I’m starting to worry that we don’t have an economically viable way to distribute cash flow underwriting (CFU) products to consumers.

Before I dive in further, I want to make this clear: am I not a cash flow underwriting hater.

Quite the opposite. I’d love for it to work, as I think demand for my marketing agency — New Market Growth — could increase as a result.

But, something isn’t adding up.

Let’s start at the 30,000 foot level. I see a bunch of products like Cash Atlas (Nova Credit), Prism Data, and Plaid Check offering lenders CFU products.

And, these providers are raising big money. For example, Nova Credit raised a $45MM Series C last year to keep building their data platform. 

Meanwhile, cash flow lenders like Petal have stumbled. They launched in 2016, raised $300MM in equity capital, and then sold off their portfolio for an undisclosed amount to Empower in April of this year.

All signs point to a distress sale where the VCs backing Petal didn’t exactly hit their target returns.

But, one fintech that stumbles in the CFU world isn’t a story.

I talk to plenty of fintechs and bank lenders. And, I haven’t seen an example of a cash flow based lender who’s killing it right now.

That’s what doesn’t add up.

B2B CFU products are buzzy. But without lenders who are absolutely crushing it using these products, can these B2B providers keep growing?

Before I lay out the challenges (and potential solutions), let’s take a step back and review why CFU exists, some of the problems it could solve, and some of the challenges folks are already discussing.

Cash Flow Underwriting 101

If you’re new to CFU, do yourself a favor and check out Alex Johnson’s Deep Dive Essay. It’s called “Everything You Wanted To Know About Cash Flow Underwriting But Were Afraid To Ask.”

But, it’s nearly 5,000 words and a 20 minute read. So we’ll share some of the highlights here (quotes below are from the essay).