Facts & Figures of Amazon lending and the Goldman Sachs X-factor

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As I was listening to Cathy Wood`s interview, CEO of ArkInvest, from the Exponential Africa Show; she triggered an insight around investing and disruptive innovation.

One can`t be a banking analyst or an automobile industry analyst anymore, with the same silo-ed focus required over the past decades. Industry-specific analysts bring a lot of experience from their respective sectors but lack the insights of innovative business models enabled by the `future technologies` (that are already here by the way).

I will elaborate on this topic over the next couple of weeks with several examples and insights on where I see the market heading to.

This week I will look at Amazon`s SME lending business facts and figures, as there have been several articles following the announcement of a lending partnership with Goldman Sachs.

Are Banking analysts and Tech analysts collaborating to analyze such partnerships and develop attribution models for the value co-created?

Goldman and Amazon’s lending partnership presents a huge threat to fintechs  Business Insider

Amazon and Goldman Sachs Wade Deeper Into Financial Services Motley Fool

Goldman Has Some Boring Plans Matt Levine Bloomberg

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019.

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Amazon has been offering loans to its marketplace sellers since 2011.

These loans have been by invitation-only. So, on Amazon lending there is no application or evaluation process. It is kind of a reverse process compared to seeking a loan on Kabbage or Square, or Paypal (alternatives for SME borrowing in the US).

On top of this, the Amazon loans come with more restrictions. The loans can only be used to get more inventory and do more business on the Amazon marketplace, NOT on any other distribution channel. Merchants of course, can spend their borrowed funds to `invest` in upping up their game to competing with the Amazon advertising algorithm. Which points to the growth of Amazon`s advertising revenues (read more here Advertising is the new high-priced tobacco and vendors are addicted to it).

Amazon has close to 6 million sellers on its marketplace, however, only 2.5 million are active sellers and furthermore, only 24,000 generate sales over $1million (as of 2018).

That explains why the Amazon lending business has only serviced around 20,000 enterprises since its launch. Tearsheet reports a total of $5billion of loans issued since 2011.

Amazon continued to use the same cautious approach to lending – by invitation only and with restrictions – even after establishing a partnership with Bank of America in 2016. Larger sellers report that they can get much better rates from other lenders (Paypal, Square, Kabbage).

Amazon lending data over the past four years shows that it has not been a business that Amazon sees as strategic.

$661 million loans in 2016

$692 million loans in 2017

$710 million loans in 2018

$863 million loans in 2019

What will change with the Goldman Sachs lending partnership? It can`t simply be the access to a bank`s balance sheet because Bank of America had that capacity too. Last year also, Payoneer, the global payment platform, partnered with Amazon offering working capital for merchants selling on Amazon (figures not yet available).

Will Goldman Sachs enable Amazon to offer competitive real-time loans to all Amazon merchants?

Amazon lending serves only 1% of its active merchants.

What multiple can the Goldman Sachs partnership attain, while still keeping a high percentage of the borrowed funds spent within the Amazon ecosystem?

As Matt Levine says, there could be another scenario which is more in the spirit of Goldman`s interestingness. A Goldman Sachs lending offering for the AWS ecosystem.

The New Breed Of Lender That’s Making Loans To Amazon Sellers Based On Their Sales Data

The post Facts & Figures of Amazon lending and the Goldman Sachs X-factor appeared first on Daily Fintech.

Amazon`s `Other` revenues grow 34%

We have to fly high to see what is happening in the world. We are all trapped in the convenience trap. And as David Siegel says in his recent video

We are pawns

Flying high and using the revenue lens for public companies like Amazon, is where I want to take you today. I took a glance at the 2018 revenues of Amazon. The three main businesses lines are e-commerce, cloud computing, and ad revenues. What struck me was that growth came from ad revenues which are `lumped` into a generic category labeled `Other`.

Remember 2015 was the first year that Amazon reported cloud revenues separately, revealing specifics about its AWS business. Today, four years later, Amazon reports advertising revenues in a category that is named `Other`. According to the GeekWire for 2018, Amazon reported $10.1 billion for the “Other” category. According to Amazon`s financial statements this category “primarily includes sales of advertising services, as well as sales related to our other service offerings”. Fortune reported that in Q1 2019,

Sales in Amazon’s “other” segment, which is mostly advertising, increased 34%, to 2.72 billion. The company’s digital advertising franchise has grown into the third largest in the U.S., trailing only Alphabet’s Google and Facebook, researcher EMarketer estimates.

Let me spell this out loud: Amazon`s advertising business is getting ready to be publicly disclosed as one of the main businesses competing openly with Facebook and Google`s Alphabet. This is important because the top marketplaces are Ad driven and don’t seem to intend to switch from that business model. Actually, it isn’t easy for them to switch to another marketplace business model.

Are you aware that merchants that want to sell on the Amazon marketplace have to compete amongst themselves to reach end customers? That means, paying to advertise on Amazon in order to move algorithmically up the ranking on the Amazon marketplace. This is the game that each and every Western Bigtech uses in its closed ecosystem. You have to understand the algorithm and pay to play based on the rules of the algorithm; be it Amazon marketplace, Facebook, Alphabet.


