The underwriters for the offering are Morgan Stanley, Bank of America Merrill Lynch, Raymond James, J.P. Morgan, Stifel, Deutsche Bank, Jefferies and Needham.
The company operates an online platform for small business lending. Small businesses can apply for a term loan or line of credit on the company’s website in minutes and, using its proprietary OnDeck Score, it can make a funding decision immediately and transfer funds as fast as the same day. Since its first loan in 2007, OnDeck has originated more than $1.7 billion in loans and collected more than 4.4 million customer payments. Loan originations have increased at a compound annual growth rate of 127% from 2011 to 2013 and had a year-over-year growth rate of 171% for the nine months ended September 30, 2014.
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In the filing, OnDeck described its market:
The small business lending market is vast and underserved. According to the FDIC, there were $178 billion in business loan balances under $250,000 in the United States in the second quarter of 2014, across 21.7 million loans. Oliver Wyman, a management consulting firm and business unit of Marsh & McLennan, estimates that there is a potential $80 to $120 billion in unmet demand for small business lines of credit, and we believe that there is also substantial unmet demand for other credit-related products, including term loans. We also believe that the application of our technology to credit assessment can stimulate additional demand for our products and expand the total addressable market for small business credit.
OnDeck originated $458.9 million of loans in 2013, representing year-over-year growth of 165%, and in the first nine months of 2014, the company originated $788.3 million of loans, representing year-over-year growth of 171%, all while maintaining consistent credit quality. In 2013, the company recorded gross revenue of $65.2 million, representing year-over-year growth of 155%. In the first nine months of 2014, there was gross revenue of $107.6 million, representing year-over-year growth of 156%.
The proceeds from this offering are intended to be used primarily for general corporate purposes and to potentially acquire or invest in new technologies, solutions or businesses that complement the company’s model.
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