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Xero is getting into business lending, buying Sydney financing startup Waddle for $80 million

startup WaddleXero is moving into lending to small business through invoice financing, announcing plans to acquire Sydney startup Waddle for up to $80 million.

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Accounting software giant Xero Ltd is moving into lending to small business through invoice financing, announcing plans to acquire Sydney startup Waddle for up to $80 million.

Xero (ASX: XRO) said the acquisition of the cloud-based lending platform aligns with its strategy to grow the small business platform and to address critical small business financial needs.

“Waddle’s best-in-class cloud-lending platform, combined with small businesses’ invoice data, will enable the delivery of tailored invoice financing solution,” Xero said in a statement to the ASX on Tuesday morning.

“The acquisition positions Xero to partner with lenders globally, to better serve small businesses’ working capital and other financial needs.”

Waddle, co-founded in 2014 by Simon Creighton and Nathan Andrews, makes it easier for banks and fintechs to lend to small businesses by leveraging their accounting data and automating many of the manual processes in invoice financing.

Waddle has agreements with UK and Australian banks and lenders in Australia and also operates a small direct lending portfolio used primarily for product development purposes. It’s issued more than $330 million in loans since launching in mid-2015 and also partners with MYOB and Quickbooks.

Xero said it plans to explore how to facilitate small business access to capital, beyond invoice financing in the wake of the deal.

The company will pay A$31 million initially for Waddle, with $49 million in subsequent earnout payments based on product development and revenue milestones for a total price of $80 million. Any earnout payments are expected to be settled 50% in ordinary shares in Xero and 50% in cash.

Source: https://australianfintech.com.au/xero-is-getting-into-business-lending-buying-sydney-financing-startup-waddle-for-80-million/

Private Equity

Venture Capital: Yale Endowment’s Legendary Boss Swensen Moves To Change “Mostly White, Mostly Male”

David Swensen stands tall in the field of management of endowment funds at universities. He joined the Yale Investments Office at the age of 31. The fund was then worth $1 billion. Today, Swensen runs $31.2 billion for Yale, second only to Harvard’s corpus of $40 billion. On October 2, Swensen wrote to the investment management firms that handled Yale’s prodigious endowment fund.

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Venture Capital: Yale Endowment’s Legendary Boss Swensen Moves To Change “Mostly White, Mostly Male”

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David Swensen tells Yale’s fund managers to increase diversity, or else.

David Swensen stands tall in the field of management of endowment funds at universities. He joined the Yale Investments Office at the age of 31. The fund was then worth $1 billion. Today, Swensen runs $31.2 billion for Yale, second only to Harvard’s corpus of $40 billion.

His Yale Model transformed the University’s portfolio, investing more in “alternatives” such as venture capital, private equity, hedge funds, and international opportunities. At the same time, progressively lesser amounts went to public equities and bonds.

Diversity and inclusion at Yale’s fund managers

On October 2, Swensen wrote to the investment management firms that handled Yale’s prodigious endowment fund.

The subject: The lack of women and minorities in the asset management industry.

His message: Increase the diversity in the composition of their staff by hiring more women and minorities. And do so early in their careers. If possible, even recruit directly from college campuses, Swensen suggested.

“By and large, the number of experienced investment professionals is fixed. We do not solve the larger problem of underrepresentation by recruiting diverse candidates from other investment organizations. Such position shuffling is a zero-sum game, doing nothing to improve the diversity of the overall industry,” he clarified.

Close mentorship and training, such as imparted through the old-fashioned apprenticeship, can be instrumental in transmitting the hard and soft skills of senior members to the new hires.

“Shadowing experienced colleagues and absorbing their approach to analyzing opportunities provide a solid foundation for a career in asset management,” observed Swensen.

Swensen signed off by asking the 70 Yale fund managers to file a survey detailing the numbers of diverse professionals on their investment team and in support functions at various levels of seniority.

