S11d772825ds1.

htmFORMS1
TableofContents
AsfiledwiththeSecuritiesandExchangeCommissiononNovember10,2014
RegistrationNo.333

UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

FORMS1
REGISTRATIONSTATEMENT
Under
TheSecuritiesActof1933

ONDECKCAPITAL,INC.
(Exactnameofregistrantasspecifiedinitscharter)

Delaware

(Stateorotherjurisdictionof
incorporationororganization)

6199

(PrimaryStandardIndustrial
ClassificationCodeNumber)

421709682

(I.R.S.Employer
IdentificationNumber)

1400Broadway,25thFloor
NewYork,NewYork10018
(888)2694246

(Address,includingzipcode,andtelephonenumber,includingareacode,ofregistrantsprincipalexecutiveoffices)

NoahBreslow
ChiefExecutiveOfficer
1400Broadway,25thFloor
NewYork,NewYork10018
(888)2694246

(Name,address,includingzipcode,andtelephonenumber,includingareacode,ofagentforservice)

Copiesto:
LarryW.Sonsini
TonyJeffries
DamienWeiss
WilsonSonsiniGoodrich&Rosati,P.C.
650PageMillRoad
PaloAlto,California94304
(650)4939300

CoryKampfer
GeneralCounsel
1400Broadway,25thFloor
NewYork,NewYork10018
(888)2694246

ChristopherJ.Austin
AndrewD.Thorpe
StephenC.Ashley
Orrick,Herrington&SutcliffeLLP
51West52ndStreet
NewYork,NewYork10019
(212)5065000

Approximatedateofcommencementofproposedsaletothepublic:Assoonaspracticableafterthisregistrationstatementbecomeseffective.

IfanyofthesecuritiesbeingregisteredonthisFormaretobeofferedonadelayedorcontinuousbasispursuanttoRule415undertheSecuritiesAct
of1933checkthefollowingbox:
IfthisFormisfiledtoregisteradditionalsecuritiesforanofferingpursuanttoRule462(b)undertheSecuritiesAct,pleasecheckthefollowingbox
andlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.
IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(c)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesAct
registrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.
IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(d)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesAct
registrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anonacceleratedfiler,orasmallerreportingcompany.
Seethedefinitionsoflargeacceleratedfiler,acceleratedfilerandsmallerreportingcompanyinRule12b2oftheExchangeAct.(Checkone):

Largeacceleratedfiler

Acceleratedfiler

Nonacceleratedfiler x(donotcheckifasmallerreportingcompany)

Smallerreportingcompany

CALCULATIONOFREGISTRATIONFEE

TitleofEachClassof
SecuritiestobeRegistered

ProposedMaximum
Aggregate
OfferingPrice(1)(2)

Amountof
RegistrationFee

CommonStock,parvalue$0.01pershare

$150,000,000

$17,430
(1) Includesofferingpriceofanyadditionalsharesthattheunderwritershavetheoptiontopurchase,ifany.
(2) EstimatedsolelyforthepurposeofcalculatingtheregistrationfeeinaccordancewithRule457(o)undertheSecuritiesActof1933,asamended.

Theregistrantherebyamendsthisregistrationstatementonsuchdateordatesasmaybenecessarytodelayitseffectivedateuntiltheregistrant
shallfileafurtheramendmentwhichspecificallystatesthatthisregistrationstatementshallthereafterbecomeeffectiveinaccordancewith
Section8(a)oftheSecuritiesActof1933oruntiltheregistrationstatementshallbecomeeffectiveonsuchdateastheSecuritiesandExchange
Commission,actingpursuanttosaidSection8(a),maydetermine.

TableofContents
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers
to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS(SubjecttoCompletion)
Issued,2014

Shares

COMMONSTOCK

OnDeckCapital,Inc.isofferingsharesofitscommonstock.Thisisourinitialpublicofferingandnopublicmarket
currentlyexistsforourshares.Weanticipatethattheinitialpublicofferingpriceofourcommonstockwillbebetween$and
$pershare.

WehaveappliedtolistourcommonstockontheNewYorkStockExchangeunderthesymbolONDK.

Weareanemerginggrowthcompanyunderthefederalsecuritieslawsandarethereforesubjecttoreducedpubliccompany
reportingrequirements.Investinginourcommonstockinvolvesrisks.SeeRiskFactorsbeginningonpage14.

PRICE$ASHARE

PerShare
Total

Priceto
Public

$
$

Underwriting
Discounts
and
Commissions

$
$

Proceedsto
OnDeck
Capital,Inc.

Wehavegrantedtheunderwriterstherighttopurchaseuptoanadditionalsharesofcommonstock.
TheSecuritiesandExchangeCommissionandstatesecuritiesregulatorshavenotapprovedordisapprovedofthesesecuritiesor
determinedifthisprospectusistruthfulorcomplete.Anyrepresentationtothecontraryisacriminaloffense.
Theunderwritersexpecttodeliverthesharesofcommonstocktopurchaserson,2014.

MORGANSTANLEY

BofAMERRILLLYNCH

RAYMONDJAMES

J.P.MORGAN
STIFEL

DEUTSCHEBANKSECURITIES

NEEDHAM&COMPANY

$
$

JEFFERIES

,2014

TableofContents

TableofContents

TABLEOFCONTENTS

Page

ProspectusSummary
TheOffering
SummaryConsolidatedFinancialData
RiskFactors
SpecialNoteRegardingForwardLookingStatements
andIndustryData
IndustryandMarketData
UseofProceeds
DividendPolicy
Capitalization
Dilution
SelectedConsolidatedFinancialData
ManagementsDiscussionandAnalysisofFinancial
ConditionandResultsofOperations
Business

1
9
11
14

36
38
39
39
40
42
44

46
87

Page

Management
ExecutiveCompensation
CertainRelationshipsandRelatedPartyandOther
Transactions
PrincipalStockholders
DescriptionofIndebtedness
DescriptionofCapitalStock
SharesEligibleforFutureSale
MaterialU.S.FederalIncomeTaxConsequencesto
NonU.S.HoldersofOurCommonStock
Underwriters
LegalMatters
Experts
WhereYouCanFindMoreInformation
IndextoConsolidatedFinancialStatements

105
114

125
129
132
136
141

144
148
155
155
155
F1

Youshouldrelyonlyontheinformationcontainedinthisprospectusorcontainedinanyfreewritingprospectuspreparedbyor
onbehalfofus.Neitherwenortheunderwritershaveauthorizedanyonetoprovideyouwithinformationdifferentfrom,orin
additionto,thatcontainedinthisprospectusoranyrelatedfreewritingprospectus.Thisprospectusisanoffertosellonlytheshares
offeredherebybutonlyundercircumstancesandinjurisdictionswhereitislawfultodoso.Theinformationcontainedinthis
prospectusiscurrentonlyasofitsdate,regardlessofitsdelivery.Ourbusiness,financialcondition,resultsofoperationsand
prospectsmayhavechangedsincethatdate.
ForinvestorsoutsidetheUnitedStates:neitherwenoranyoftheunderwritershavedoneanythingthatwouldpermitthis
offeringorpossessionordistributionofthisprospectusinanyjurisdictionwhereactionforthatpurposeisrequired,otherthanthe
UnitedStates.Youarerequiredtoinformyourselvesaboutandtoobserveanyrestrictionsrelatingtothisofferingandthedistribution
ofthisprospectus.