This realization makes me think that maybe, I only say maybe, merchants borrow from the SME lending arm of Amazon, to finance their advertising campaigns on Amazon. So, Amazon wins twice. I don’t have data on this, so it is only a conjecture.

We know that the technology is there to launch an e-commerce marketplace that vendors can reach end customers (B2C or B2B) without having to pay high advertising fees and incur costs to play on the platform whether they sell or not. Who can execute on this? We just need one success story of such disintermediation. Will it be in selling books or music or baby formula or online education? Will it happen in the West or the East? Will Amazon dare to cannibalize its e-commerce business at least in one area?

What we do know, is that it won’t happen from Facebook whose business is 98.5% based on advertising and their plans for a Facecoin won’t change that business model. It won’t come from Alphabet either, who earns 15% of revenues from non-google ads but 70% from advertising of the Google family (Youtube, Gmail, etc). Both are Titanics in advertising and can`t disrupt themselves.

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

 I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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Fintech India boosted as Blockchain Consortium for SME lending kicks off

Fintech India saw a boost in 2018 with over 132 investments in startups, with a large proportion of them going into Lending and Insurance. The total investment was about $2 Billion as of Nov 2018. Sequioa, Omidyar, and Kalahari capital were the top investors in the sector.

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The New Year opened with a bang as 11 Indian banks have now come together to form a Blockchain consortium to address the under served SME lending market.

The rise of India Fintech in comparison with the likes of China, is still dwarfed. However, the policy makers have provided ample support to the innovation ecosystem to thrive. Initiatives such as NPCI (National Payments Council of India), Digital India Programme have helped.

The Reserve Bank of India (RBI) has approved 11 fintech firms
who could now be payment banks that offer deposit, savings, and remittance services. Unified Payments Interface (UPI) has been the bedrock of the digital payments boom in the country.

You are probably thinking – too many TLAs (Three Letter Acronyms), but the impact of all these measures on digital payments and lending in the country has been significant.

Inspite of all this, the SME lending market in India has been particularly challenging. SMEs in the country relied on a complicated supply chain that was broken and lacked transparency. A Blockchain network would provide lenders with public credit data, that they could use for their underwriting decisions.

The Micro SME lending market is about 17.3% of the overall corporate lending market in India. And after the recent IL FS scam, the corporate lending market needed a boost to tap into the under served SME sector. The 11 banks involved in the Blockchain consortium would first reach out to supply chain vendors and get their records digitsed.

The consortium includes names like ICICI, AXIS and State Bank of India, who together make up a big proportion of the lending market. Getting them all on a single network along with digitised supply chain information, should allow them to make near real time lending decisions to Micro SMEs.


Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

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BBVA and Porsche – Is DIY Corporate lending on Blockchain the future?

Earlier this month, BBVA announced an acquisition term loan offering on Blockchain, where they lent $170 Million to Porsche.

An acquisition loan is a loan given to a company to purchase a specific asset or to be used for purposes that are laid out before the loan is granted.

– Investopedia

The credit line will allow Porsche to expand their retail distribution channels in Europe and Asia. This is yet another feather in the cap for the BBVA, as they set to establish themselves as a front runner in providing innovative financial services.

In executing this credit line facility, BBVA have managed two firsts – first acquisition term loan ever arranged through blockchain technology, and Porsche Holding is also the first non-Spanish borrower using this technology for the negotiation and closing of a corporate loan

For the BBVA, this is by no means their first stab at something adventurous with Blockchain. Earlier to this, they have offered a syndicate loan on Blockchain for $170 Million to Red Electrica. They also offered a line of credit with Repsol for $367 Million. But this is the first time they have extended it to a non-Spanish borrower.

The press release from the BBVA discusses the benefits of using Blockchain in their Corporate lending process. From automating negotiations and minimizing operational risks, to bringing transparency and immutability to the documentation, the technology adds efficiency to the lending process.

“Our aim is to improve clients’ experience by simplifying processes and enhancing the speed of execution”


Frank Hoefnagels, Head of BBVA CIB in Germany

But BBVA have high ambitions and believe that the technology can help convert corporate lending into a “Do it Yourself” process for their corporate and business clients.

This might yet be another PR stunt, however, if they manage to achieve it, the benefits that framework would add is immense. That can be a blueprint for banks and alternative finance firms to use as a lending operating model for SMEs.

There are firms who have managed to gather a lot of intelligence around lending to SMEs. One of my portfolio firms Funding Xchange is a champion at that. That intelligence acheived through facilitating business loans over the years combined with the process efficiencies and seamlessness that Blockchain could potentially offer would create impact at scale.

It is a year when many crypto dreams have crumbled. But dream we shall, for its the season of hope. And as the New Year dawns, there can be only one way forward – Onwards and Upwards. Happy New Year folks!!


Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email