumer payments and credit. We will reach our ambitious target through the continued development of pioneering new products, hiring great people to our mission, and maintaining partnerships, such as the one we hold with Barclays, to serve as many businesses with finance as we can.”

Business Research, News

Firms that gain more media visibility can expect to perform better, according to new research

Firms that are more visible in the media increase their value and their stock returns, according to new research from Aalto University School of Business and Goethe University.

Assistant Professor Michael Ungeheuer from Aalto University School of Business and Professor Alexander Hillert from Goethe University analysed the relation between firm visibility and stock returns using comprehensive data on news coverage of U.S. firms ranging from 1924 to 2019.

The researchers found that firms with higher media visibility exhibit predictable improvements in corporate governance, a higher likelihood of forced CEO turnover after poor performance, as well as higher sales growth and higher profitability growth.

“Our research suggests that future returns of more visible firms are significantly higher. This provides new insights on the common view that media coverage affects a firm’s cost of capital through a reduced risk premium for well-known firms” says Ungeheuer.

But why is this? The researchers claim that their research supports previous studies that have suggested that media coverage could increase sales, similar to product market advertising.

As well as this, their research shows how the media could play a monitoring role and prevent value-destroying behaviour by managers.

“If these positive effects of visibility on profitability are not adequately priced, a positive relation between visibility and future stock returns follows” says Ungeheuer.

So, this research implies a positive role for the media, and more generally, a positive role for firm visibility.

As such, managers should learn about the value of visibility from stock markets and, thus, increase their efforts to improve firm visibility in the media.

This paper is published in ‘SSRN’.

News

Family business groups yield the greatest political influence

Family business groups are better positioned to play the political game than their non-family counterparts and benefit their affiliate firms, according to new research by emlyon business school.

The study, conducted by Professors Addis Gedefaw Birhanu and Filippo Carlo Wezel, looked into whether business groups have a competitive advantage in the political environment in comparison to non-family-owned businesses and which type of company ownership is more likely to leverage this advantage.

The researchers found that the overlap of management and ownership, and their stability over time, grants family business groups an edge over other firms when it comes to developing trust and exchanging favours with a low risk of traceability with politicians.

In order to find this, the researchers analysed the context of Egypt and Tunisia when they experienced a sudden and peaceful government change following the Arab Spring.

This government change disrupted the ‘ruling-bargain’ that dominated those countries for several decades and allowed researchers to measure the lost benefits of political influence and identify if certain business groups benefit more from political influence than others.

“Our research found evidence that family business groups have unfairly benefited from the privatisation of state-owned firms, privileged access to licenses and scarce resources such as land for real estate development, and loans from government owned banks,” says Professor Birhanu.

However, the results also revealed that while affiliation with family business groups is beneficial, in contexts like Egypt and Tunisia, abrupt political changes can cost these firms profoundly.

The research revealed that during the Arab Spring, affiliates of family business groups suffered a huge profit loss, as high as 29 per cent, of the average profitability in the sample.

The researchers say that any policy intervention that aims to address the political influence of family business groups should focus on the macro-institutional conditions that make political influence more attractive than attempting to weed them out.

The research paper was published in the journal of  Strategic Organisation.