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PROSPECTUSSUMMARY
Thissummaryoverviewofthekeyaspectsoftheofferingidentifiesthoseaspectsoftheofferingthatarethemost
significant.Thissummaryisqualifiedinitsentiretybythemoredetailedinformationandfinancialstatementsincluded
elsewhereinthisprospectus.Thissummarymaynotcontainalltheinformationyoushouldconsiderbeforeinvestinginour
commonstock.Youshouldcarefullyreadthisprospectusinitsentiretybeforeinvestinginourcommonstock,includingthe
sectionstitledRiskFactorsandManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations
andourconsolidatedfinancialstatementsandrelatednotesincludedelsewhereinthisprospectus.
ONDECKCAPITAL,INC.
OurCompany
Wearealeadingonlineplatformforsmallbusinesslending.Weareseekingtotransformsmallbusinesslendingbymaking
itefficientandconvenientforsmallbusinessestoaccesscapital.Enabledbyourproprietarytechnologyandanalytics,we
aggregateandanalyzethousandsofdatapointsfromdynamic,disparatedatasourcestoassessthecreditworthinessofsmall
businessesrapidlyandaccurately.Smallbusinessescanapplyforatermloanorlineofcreditonourwebsiteinminutesand,
usingourproprietaryOnDeckScore,wecanmakeafundingdecisionimmediatelyandtransferfundsasfastasthesameday.We
haveoriginatedmorethan$1.7billioninloansandcollectedmorethan4.4millioncustomerpaymentssincewemadeourfirst
loanin2007.Ourloanoriginationshaveincreasedatacompoundannualgrowthrateof127%from2011to2013andhadayear
overyeargrowthrateof171%fortheninemonthsendedSeptember30,2014.
The28millionsmallbusinessesintheUnitedStatesareintegraltotheU.S.economyandthevibrancyoflocal
communities,employingapproximately50%oftheprivateworkforce.Smallbusinessgrowthdependsonefficientand
frictionlessaccesstocapital,yetsmallbusinessesfacenumerouschallengesthatmakeitdifficulttosecuresuchcapital.Small
businessownersaretimeandresourceconstrained,butthetraditionalborrowingprocessistimeconsumingandburdensome.
SmallbusinessessurveyedbytheFederalReserveBankofNewYorkindicatedthatthetraditionalfundingprocessrequired
them,onaverage,todedicate26hours,contact2.6financialinstitutionsandsubmit2.7loanapplications.Thesechallengesexist
inpartbecauseitisinherentlydifficulttoassessthecreditworthinessofsmallbusinesses.Smallbusinessesareadiversegroup
spanningmanydifferentindustries,stagesindevelopment,geographies,financialprofilesandoperatinghistories,historically
makingitdifficulttoassesstheircreditworthinessinauniformmanner,andthereisnowidelyacceptedcreditscoreforsmall
businesses.Inaddition,smallbusinessesoftenseeksmall,shorttermloanstofundshorttermprojectsandinvestments,but
traditionallendersmayonlyofferloanproductsthatfeaturelargeloansizes,longerdurationsandrigidcollateralrequirements
thatarenotwellsuitedtotheirneeds.
Thesmallbusinesslendingmarketisvastandunderserved.AccordingtotheFDIC,therewere$178billioninbusinessloan
balancesunder$250,000intheUnitedStatesinthesecondquarterof2014,across21.7millionloans.OliverWyman,a
managementconsultingfirmandbusinessunitofMarsh&McLennan,estimatesthatthereisapotential$80to$120billionin
unmetdemandforsmallbusinesslinesofcredit,andwebelievethatthereisalsosubstantialunmetdemandforothercredit
relatedproducts,includingtermloans.Wealsobelievethattheapplicationofourtechnologytocreditassessmentcanstimulate
additionaldemandforourproductsandexpandthetotaladdressablemarketforsmallbusinesscredit.
Tobettermeetthecapitalneedsofsmallbusinesses,weareseekingtousetechnologytotransformthewaythiscapitalis
accessed.Webuiltourintegratedplatformspecificallytomeettheirfinancingneeds.Ourplatformtoucheseveryaspectofthe
customerlifecycleandapotentialcustomercancompleteanonlineapplication24hoursaday,7daysaweek.Ourproprietary
dataandanalyticsengineaggregatesandanalyzesthousandsof