“I plan on asking you for annual updates,” Swensen said.

The Yale endowment fund

Yale’s strategy is to seek high inflation- and risk-adjusted returns through an asset allocation via managers that “improve the operations of public and private businesses.”

The cornerstone of the strategy is mean-variance analysis. That is a portfolio management tool developed by Nobel laureates James Tobin and Harry Markowitz.

“Despite the operational challenges, the rigor required in conducting mean-variance analysis brings an important element of discipline to the asset allocation process,” says Yale.

Asset allocation at Yale has changed dramatically since 1989. At the time about 75% of the portfolio rested in U.S. stocks, bonds, and cash. Currently, domestic marketable securities constitute less than 10%, with the rest being made up of alternatives, foreign equity, absolute return strategies, and real assets.

“Alternative assets, by their very nature, tend to be less efficiently priced than traditional marketable securities, providing an opportunity to exploit market inefficiencies through active management,” says the Yale Investments Office. “The Endowment’s long time horizon is well suited to exploiting illiquid, less efficient markets such as venture capital, leveraged buyouts, oil and gas, timber, and real estate.”

Returns

The endowment earned, net of fees, a 6.8% investment return during the year ended June 30, 2020. The fund grew in value from $30.3 billion to $31.2 billion in that time.

Over the past two decades, the fund earned 9.9% per annum. That outperformed both stocks (which returned 6.2% annually) and bonds (which returned 5.1% annually).

According to the Wall Street Journal, Swensen’s investment approach has reshaped how endowments and foundations invest.

Many of his proteges have gone on to manage other endowments.

Swensen told the WSJ that the Black Lives Matter movement had had a powerful effect on him and the team.

Related Story:    Liquid Alts Offer Endowment Style Investing to Individuals

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Source: https://dailyalts.com/venture-capital-yale-endowments-legendary-boss-swensen-moves-to-change-mostly-white-mostly-male/

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Venture Capital

The SPAC Target List: Private Tech and Media Firms in Their Teenage Years

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A dozen private tech and media firms, ranging from BuzzFeed to Getaround, have been left behind in the initial public offering surge of the past two years. Some are in their teenage years and are struggling to grow, while others appear to be doing fine—but need a way for their investors to exit. For either kind, an SPAC may be their savior.

An explosion of special purpose acquisition companies—firms that raise money in a public offering, with their only purpose to find a business to buy—is creating an opportunity for mature private firms to go public. Merging with a SPAC gives them cash for growth and a stock they can use as currency for acquisitions. It offers investors a more liquid way to sell, potentially at a higher valuation than is available in the private markets now.

Source: https://www.theinformation.com/articles/the-spac-target-list-private-tech-and-media-firms-in-their-teenage-years

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Venture Capital

Skeletons Out of The Closet, Sharleen Ernster, Podcast#136

Sharleen Ernster is the founder and CEO of We Are HAH, a company pioneering sustainable fashion in intimate apparel and redefining sexy for a new generation of women. I sat down with Sharleen in the pre-covid days, and we talked about her many years of experience as a fashion executive and the reasons that led […]

The post Skeletons Out of The Closet, Sharleen Ernster, Podcast#136 appeared first on Gotham Gal.

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Sharleen Ernster is the founder and CEO of We Are HAH, a company pioneering sustainable fashion in intimate apparel and redefining sexy for a new generation of women.

I sat down with Sharleen in the pre-covid days, and we talked about her many years of experience as a fashion executive and the reasons that led her to launch her own company. A couple of weeks after, our reality as we know it completely changed. So, we decided to revisit our conversation and talk about how the pandemic has impacted her life & business.

You can listen to this on Soundcloud here and iTunes here.

Source: https://gothamgal.com/2020/10/skeletons-out-of-the-closet-sharleen-ernster-podcast136/?utm_source=rss&utm_medium=rss&utm_campaign=skeletons-out-of-the-closet-sharleen-ernster-podcast136

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