HCG Fund Management LP has entered into a partnership with Shopify. The former has agreed to purchase loans facilitated by Shopify Capital. For the unversed, Shopify Capital is the capital arm of Shopify.
The deal between HCG Fund Management and Shopify will help small and micro-online businesses across the United States by supporting the democratization of credit access. The partnership is an opportunity for HCG to assist Shopify in its mission to make e-commerce more accessible and simpler for all.
Jose Penabad, Co-Founder and CIO of HCG is elated with this partnership. Commenting on the same, he said, “We are excited to work with Shopify. Shopify’s loan origination platform perfectly fits HCG’s ecosystem of pioneering companies that facilitate lending activities to individuals and small companies. Because of Shopify’s activity and foresight, many e-commerce companies today have access to credit, an essential ingredient for fostering the growth of small businesses, the engine of the US economy”.
About HCG
HCG, founded by Hadi F. Habal and Jose Penabad is a ‘specialist alternative investment management company focused on private market opportunities in Fintech’. Both the founders of HCG have been working together for around 20 years. The company is headquartered in Raleigh, North Carolina, United States.
The About Us section of its LinkedIn profile says, ‘HCG is a specialty finance manager within private credit. We purchase loans originated by Fintech companies. We aim to transform the future of finance through trust, innovation, and capital.”
According to a press release, investment vehicles that have been managed by HCG have invested more than US$4.5 billion in small-balance loans. By creating expert investment programs and sharing industry insights with a focus to provide strong and risk-adjusted returns, HCG is expanding opportunities for fintech companies.
What is Shopify Capital?
Launched in 2016 in the United States, Shopify Capital was later expanded to Canada and the UK in 2020 and 2021 respectively. In 2022, it entered the Australian market. By August 2022, Shopify Capital lent more than $3.8 billion USD in its first three markets. According to the official website, merchants who received funds through Shopify Capital witnessed 36 percent higher sales in the next six months compared to others.
Removing the complexities involved in traditional finance, Shopify Capital eases the process for merchants. With no lengthy application process and personal credit checks, it allows small business owners to apply for and pay back through the existing Shopify platform they use to run their online store. Once approved by experts, funds get deposited into the merchant’s account within two business days. There are no hidden fees and uncertainty of compounding interest rates. Merchants repay based on a mutually agreed fixed percentage of daily sales. Most importantly, there is no time limitation involved for the repayment — merchants can repay based on their sales, hence payments flex with the business.
At the time of its entry into the Australian market, Tui Allen, Shopify’s head of product for capital lending and financial services, said had said, “We are embedding capability directly where merchants are running their shop. Banks don’t have the insight we have. We are expanding the service, so it’s about not just running your shop but your entire business on Shopify, including the financial components. We have a significant depth of fintech capability and continue to expand those across the platform”.