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onlineandofflinedataattributesandtherelationshipsamongthoseattributestoassessthecreditworthinessofasmallbusinessin
realtime.Thedatapointsincludecustomerbankactivityshownonbankstatements,governmentfilings,taxandcensusdata.In
addition,incertaininstanceswealsoanalyzereputationandsocialdata.Welookatbothindividualdatapointsandrelationships
amongthedata,witheachtransactionoractionbeingaseparatedatapointthatwetakeintoaccount.Akeydifferentiatorofour
solutionistheOnDeckScore,theproductofourproprietarysmallbusinesscreditscoringsystem.Bothourdataandanalytics
engineandthealgorithmspoweringtheOnDeckScoreundergocontinuousimprovementtoautomateandoptimizethecredit
assessmentprocess,enablingmorerapidandpredictivecreditdecisions.Eachloanthatwemakeinvolvesourproprietary
automatedunderwritingprocess,andapproximatelytwothirdsofourloansareunderwrittenusingafullyautomated
underwritingprocessthatdoesnotrequiremanualreview.Ourplatformsupportssamedayfundingandautomatedloan
repayment.Thistechnologyenabledapproachprovidessmallbusinesseswithefficient,frictionlessaccesstocapital.
Webelievethatthedifferencesbetweenourapproachandtheapproachadoptedbytraditionallendersarewhathave
allowedustobetteraddressthechallengesofsmallbusinesslending.Inourapproach,manualunderwritinghaslargelybeen
replacedbyanautomated,datadrivenapproachtocreditassessment.Expensivebranchnetworkshavebeenreplacedbyan
onlinewebsiteforapplicationsandaccountmanagement.Serviceofconsumersandbusinessesofallsizeshasbeenreplacedbya
singularfocusonsmallbusiness.Inaddition,wearesubjecttolessregulationthantraditionallendersbecausewedonotmake
loanstoconsumersnordowetakedeposits.Webelievethatdifferencesinourloanproductsallowustobettermeettheneedsof
smallbusinesses.Smallbusinessownerstypicallyseeksmall,shorttermloanssoweoffertermloanproductsthatrangeinsize
from$5,000to$250,000andfeaturetermsof3to24monthsversustraditionallendersthatofferlargerandlongertermloans.At
September30,2014,ouroutstandingloanshadoriginalloanbalancesrangingfrom$5,000to$250,000.Wealsoofferalineof
creditproductthatcanbeapprovedmorequicklythancomparableproductsofferedbytraditionallenders.Webelievethatsmall
businessownerspreferpredictabilitysoweofferfixedinterestamountsandautomateddailyorweeklyrepaymentscomparedto
traditionallendersthatofferbothfixedandvariablerateloanswithmonthlyrepayments.Wealsobelievethatsmallbusiness
ownersvalueflexibilitysowedonthavetherigidcollateralrequirementsthataretypicaloftraditionallenders.Allor
substantiallyallofourtermloansandlinesofcreditarecurrentlycollateralizedthroughasecurityinterestinourcustomers
assets,butwedonotrequireaminimumamountofcollateraltomakealoan.Weintendtotransitiontounsecuredlinesofcredit
inthenearfuture.
Welendtoawidevarietyofsmallbusinessesacrossmorethan700industriesandinall50U.S.statesandhaverecently
begunlendinginCanada.Thetopfivestatesinwhichweoriginatedloansin2013andintheninemonthsendedSeptember30,
2014wereCalifornia,Florida,NewYork,TexasandNewJersey,representingapproximately14%,10%,8%,8%and4%ofour
totalloanoriginationsfortheyearendedDecember31,2013andapproximately15%,9%,8%,8%and4%ofourtotalloan
originationsfortheninemonthsendedSeptember30,2014,respectively.Ourmostfrequentcustomersareprofessionalservices
firms,retailers,restaurantsandfoodservicecompanies,healthcarespecialistsandwholesalers.Wealsolendtocustomerswitha
rangeoffinancialandoperatinghistories:ourcustomershaveamedianof$568,000inannualrevenue,with90%ofour
customershavingbetween$150,000and$3.2millioninannualrevenue,andhavebeeninbusinessforamedianof7.5years,
with90%inbusinessbetween2and31years.
Wehaveadiverseandscalablesetoffundingsources.Theseincludedebtfacilities,securitizationofsmallbusinessloans
generatedbyOnDeckandtheOnDeckMarketplace,aproprietarywholeloansalemarketplacethatallowsinstitutionalinvestors
todirectlypurchasesmallbusinessloansfromus.Webelievethathavingdiversesourcesofcapitalenablesustoreduceour
averagecostofcapital,providesmultiplesourcesofcapitalinavarietyofeconomicclimatesandprovidesincreasedflexibilityas
weseektoincreaseourloanoriginations.Affiliatesofcertainofourunderwritersinthisofferingareparticipantsinourvarious
financingfacilitiesandhaveactedinvariousadministrativerolesinconnectionwithsuchfacilities.Forfurtherinformation,see
thesectiontitledUnderwriters.

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Ourbusinesshasgrownrapidly.In2013,weoriginated$458.9millionofloans,representingyearoveryeargrowthof
165%,andinthefirstninemonthsof2014,weoriginated$788.3millionofloans,representingyearoveryeargrowthof171%,
allwhilemaintainingconsistentcreditquality.In2013,werecordedgrossrevenueof$65.2million,representingyearoveryear
growthof155%,andinthefirstninemonthsof2014,werecordedgrossrevenueof$107.6million,representingyearoveryear
growthof156%.During2013andthethreemonthsendedSeptember30,2014,ourAdjustedEBITDAwas$(16.3)millionand
$2.6million,respectively,our(loss)incomefromoperationswas$(19.3)millionand$0.7million,respectivelyandournet(loss)
incomewas$(24.4)millionand$0.4million,respectively.SeethesectiontitledManagementsDiscussionandAnalysisof
FinancialConditionandResultsofOperationsNonGAAPFinancialMeasuresforadiscussionandreconciliationofAdjusted
EBITDAtonet(loss)income.AsofDecember31,2013andSeptember30,2014,ourtotalassetswere$235.5millionand$466.0
million,respectivelyandtheunpaidprincipalbalanceonloansoutstandingwas$216.0millionand$422.1million,respectively.
IndustryBackgroundandTrends

SmallBusinessesareanEnormousDriveroftheU.S.Economy.AccordingtotheU.S.SmallBusinessAdministration,
thereare28millionsmallbusinessesintheUnitedStates,contributingapproximately45%ofU.S.nonagricultural
grossdomesticproductandemployingapproximately50%oftheprivateworkforce.Thesesmallbusinesseshelpbuild
vibrantcommunitieswithlocalcharacter.

SmallBusinessesNeedCapitaltoSurviveandThrive.Webelievethatsmallbusinessesdependonefficientand
frictionlessaccesstocapitaltopurchasesuppliesandinventory,hireemployees,markettheirbusinessesandinvestin
newpotentialgrowthopportunities.

SmallBusinessesareUniqueandDifficulttoAssess.Creditassessmentisinherentlydifficultbecausesmallbusiness
dataisconstantlychangingasthebusinessevolvesandisscatteredacrossamyriadofonlineandofflinesources,
unlikeconsumercreditassessmentwherealendercangenerallylooktoscoresprovidedbyconsumercreditbureaus.

SmallBusinessesarenotAdequatelyServedbyTraditionalLenders.Webelievetraditionallendersfaceanumberof
challengesandlimitationsthatmakeitdifficulttoaddressthecapitalneedsofsmallbusinesses,suchas:

OrganizationalandStructuralChallenges.Thecostlycombinationofphysicalbranchesandmanually
intensiveunderwritingproceduresmakesitdifficultfortraditionallenderstoefficientlyservesmallbusinesses.

TechnologyLimitations.Manytraditionallendersuselegacyorthirdpartysystemsthataredifficulttointegrate
oradapttotheshiftingneedsofsmallbusinesses.

ProductsnotDesignedforSmallBusinesses.Smallbusinessesarenotwellservedbytraditionalloanproducts.
Webelievethattraditionallendersoftenofferproductscharacterizedbylargerloansizes,longerdurationsand
rigidcollateralrequirements.Bycontrast,smallbusinessesoftenseeksmallloansforshortterminvestments.

Asaresult,webelievethatsmallbusinessesfeelunderservedbytraditionallenders.AccordingtotheFDIC,thepercentage
ofcommercialandindustrialloanswithabalancelessthan$250,000hasdeclinedfrom20%oftotaldollarsborrowedin2004to
13%inthesecondquarterof2014.AccordingtoOliverWyman,75%ofsmallbusinessesarelookingtoborrowlessthan
$50,000.Inaddition,accordingtothesecondquarter2014WellsFargoGallupSmallBusinessIndex,only25%ofsmall
businessesreportedthatobtainingcreditwaseasy.

