Bits of Cents

I’m excited to finally be able to talk about something that has been in the works for a bit now: Ready Financial is merging with AccountNow.

Flybridge invested in Ready Financial in November of 2009 after a dive into the prepaid space.  The observation was that the space was undergoing tremendous growth (nearly 40% annually) and that the market was differentiating based on acquisition channel.  Greendot had locked up the retail distribution channel, working with outlets like Walmart.  Netspend had acquired customers though the alternative financial channel, working with payday loan outlets and pawn shops.  Both acquisition channels had been fruitful and both Greendot and Netspend were accelerating fast (in fact, both IPOed about a year after our investment in Ready Financial).

As we looked at the market and considered the success both Greendot and Netspend had seen, we wondered if that model could be replicated in another acquisition channel.  Our hypothesis: that the online channel could be as productive or more so than the physical channel.  Our investment thesis: that the skill set needed to build an online acquisition machine did not exist in the companies that focused on physical distribution, meaning a company could be built that focused exclusively in online distribution.  This thinking resulted in our investment in Ready Financial.

Fast forward to present day.  Over the past year and a half, Will Tumulty (CEO) and the entire Ready Financial team did a great job executing towards that vision.  The company rapidly grew their account base and released innovative products like the platinum card, a credit score and tracking tool and a way to grow consumers into a credit card over time called Path2Credit.  Things were firing on all cylinders.

AccountNow is the one player in prepaid card space that took a similar approach to Ready Financial by focusing their acquisition efforts online.  Started in 2005, AccountNow is no stranger to exploiting the online channel.  They accumulated a large consumer base and partnered with other online acquisition partners like ezTaxReturn.  Their CEO, Jim Jones, has done an incredible job at using both online as well as alternative acquisition channels to get consumers on the AccountNow product.

The relationship between the two companies had been close over the years and, over time, it became clear that joining forces could really accelerate both companies to the next level.

The combination of AccountNow and Ready Financial is an exciting one for a number of reasons.  First off, it gets the combined company to even more scale quickly.  By combining two sizable customer bases, the combined company will be one of the top prepaid card issues out there.  Additionally, both companies gain the skills of the other.  AccountNow benefits from the product innovation spearheaded by Ready Financial; innovation that will continue under the guidance of Will Tumulty who will serve as CMO of the combined company.  Likewise, Ready Financial benefits from the alternative acquisition channels AccountNow has successfully deployed and used to grow their account base.

More customers with better products.  That’s one plus one equals three in my mind.  Congratulations to Will, Jim and everyone at the new AccountNow!