ApplePie Capital, a marketplace lender for the franchise industry, has closed a $6 million Series A funding round led by Signia Venture Partners. Other investors included Freestyle Capital, QED Investors and Ron Suber, President of Prosper.
The platform has also raised over $28 million in debt capital commitments from institutional and individual investors to fund franchise loans.
ApplePie Capital originates loans to franchise entrepreneurs and offers loans to investors in whole or fractionally on its franchise loan marketplace.
The franchise industry accounts for 3.5% of total US GDP and has experienced double digit growth since 2010- partly due to a surge of people starting up their own businesses after being laid off during the recession. This trend indicates that there is a strong market for franchise business loans.
The Series A round, together with the debt capital commitment, will help to accelerate the platform’s growth and it hopes to cement its position as the preeminent marketplace lender for the franchise industry.
Denise Thomas, CEO of ApplePie, commented:
“These milestones are a recognition of ApplePie Capital’s success and momentum in addressing the unique needs of the franchise industry, a market with an annual capital demand of $45 billion. Investors are very interested in this asset class and we plan on increasing our lending capacity as loan demand scales. We are now very well positioned to accelerate our mission of providing qualified franchise entrepreneurs with efficient access to capital to start, expand, remodel, refinance, or recapitalize their business.”
ApplePie Capital has now raised nearly $10 million in equity capital for its growth and operations. In July 2014 the company raised $3.77 million in a seed round led by Freestyle Capital, with contributions from Signia Venture Partners, QED Investors, and angel investors. QED Investors are very active in the P2P space and Capital One co-founder Nigel Morris is a managing director at QED and is also a director at Prosper.
The business model of ApplePie works that once a franchise loan is placed onto the marketplace platform, ApplePie is committed to make the loan from capital provided by accredited investors or from ApplePie drawing from other pools of capital. This enables the platform to fund the loans a lot faster, than would otherwise be possible.
Zaw Thet, Partner with Signia Venture Partners, added:
“Franchise performance data is a unique information layer that ApplePie Capital understands better than any other marketplace lender. ApplePie goes deep with franchisors across both quantitative and qualitative measures to develop a robust analysis of risk, and the early demand that ApplePie has seen from institutional investors is a strong validation of their approach.”
ApplePie Capital started making loans in January and to date has had over $40 million in capital demand from borrowers. Eleven brands have joined its marketplace, including AdvantaClean, Brain Balance Achievement Centers, Brightway Insurance, Capriotti’s Sandwich Shop, Einstein Bros Bagels, Fast-Fix Jewelry and Watch Repair, Marco’s Pizza, Nothing Bundt Cakes, Phenix Salon Suites, RNR Tire Express, and Sola Salon Studios.
Ken Switzer, Marco’s Pizza CFO, explained:
“We see the development of marketplace lending as very helpful to many franchisors. ApplePie Capital fills a need and we see demand for this type financing growing very rapidly.”
At the end of March the company announced that it was partnering with three more franchise brands, Brain Balance Achievement Centers, Brightway Insurance and Capriotti’s Sandwich Shop. Each brand has prequalified with ApplePie Capital in order to provide a fast and efficient financing alternative for their franchisees.
Denise Thomas, CEO of ApplePie Capital, said:
"Our new franchisor partners are all leaders in their respective industries, and have proven, well-established business models and support systems that help franchise entrepreneurs create successful small businesses. Partnering with ApplePie Capital will help their franchisees quickly and efficiently access capital to finance their new or existing businesses and for the brands to achieve their growth objectives."
With these new brands ApplePie Capital now has 11 brands available on its marketplace. Other brands include, AdvantaClean, Einstein Bros Bagels, Fast-Fix Jewelry and Watch Repair, Macro’s Pizza, Nothing Bundt Cakes, Phenix Salon Suites, RNR Tire Express, and Sola Salon Studios.