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ChallengesforSmallBusinessOwners

SmallBusinessOwnersareTimeandResourceConstrained.Webelievethatsmallbusinessownerslackmanyofthe
resourcesavailabletolargerbusinessesandhavefewerstaffonwhichtorelyforcriticalbusinessissues.Timespent
inefficientlymaymeanlostsales,extraexpensesandpersonalsacrifices.

TraditionalLendingisnotGearedTowardsSmallBusinesses.Traditionallendersdonotmeettheneedsofsmall
businessesforanumberofreasons,includingthefollowing:

TimeConsumingProcess.AccordingtoaHarvardBusinessSchoolstudy,thetraditionalborrowingprocess
includesapplicationformswhicharetimeconsumingtoassembleandcomplete,longinpersonmeetingsduring
businesshoursandmanualunderwritingproceduresthatdelaydecisions.

NonTailoredCreditAssessment.Thereisnowidelyacceptedcreditscoreforsmallbusinesses.Traditional
lendersfrequentlyrelyuponthesmallbusinessownerspersonalcreditasaprimaryindicatorofthebusinesss
creditworthiness,eventhoughitisnotnecessarilyindicativeofthebusinessscreditprofile.

ProductMismatch.Smallbusinessesarenotwellservedbytraditionalloanproducts.Webelievethattheyoften
seeksmallloansforshortterminvestments,buttraditionallendersmayonlyofferloanproductscharacterizedby
largerloansizes,longerdurationsandrigidcollateralrequirements.

AlternativestoTraditionalBankLoansareInadequate.Smallbusinesseswhoselendingneedsarenotbeingmetby
traditionalbankloanshavehistoricallyresortedtoafragmentedlandscapeofproducts,includingmerchantcash
advances,creditcards,receivablesfactoring,equipmentleasesandhomeequitylines,eachofwhichcomeswithits
ownchallengesandlimitations.

ModernizationofSmallBusinesses

SmallBusinessesareEmbracingTechnology.Smallbusinessesareincreasinglyusingonlineservicestomanagetheir
operations.AccordingtoasurveybytheNationalSmallBusinessAssociation,85%ofsmallbusinessespurchase
suppliesonline,83%managebankaccountsonline,82%maintaintheirownwebsite,72%paybillsonlineand41%
usetabletsfortheirbusiness.Webelievesmallbusinessownersexpectauserfriendlyonlineborrowingexperience.

TheDigitalFootprintofSmallBusinessesisExpanding.Thereisavastamountofrealtimedigitaldataaboutsmall
businessesthatcanbeusedtogeneratevaluableinsightsthathelpbetterassessthecreditworthinessofasmall
business.

OurSolution
Ourmissionistopowerthegrowthofsmallbusinessthroughlendingtechnologyandinnovation.Wearecombiningour
passionforsmallbusinesswithtechnologyandanalyticstotransformthewaysmallbusinessesaccesscapital.Oursolutionwas
builtspecificallytoaddresssmallbusinessescapitalneedsandconsistsofourloanproducts,ourendtoendintegratedplatform
andtheOnDeckScore.Weoffertwoproductstosmallbusinessestoenablethemtoaccesscapital:termloansandlinesofcredit.
Ourproprietary,endtoendintegratedplatformincludes:ourwebsite,whichallowssmallbusinessestoapplyforaloanin
minutes,24hoursaday,7daysaweekourproprietarydataandanalyticsenginethatanalyzesthousandsofdataattributesfrom
disparatesourcestoassesstherealtimecreditworthinessofasmallbusinessthetechnologythatenablesseamlessfundingofour
loansandourdailyandweeklycollectionsandongoingservicingsystems.AkeydifferentiatorofoursolutionistheOnDeck
Score,theproductofourproprietarysmallbusinesscreditscoringsystem.TheOnDeck

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Scoreaggregatesandanalyzesthousandsofdataelementsandattributesrelatedtoabusinessanditsownersthatarereflectiveof
thecreditworthinessofthebusinessaswellaspredictiveofitscreditperformance.Ourproprietarydataandanalyticsengineand
thealgorithmspoweringtheOnDeckScoreundergocontinuousimprovementthroughmachinelearningtoautomateand
optimizethecreditassessmentprocess.
Ourcustomerschooseusbecauseweprovidethefollowingkeybenefits:

Access.Bycombiningtechnologywithcomprehensiveandrelevantdatathatcapturestheuniqueaspectsofsmall
businesses,weareabletobetterassessthecreditworthinessofsmallbusinessesandapprovemoreloans.

Speed.Smallbusinessescansubmitanapplicationonlineinaslittleasminutes.Weareabletoprovidemostloan
applicantswithasimpleapplicationprocessandanimmediateapprovaldecisionandtransferfundsasfastasthesame
day.

CustomerExperience.OurU.S.basedinternalsalesforceandcustomerservicerepresentativesprovidehightech,high
touch,personalizedsupporttoourapplicantsandcustomers.Ourteamanswersquestionsandprovidesassistance
throughouttheapplicationprocessandthelifeoftheloan.OurrepresentativesareavailableMondaythroughSaturday
before,duringandafterregularbusinesshourstoaccommodatethebusyschedulesofsmallbusinessowners.Wealso
offerourcustomerscrediteducationandconsultingservicesandothervalueaddedservices.Ourcommitmentto
provideagreatcustomerexperiencehashelpedusearna71NetPromoterScore,awidelyusedsystemofmeasuring
customerloyalty,andconsistentlyachieveA+ratingfromtheBetterBusinessBureau.

OurCompetitiveStrengths
Webelievethefollowingcompetitivestrengthsdifferentiateusandserveasbarriersforothersseekingtoenterourmarket:

SignificantScale.Sincewemadeourfirstloanin2007,wehavefundedmorethan$1.7billioninloansacrossmore
than700industriesinall50U.S.statesandhaverecentlybegunlendinginCanada.

ProprietaryDataandAnalyticsEngine.OurproprietarydataandanalyticsengineandtheOnDeckScoreprovideus
withsignificantvisibilityandpredictabilityinassessingthecreditworthinessofsmallbusinessesandallowustobetter
servemorecustomersacrossmoreindustries.Witheachloanapplication,eachfundedloanandeachdailyorweekly
payment,ourdatasetexpandsandourOnDeckScoreimproves.

EndtoEndIntegratedTechnologyPlatform.Webuiltourintegratedplatformspecificallytomeetthefinancingneeds
ofsmallbusinesses.Ourplatformtoucheseveryaspectofthecustomerlifecycle,includingcustomeracquisition,sales,
scoringandunderwriting,funding,andservicingandcollections.Weuseourplatformtounderwrite,processand
serviceallofoursmallbusinessloans,regardlessofdistributionchannel.

