what was going on in financial services. When he left [and joined Pageonce as chief operating officer], we took notice, and we believed that from a product and team perspective they were a very exciting company in the mobile payment space, so we made that investment last summer.
X: Describe their business.
RL: They position themselves as a personal financial services company. People want bill paying to be easy and pain-free and they want to know how much they have in each account, what bills to pay, and an easy way to clear those bills. That was exactly the tack that Pageonce took. If you look at the Pageonce screen, it’s a beautiful user interface, but it’s what they have under the covers that’s even more interesting. They build all of their own backend for account integration. They don’t use Yodlee. They also built their own bill presentment and bill pay functionalities. So they have this very robust technical backend that other people have not focused on.
X: How is it different from Mint?
RL: They are most often compared with Mint, but Mint has more of a budgeting focus, whereas Pageonce takes the view that most people don’t balance their checkbooks. People are really managing from day to day and trying to make sure they pay their bills on time. They are much more in the mainstream. Wells Fargo or Chase will let you pay your bills online, but only from your Wells Fargo or Chase account. Pageonce lets you pay with any account you want, such as your rewards-points card. And they let you manage all of those accounts in one place. I open the app and in one place I can see what bills I have due, and pay them at the touch of a button.
X: Do you think this is an especially good time for venture firms to be investing in financial services companies, and if so, why?
RL: I think there are really three key things. One is that even though interest rates are phenomenally low, access to capital is very constrained. That is creating a very interesting ecosystem for people to disrupt the current models. There is an obvious imbalance, and that is where Lending Club came in. Another is that with the advent of social data, there is just so much more data out there, so there are new ways to evaluate and underwrite consumers that don’t just rely on FICO scores and things like that. If you look at companies taking out small business loans, for example, you can look at their FedEx history or their merchant transactions or the cash balances in their bank account, and there are even some startups starting to look at social graph data and figuring out if they can make some assumptions about creditworthiness based on that. (I don’t want to get Lending Club in trouble, because they are not doing that yet—it’s an area we are looking at.) So there is a lot more data out there. Then the whole mobile ecosystem is actually here now. The walled gardens have come down. Back in the NextCard days we talked to every version of a mobile wallet company you can possibly imagine, and none of them took off. But now with the iTunes and Android ecosystems it is a different ball game.
X: Do you feel like financial services is an area that competing venture firms have been neglecting, and one where Morgenthaler has a head start?
RL: Venture capital goes in cycles and waves, and in every cycle there’s always a handful of billion-dollar companies created in financial services. So I don’t think it’s an area VCs have neglected, so much as that that innovation comes in waves over time. My own experience is in consumer financial services and online credit. We also added Mark Goines as a partner recently. He comes with a wealth of experience from Charles Schwab and Intuit that is very complementary. He was also an early investor in Mint, and ironically enough he was an angel investor in Pageonce before he came on board. Between Mark and myself, I do think we have a deep understanding and a deep network in the financial services space.
