Dallas-based Sprout Funding has acquired its competitor Jet Capital, a move that will enable Sprout’s strategy to advance in the fintech space as a lender in small business alternative financing.
Although the financial terms were not disclosed, Sprout Funding Founder Bradley Woy said in an interview with the Dallas Business Journal that Jet Capital was originating $20 million a year in new advances.
Woy explained that the acquisition made sense because Sprout and Jet Capital had a similar footprint and business focus and both were highly active in the Lone Star State.
Additionally, Jet Capital had technology assets that are expected to help Sprout to further scale and operate from an underwriting and servicing perspective, Woy said.
Jet Capital was a Hurst-based online financial services provider that helped small businesses that didn’t have access to traditional lenders. Founded in 2015, Jet focused on businesses with 20 or fewer employees. The firm focused on advances under $30,000 and used a lending and underwriting model through a proprietary IT platform developed by Jet.
Jet Capital’s Allan Thompson has joined Sprout as senior vice president of Revenue. Overall, Jet Capital’s employees joined Sprout, and the acquisition brought Sprout Funding to just under 20 people. One employee from Jet Capital chose to take a different opportunity, Woy said.
Woy said he's seen other alternative lending platforms that structure deals that are more one-sided to the lender. However, since the industry is much more well-known today than it was a decade ago, he sees a future in the space where deals are structured that work more for both sides of the table.
“Finding that medium where the lenders are happy and the borrowers' are happy and some of that is just good old fashioned responsible lending,” he said.
“But I think that’s a big thing that's happening now. There's a move towards responsible lending and people finding structure that works for them and doesn't do their business harm, but does them good for the growth of whatever they're trying to accomplish by taking on the capital,” Woy added.
He said that the alternative lending space has not only become more ubiquitous, but that since the economy is doing well, small businesses are also doing better. As a result, Woy is seeing more small businesses using alternative lending as a way to grow, expand and take advantage of opportunities, instead of as a way to make ends meet.
Additionally, he said he thinks that borrowers have more options in the alternative lending space.
“That pure competition helps drive some of those things down and makes it more friendly to an end-user,” he said.