DiversifiedDistributionChannels.Wearebuildingbrandawarenessandenhancingdistributioncapabilitiesthrough
diversifieddistributionchannels,includingdirectmarketing,strategicpartnershipsandfundingadvisors.Ourdirect
marketing,strategicpartnerandfundingadvisorchannelsconstituted56.2%,14.9%and28.9%ofourtotalnumberof
loans,respectively,forthethreemonthsendedSeptember30,2014,54.4%,13.4%and32.3%ofourtotalnumberof
loans,respectively,fortheninemonthsendedSeptember30,2014and44.1%,10.3%and45.6%ofourtotalnumberof
loans,respectively,fortheyearendedDecember31,2013.Ourinternalsalesforcecontactspotentialcustomers,
respondstoinboundinquiriesfrompotentialcustomers,andisavailabletoassistallcustomersthroughoutthe
applicationprocess.

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HighCustomerSatisfactionandRepeatCustomerBase.Ourstrongvaluepropositionhasbeenvalidatedbyour
customers.WehadaNetPromoterScore,awidelyusedsystemofmeasuringcustomerloyalty,of71in2013,andwe
believethatstrongcustomersatisfactionhasplayedanimportantroleinrepeatborrowingbyourcustomers.In2013,
43.5%ofloanoriginationswerebyrepeatcustomers,whoeitherreplacedtheirexistingloanwithanew,usuallylarger,
loanortookoutanewloanafterpayingofftheirexistingOnDeckloaninfull.Thirtypercentofourorigination
volumefromrepeatcustomersin2013wasduetounpaidprincipalbalancesrolledfromexistingloansdirectlyinto
suchrepeatoriginations.

DurableBusinessModel.Sincewebeganlendingin2007,wehavesuccessfullyoperatedourbusinessthroughboth
strongandweakeconomicenvironments.Ourrealtimedata,shortdurationloans,automateddailyandweekly
collection,riskmanagementcapabilitiesanduniteconomicsenableustoreactrapidlytochangingmarketconditions
andgenerateattractivefinancialresults.

DifferentiatedFundingPlatform.Wesourcecapitalthroughmultiplechannels,includingdebtfacilities,securitization
andtheOnDeckMarketplace,ourproprietarywholeloansaleplatformforinstitutionalinvestors.Thisdiversity
providesuswithmultiple,scalablefundingsources,longtermcapitalcommitmentsandaccesstoflexiblefundingfor
growth.

100%SmallBusinessFocused.Wearepassionateaboutsmallbusinesses.Wehavedevelopedsignificantexpertise
overoursevenyearoperatinghistoryexclusivelyfocusedonassessinganddeliveringcredittosmallbusinesses.We
believethispassion,focusandsmallbusinesscreditexpertiseprovidesuswithsignificantcompetitiveadvantages.

OurStrategyforGrowth
Ourvisionistobecomethemosttrustedlendertosmallbusinesses,andtoaccomplishthis,weintendto:

ContinuetoAcquireCustomersThroughDirectMarketingandSales.Weplantocontinueinvestingindirect
marketingandsalestoaddnewcustomersandincreaseourbrandawareness.

BroadenDistributionCapabilitiesThroughPartners.Weplantoexpandournetworkofpartners,includingbanks,
paymentprocessors,fundingadvisorsandsmallbusinessfocusedserviceproviders,andleveragetheirrelationships
withsmallbusinessestoacquirenewcustomers.

EnhanceDataandAnalyticsCapabilities.Weplantomakesubstantialinvestmentsinourdataandanalytics
capabilities.Ourdatascienceteamcontinuallyuncoversnewinsightsaboutsmallbusinessesandtheircredit
performanceandconsidersnewdatasourcesforinclusioninourmodels,allowingustoevaluateandlendtomore
customers.

ExpandProductOfferings.Followingthesuccessfulrecentintroductionofourlineofcreditand24monthtermloan
products,overtimeweplantoexpandourofferingsbyintroducingnewcreditrelatedproductsforsmallbusinesses.
Wemayfundtheexpansionofourproductofferingsinpartfromtheproceedswereceivefromourinitialpublic
offering,orIPO,butwehavenotyetfinalizedthespecificproductswewillintroduceorestablishedaparticular
timelinetoexpandourproductofferings.

ExtendCustomerLifetimeValue.Webelievewehaveanopportunitytoincreaserevenueandloyaltyfromnewand
existingcustomers.Weplantointroducenewfeaturesandproductcrosssellcapabilitiestocontinuedrivingthe
increaseduseofourplatform.

TargetedInternationalExpansion.Webelievethereareopportunitiestoexpandoursmallbusinesslendinginselect
countriesoutsideoftheUnitedStatesandCanada.Wemayfundourinternationalexpansioninpartfromtheproceeds
wereceivefromourIPO,butwehavenotyetcommittedtoanyspecifiedlocationorestablishedaparticulartimeline
topursuethisopportunity.

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RisksAffectingUs
Ourbusinessissubjecttonumerousrisksanduncertainties,includingthosehighlightedinthesectiontitledRiskFactors
beginningonpage14.Theserisksinclude,butarenotlimitedto,thefollowing:

Wehavealimitedoperatinghistoryinanevolvingindustry,whichmakesitdifficulttoevaluateourfutureprospects
andmayincreasetheriskthatwewillnotbesuccessful.

Ourrecent,rapidgrowthmaynotbeindicativeofourfuturegrowthand,ifwecontinuetogrowrapidly,wemaynotbe
abletomanageourgrowtheffectively.

Wehaveahistoryoflossesandmaynotachieveconsistentprofitabilityinthefuture.

Worseningeconomicconditionsmayresultindecreaseddemandforourloans,causeourcustomersdefaultratesto
increaseandharmouroperatingresults.

Ourbusinessmaybeadverselyaffectedbydisruptionsinthecreditmarkets,includingreducedaccesstocredit.

Iftheinformationprovidedbycustomerstousisincorrectorfraudulent,wemaymisjudgeacustomersqualifications
toreceivealoanandouroperatingresultsmaybeharmed.

Ourcurrentlevelofinterestratespreadmaydeclineinthefuture.Anymaterialreductioninourinterestratespread
couldreduceourprofitability.

Anincreaseincustomerdefaultratesmayreduceouroverallprofitabilityandcouldalsoaffectourabilitytoattract
institutionalfunding.Further,historicaldefaultratesmaynotbeindicativeoffutureresults.

Ourriskmanagementeffortsmaynotbeeffective.

Werelyonourproprietarycreditscoringmodelintheforecastingoflossrates.Ifweareunabletoeffectivelyforecast
lossrates,itmaynegativelyimpactouroperatingresults.

Ourallowanceforloanlossesisdeterminedbaseduponbothobjectiveandsubjectivefactorsandmaynotbeadequate
toabsorbloanlosses.

