Bread is a company seeking to create a new credit option for consumers. Partnering with sellers, Bread provides in-purchase financing options, allowing shoppers to see if they can be approved for financing and provide the terms, making it easy to break purchases down into easy payments without needing to use or sign up for a credit card. Offering credit-based interest rates, Bread aims to be simple and competitive in their rates.
Zirra Rates Bread Finance
Competitive Position: Bread is operating in the ever expanding market of Fintech and accounting and finance services. We have identified several competitors, both direct and indirect, that are operating in the space and vying for position amongst each other. The dominant player here is PayPal, which is owned by eBay. The most direct competition comes from players like Klarna, FinanceIt, Sunbit, and LendPro. Klarna is massive. The company has 1,164 employees listed on Linkedin, and has raised $291.33M and acquired two companies since 2005. FinanceIt, currently with 99 employees, has raised $38.4M from 10 investors since 2007. Sunbit, based in Los Angeles, has 18 employees, and has received $2.97M from SGVC. Lastly, LendPro does not disclose how many employees they currently have, neither do they disclose their funding amount. Based on funding and employee numbers, Bread is most likely competing very heavily with FinanceIt and will need to create some sort of differentiating factor in order to reach the likes of Klarna and, maybe someday, PayPal.
Fundamentals: Bread is a young company, having only been founded in 2014, but they have amassed $18.6M in funding from prominent VC firms including Bessemer Venture Partners and Greycroft Partners. Bread’s clients could be any retailer willing to embed Bread’s solution into their business. Bread has chosen not to disclose who their merchants are at this point, but we can infer that they must have a large user base, based on the amount of funding they received in their financing rounds. We can provide a rough estimation of the maximum range of revenue Bread may be earning by multiplying the number of current employees (24) and multiplying by $125,000 and again by $200,000. This calculation gives us a range of $3M and 4.8M. It is difficult to accurately assess the true revenue of the company with the little information there is available with regard to merchants and user base.
HR Situation & Reviews: Bread currently has 21 employees who list themselves on LinkedIn, and have shown themselves to hire talent with relevant experience, including 2 from GE Finance and 2 from Barclays. None of these joined within the last three months, and Bread has active job postings, demonstrating their intent to grow with an additional 6 positions including a director of B2B marketing, demonstrating that they are focused on increasing the number of companies integrating their solution. Additional positions include senior operations and associate counsel, which speaks to the importance of staying in line with the regulatory environment in the financial industry, as well as hiring additional R&D staff. Due to the newness of the company, there are currently no employee reviews to measure sentiment from.
Founder & Executive Profiles: Co-founder & CEO Josh Abramowitz and Co-founder & CTO/COO Daniel Simon both have strong backgrounds in finance, with Mr. Simon focusing more on software and development. Mr. Abramowitz has been working in finance since 2001 when he was an Investment Analyst at Elliot Management Corporation. He continued on for three years there before taking a similar role at Viking Global Investors for another five years. After that, Abramowitz became Chairman at Deep Creek Capital and still holds that position today. Daniel Simon took a different path, starting his professional career as a Software Engineer at EMC in 2003. After nearly three years, he moved on to work at a financial technology consultancy firm called Lab49 for another three years. In 2010 Daniel became the Chief Architect of Quantitative Systems for USP Asset Management before leaving to become an Analyst at Hudson Bay Capital Management. Daniel also did a three month program specializing in Terrorist Financing and Financial Crimes. in 2014, the two men joined forces and founded Bread in New York City. The connection between the two men is not quite clear. Although they are both alumni of Yale Law School, they attended nearly 10 years apart. It is possible the two either met through mutual friends from law school, or met organically through doing business in the financial industry.
Market Forecast & Exit Indicators: The fact that within the United States there is currently $885 billion outstanding revolving debt alone, shows that there is a large market for shoppers who may want options to pay for their purchases that do not include the pitfalls of 13-29% interest rates and other disadvantages of revolving credit. Online sales, in particular, are growing, driving much of the spending in the US and is projected to reach $523 billion by 2020, accounting for the growth in alternative payment options from companies such as PayPal and young companies such as Bread and their competitors. Mobile devices are expected to also account for the majority of purchases by 2020, meaning it is important to Bread to ensure their process is smooth on any device.