Mindbody’s mind blowing adoption of embedded finance…

Mindbody Capital is a great example of embedded finance, in this instance non-recourse financing powered by Parafin. Traditional credit risk assessment supplemented by Mindbody’s alternative booking data set makes for an improved product, customer experience and relationship between creditor and business.

For Mindbody this means:
- Additional revenue stream
- Improved customer retention
- Proposition differentiation

For wellness businesses:
- Access to funding within their existing ecosystem which is straightforward, pre-approved and repaid flexibly in line with growth

If Square Capital and Shopify Capital (who have originated $756m and $346.7m in loans respectively in only the first quarter of 2022) are anything to go by, Mindbody will see strong demand for their new proposition this year.

I didn’t realise at that point however, that prior to being taken private by Vista equity partners in 2019, already a third of Mindbody revenue was derived from payments. In fact, a16z wrote a nice piece summarising how they enabled a new inside sales GTM by increasing customer LTV while CAC remained the same.

Adding to their analysis a conservative, crude estimate for lending revenue (1% origination fee for a $10k average loan size), Mindbody might receive $100 for each advance.

By also including embedded insurance — Public liability, Commercial property, cyber liability to name a few relevant products — you can see a scenario where they would easily 2x ARPA with financial services…

For new SaaS businesses with similar subscription business models on a journey to $100m ARR, Embedded Finance may help to turn Rabbits into Deer: https://lnkd.in/eMG6k9nq (Credit Christoph Janz)

Link to previous post: https://lnkd.in/eT_hrp-j
Link to Square Q1–22 (P11): https://lnkd.in/eEvSA3r8
Link to Shopify Q1–22: https://lnkd.in/eR-SQFeq.
Link to a16z piece: https://lnkd.in/eKbNHAfm.