Wefaceincreasingcompetitionand,ifwedonotcompeteeffectively,ouroperatingresultscouldbeharmed.

Thelendingindustryishighlyregulated.Changesinregulationsorinthewayregulationsareappliedtoourbusiness
couldadverselyaffectourbusiness.

CorporateInformation
Ourprincipalexecutiveofficesarelocatedat1400Broadway,25thFloor,NewYork,NewYork10018,andourtelephone
numberis(888)2694246.Ourwebsiteiswww.ondeck.com.Informationcontainedon,orthatcanbeaccessedthrough,our
websiteisnotincorporatedbyreferenceintothisprospectus,andyoushouldnotconsiderinformationonourwebsitetobepart
ofthisprospectus.WewereincorporatedinDelawareinMay2006.
OnDeck,theOnDecklogo,OnDeckScore,OnDeckMarketplaceandothertrademarksorservicemarksofOnDeck
appearinginthisprospectusarethepropertyofOnDeck.Tradenames,trademarksandservicemarksofothercompanies
appearinginthisprospectusarethepropertyoftheirrespectiveholders.Wehaveomittedtheanddesignations,as
applicable,forthetrademarksusedinthisprospectus.
WeareanemerginggrowthcompanyasdefinedintheJumpstartOurBusinessStartupsActof2012andaretherefore
subjecttoreducedpubliccompanyreportingrequirements.Wewillremainanemerginggrowth

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companyuntiltheearliesttooccurof:thelastdayofthefiscalyearinwhichwehavemorethan$1.0billioninannualrevenue
thedatewequalifyasalargeacceleratedfilerwithatleast$700millionofequitysecuritiesheldbynonaffiliatesthe
issuance,inanythreeyearperiod,byusofmorethan$1.0billioninnonconvertibledebtsecuritiesandthelastdayofthefiscal
yearendingafterthefifthanniversaryofourinitialpublicoffering.
OfferingRelatedConversion
Uponthecompletionofthisoffering,wewillnolongerhaveanysharesofpreferredstockorpreferredstockwarrants
outstanding.Uponcompletionofthisoffering,23,725,822sharesofourpreferredstockwillautomaticallyconvertintosharesof
commonstock.Alsoatsuchtime,alloutstandingpreferredstockwarrantswillautomaticallyconvertintocommonstock
warrantsandtherelatedliabilitywillbereclassifiedtoadditionalpaidincapital.Theconsiderationwereceivedinrespectofthe
preferredstockoutstandingatSeptember30,2014rangedfrom$0.73to$29.42pershareandaveraged$7.68pershare.Each
shareofpreferredstockwillconvertintooneshareofcommonstockwithoutthepaymentofadditionalconsideration.In
addition,certainsharesofpreferredstockwerealreadyrepurchasedandretiredin2013,whenwevoluntarilyredeemedcertain
sharesofSeriesAandSeriesBpreferredstockforanaggregatepricethatwasapproximately$5.3millioninexcessofthe
carryingamount.Theportionoftheredemptioninexcessofthecarryingamountwasrecordedasareductiontoadditionalpaid
incapitalandaddedtonetlosstoarriveatnetlossattributabletocommonstockholdersinthecalculationoflosspercommon
share.

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THEOFFERING

Commonstockofferedbyus

shares

Commonstocktobeoutstandingafterthis
offering

shares

Optiontopurchaseadditionalsharestobe
offeredbyus

shares

Weintendtousethenetproceedsfromthisofferingforgeneralcorporatepurposes,
includingworkingcapital,salesandmarketingactivities,dataandanalytics
enhancements,productdevelopment,capitalexpendituresandtofundaportion
oftheloansmadetoourcustomers.Wealsomayuseaportionofthenet
proceedstoinvestinoracquirecomplementarytechnologies,solutionsor
businessesandfortargetedinternationalexpansion.However,wehaveno
presentagreementsorcommitmentsforanysuchinvestments,acquisitionsor
expansion.SeethesectiontitledUseofProceeds.

Uponcompletionofthisoffering,theexecutiveofficers,directorsand5%
stockholdersofourcompanyandtheiraffiliateswillbeneficiallyown,inthe
aggregate,approximately%ofouroutstandingcapitalstock.

ONDK

Useofproceeds

Concentrationofownership

ProposedNewYorkStockExchange
tradingsymbol

Thenumberofsharesofourcommonstocktobeoutstandingafterthisofferingisbasedon28,080,318sharesofour
commonstockoutstandingonanasconvertedbasisasofSeptember30,2014,andexcludes:

4,985,401sharesofcommonstockissuableupontheexerciseofoptionsoutstandingasofSeptember30,2014,witha
weightedaverageexercisepriceof$7.51pershareandpershareexercisepricesrangingfrom$0.53to$21.32

149,000sharesofcommonstockissuableupontheexerciseofoptionsoutstandingasofNovember6,2014,which
weregrantedafterSeptember30,2014,withanexercisepriceof$24.76pershare

sharesofcommonstockreservedforissuanceunderour2014EquityIncentivePlan,whichwillbecome
effectiveinconnectionwiththisoffering

sharesofcommonstockreservedforissuanceunderour2014EmployeeStockPurchasePlan,whichwill
becomeeffectiveinconnectionwiththisoffering

1,806,263sharesofcommonstockissuableupontheexerciseofwarrantsoutstandingasofSeptember30,2014,witha
weightedaverageexercisepriceof$13.89pershareandpershareexercisepricesrangingfrom$0.65to$29.42and

1,000sharesofcommonstockissuableupontheexerciseofonewarrantissuedafterSeptember30,2014,withan
exercisepriceof$24.76pershare.

Unlessotherwisenoted,theinformationinthisprospectusreflectsandassumesthefollowing:

afor1forwardstocksplitofourcommonstockandredeemableconvertiblepreferredstocktobeeffectedprior
tothecompletionofthisoffering

theconversionofalloutstandingsharesofourredeemableconvertiblepreferredstockasofSeptember30,2014intoan
aggregateof23,725,822sharesofcommonstockimmediatelypriortothecompletionofthisoffering

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thefilingofouramendedandrestatedcertificateofincorporationinconnectionwiththecompletionofthisoffering

noexerciseofoutstandingoptionsorwarrantsand

noexerciseoftheunderwritersoptiontopurchaseadditionalshares.

10

TableofContents

SUMMARYCONSOLIDATEDFINANCIALDATA
Thefollowingtablessummarizeourconsolidatedfinancialdata.Youshouldreadthesummaryconsolidatedfinancialdata
setforthbelowinconjunctionwithourconsolidatedfinancialstatements,thenotestoourconsolidatedfinancialstatementsand
thesectiontitledManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationscontained
elsewhereinthisprospectus.
TheconsolidatedstatementsofoperationsdatafortheyearsendedDecember31,2012and2013arederivedfromour
auditedconsolidatedfinancialstatementsincludedelsewhereinthisprospectus.Theconsolidatedstatementsofoperationsdata
fortheninemonthsendedSeptember30,2013and2014andbalancesheetdataasofSeptember30,2014arederivedfromour
unauditedconsolidatedinterimfinancialstatementsincludedelsewhereinthisprospectus.Theunauditedconsolidatedfinancial
datafortheninemonthsendedSeptember30,2013and2014andasofSeptember30,2014includesalladjustments,consisting
onlyofnormalrecurringaccruals,thatarenecessaryintheopinionofourmanagementforafairpresentationofourfinancial
positionandresultsofoperationsfortheseperiods.Ourhistoricalresultsarenotnecessarilyindicativeoftheresultsthatmaybe
expectedinanyfutureperiod.

ConsolidatedStatementsofOperationsData:
Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue
Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue
Netrevenue
Operatingexpenses:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totaloperatingexpenses
Lossfromoperations
Other(expense)income:
Interestexpense
Warrantliabilityfairvalueadjustment
Totalother(expense)income
Lossbeforeprovisionforincometaxes
Provisionforincometaxes
Netloss
SeriesAandSeriesBpreferredstockredemptions
Accretionofdividendsonredeemableconvertiblepreferredstock
Netlossattributabletocommonstockholders

Netlosspershareofcommonstockbasicanddiluted
Proformanetlosspershareofcommonstockbasicanddiluted(1)

26,570
13,419
39,989
25,260

18,095
8,760
5,577
12,169
44,601
(19,341)

(88)

(148)

(236)
(16,844)

(16,844)

(3,440)
$ (20,284)

(1,276)
(3,739)
(5,015)
(24,356)

(24,356)
(5,254)
(7,470)
(37,080)

(17.28)

(0.96)

25,273

370
25,643

12,469
8,294
20,763
4,880

6,633
5,001
2,919
6,935
21,488
(16,608)

Weightedaveragesharesofcommonstockusedincomputingnetloss
persharebasicanddiluted

41,073

1,004
42,077

99,873
4,569
3,131
107,573

16,300
9,400
25,700
16,377

47,011
12,531
59,542
48,031

13,566
6,090
3,746
9,158
32,560
(16,183)

21,799
11,357
5,928
13,968
53,052
(5,021)

(1,070)

(1,496)

(2,566)
(18,749)

(18,749)

(5,254)

(5,414)
$ (29,417)

(274)
(9,122)
(9,396)
(14,417)

(14,417)

(9,828)
(24,245)

(8.48)

(0.21)

(8.54)

62,941
788
1,520
65,249

Weightedaveragesharesofcommonstockusedincomputingpro
formanetlosspersharebasicanddiluted(1)

NineMonthsEnded
YearEndedDecember31,
September30,
2012

2013

2013

2014
(inthousands,exceptshareandpersharedata)

(13.73)

2,375,220

2,146,013

2,142,568

2,857,871

21,544,497

25,583,884

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TableofContents

NineMonthsEnded
YearEndedDecember31,
September30,

2012
2013
2013
2014
(inthousands,exceptshareandpersharedata)

Stockbasedcompensationexpenseincludedabove:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totalstockbasedcompensationexpense

Otherfinancialdata:
AdjustedEBITDA(2)
Adjustednetloss(3)

$(14,834)
$(16,467)

$(16,258)
$(20,179)

$(14,152)
$(16,986)

47
7
9
166
229

118
47
30
243
438

71
20
15
161
267

$ 325
290
126
706
$ 1,447
$ (726)
$(3,848)

(1) Proformabasicanddilutednetlosspershareofcommonstockhavebeencalculatedassuming(i)theconversionofalloutstandingsharesof
redeemableconvertiblepreferredstockatDecember31,2013andSeptember30,2014intoanaggregateof20,549,165and23,725,822shares
ofcommonstock,respectively,asofthebeginningoftheapplicableperiodoratthetimeofissuance,iflater,(ii)theredemptionofSeriesAand
SeriesBpreferredstockasofthebeginningoftheapplicableperiod,and(iii)thereclassificationofoutstandingpreferredstockwarrantsfrom
liabilitiestoadditionalpaidincapitalasofthebeginningoftheapplicableperiod.
(2) AdjustedEBITDAisnotafinancialmeasurepreparedinaccordancewithGAAP.AdjustedEBITDArepresentsournetloss,adjustedto
excludeinterestexpenseassociatedwithdebtusedforcorporatepurposes,incometaxexpense,depreciationandamortization,stockbased
compensationexpenseandwarrantliabilityfairvalueadjustment.AdjustedEBITDAdoesnotadjustforfundingcosts,whichrepresentthe
interestexpenseassociatedwithdebtusedforlendingpurposes.SeeManagementsDiscussionandAnalysisofFinancialConditionand
ResultsofOperationsNonGAAPFinancialMeasuresformoreinformationandforareconciliationofAdjustedEBITDAtonetloss,the
mostdirectlycomparablefinancialmeasurecalculatedinaccordancewithGAAP.
(3) AdjustednetlossisnotafinancialmeasurepreparedinaccordancewithGAAP.WedefineAdjustednetlossasnetlossadjustedtoexclude
stockbasedcompensationexpenseandwarrantliabilityfairvalueadjustment.SeeManagementsDiscussionandAnalysisofFinancial
ConditionandResultsofOperationsNonGAAPFinancialMeasuresformoreinformationandforareconciliationofAdjustednetlossto
netloss,themostdirectlycomparablefinancialmeasurecalculatedinaccordancewithGAAP.

Actual

ConsolidatedBalanceSheetData:
Cashandcashequivalents
Restrictedcash
Loans,netofallowanceforloanlosses
Loansheldforsale
Totalassets
Fundingdebt(3)
Corporatedebt(4)
Totalliabilities
Totalredeemableconvertiblepreferredstock
Totalstockholders(deficit)equity

$ 22,642
22,615
393,635

2,653
466,007
347,204

3,000
368,077
218,363
(120,433)

AsofSeptember30,2014
Proforma(1)
(inthousands)

22,642
22,615
393,635
2,653
466,007
347,204
3,000
365,275

100,732

Proformaas
adjusted(2)

(1) TheproformacolumnreflectstheconversionofalloutstandingsharesofconvertiblepreferredstockatSeptember30,2014into23,725,822
sharesofcommonstockimmediatelypriortotheclosingofthisoffering.Theconsiderationpaidforeachshareofconvertiblepreferredstock
outstandingatSeptember30,2014rangedfrom$0.73to$29.42andaveraged$7.68.Eachshareofpreferredstockwillconvertintooneshare
ofcommonstockwithoutthepaymentofadditionalconsideration.Theconversionoftheconvertiblepreferredstockandthewarrantliability
reducestotalredeemableconvertiblepreferredstockandtotalliabilitiesby$218.4millionand$2.8million,respectively.

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TableofContents

(2) Theproformaasadjustedcolumnreflectstheproformaadjustmentsdescribedinfootnote(1)aboveandthesalebyusofsharesofcommon
stockinthisofferingatanassumedinitialpublicofferingpriceof$pershare,themidpointofthepricerangesetforthonthecoverpage
ofthisprospectus,afterdeductingtheunderwritingdiscountandcommissionsandestimatedofferingexpensespayablebyus.A$1.00increase
(decrease)intheassumedinitialpublicofferingpriceof$persharewouldincrease(decrease)eachofproformaasadjustedcashand
cashequivalents,workingcapitalandtotalassetsby$anddecrease(increase)proformaasadjustedtotalstockholders(deficit)equity
byapproximately$,assumingthenumberofsharesweareoffering,assetforthonthecoverpageofthisprospectus,remainsthesame,
afterdeductingtheunderwritingdiscountandcommissionsandestimatedofferingexpensespayablebyus.Theproformaasadjusted
informationisillustrativeonly,andwewilladjustthisinformationbasedontheactualinitialpublicofferingprice,numberofsharesofferedand
othertermsofthisofferingdeterminedatpricing.
(3) FundingdebtisusedtofundloanoriginationsandisnonrecoursetoOnDeckCapital,Inc.
(4) Corporatedebtisusedtofundgeneralcorporateoperations.

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TableofContents

RISKFACTORS
Investinginourcommonstockinvolvesahighdegreeofrisk.Youshouldcarefullyconsiderthefollowingrisksandallother
informationcontainedinthisprospectus,includingourconsolidatedfinancialstatementsandtherelatednotes,beforeinvestingin
ourcommonstock.Therisksanduncertaintiesdescribedbelowarenottheonlyonesweface,butincludethemostsignificant
factorscurrentlyknownbyusthatmaketheofferingspeculativeorrisky.Additionalrisksanduncertaintiesthatweareunawareof,
orthatwecurrentlybelievearenotmaterial,alsomaybecomeimportantfactorsthataffectus.Ifanyofthefollowingrisks
materialize,ourbusiness,financialconditionandresultsofoperationscouldbemateriallyharmed.Inthatcase,thetradingpriceof
ourcommonstockcoulddecline,andyoumaylosesomeorallofyourinvestment.
Wehavealimitedoperatinghistoryinanevolvingindustry,whichmakesitdifficulttoevaluateourfutureprospectsandmay
increasetheriskthatwewillnotbesuccessful.
Wehavealimitedoperatinghistoryinanevolvingindustrythatmaynotdevelopasexpected.Assessingourbusinessand
futureprospectsischallenginginlightoftherisksanddifficultieswemayencounter.Theserisksanddifficultiesincludeourability
to:

increasethenumberandtotalvolumeoftermloansandlinesofcreditweextendtoourcustomers

improvethetermsonwhichwelendtoourcustomersasourbusinessbecomesmoreefficient

increasetheeffectivenessofourdirectmarketing,aswellasourstrategicpartnerandfundingadvisorprogramcustomer
acquisitionchannels

increaserepeatborrowingbyexistingcustomers

successfullydevelopanddeploynewproducts

successfullymaintainourdiversifiedfundingstrategy,includingthroughtheOnDeckMarketplaceandfuture
securitizationtransactions

favorablycompetewithothercompaniesthatarecurrentlyin,ormayinthefutureenter,thebusinessoflendingtosmall
businesses

successfullynavigateeconomicconditionsandfluctuationsinthecreditmarket

effectivelymanagethegrowthofourbusiness

successfullyexpandourbusinessintoadjacentmarketsand

successfullyexpandinternationally.

Wemaynotbeabletosuccessfullyaddresstheserisksanddifficulties,whichcouldharmourbusinessandcauseouroperating
resultstosuffer.
Ourrecent,rapidgrowthmaynotbeindicativeofourfuturegrowthand,ifwecontinuetogrowrapidly,wemaynotbeableto
manageourgrowtheffectively.
Ourgrossrevenuegrewfrom$25.6millionin2012to$65.2millionin2013andfrom$42.1millionfortheninemonthsended
September30,2013to$107.6millionfortheninemonthsendedSeptember30,2014.Weexpectthat,inthefuture,evenifour
revenuecontinuestoincrease,ourrateofrevenuegrowthwilldecline.
Inaddition,weexpecttocontinuetoexpendsubstantialfinancialandotherresourceson:

personnel,includingsignificantincreasestothetotalcompensationwepayouremployeesaswegrowouremployee
headcount

marketing,includingexpensesrelatingtoincreaseddirectmarketingefforts

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TableofContents

productdevelopment,includingthecontinueddevelopmentofourplatformandOnDeckScore

diversificationoffundingsources,includingthroughOnDeckMarketplace

officespace,asweincreasethespaceweneedforourgrowingemployeebaseand

generaladministration,includinglegal,accountingandothercomplianceexpensesrelatedtobeingapubliccompany.

Inaddition,ourhistoricalrapidgrowthhasplaced,andmaycontinuetoplace,significantdemandsonourmanagementandour
operationalandfinancialresources.Finally,ourorganizationalstructureisbecomingmorecomplexasweaddadditionalstaff,and
wewillneedtoimproveouroperational,financialandmanagementcontrolsaswellasourreportingsystemsandprocedures.Ifwe
cannotmanageourgrowtheffectivelyourfinancialresultswillsuffer.
Wehaveahistoryoflossesandmaynotachieveconsistentprofitabilityinthefuture.
Wegeneratednetlossesof$16.8million,$24.4million,$18.7millionand$14.4millionin2012,2013andfortheninemonths
endedSeptember30,2013and2014,respectively.AsofSeptember30,2014,wehadanaccumulateddeficitof$119.7million.We
willneedtogenerateandsustainincreasedrevenuelevelsinfutureperiodsinordertobecomeprofitable,and,evenifwedo,wemay
notbeabletomaintainorincreaseourlevelofprofitability.Weintendtocontinuetoexpendsignificantfundstoexpandour
marketingandsalesoperations,increaseourcustomerserviceandgeneralloanservicingcapabilities,meettheincreasedcompliance
requirementsassociatedwithourtransitiontoandoperationasapubliccompany,leaseadditionalspaceforourgrowingemployee
base,upgradeourdatacenterinfrastructureandexpandintonewmarkets.Inaddition,werecordourloanlossprovisionasanexpense
toaccountforthepossibilitythatallloansmaynotberepaidinfull.Becauseweincuragivenloanlossexpenseatthetimethatwe
issuetheloan,weexpecttheaggregateamountofthisexpensetogrowasweincreasethenumberandtotalamountofloanswemake
toourcustomers.
Oureffortstogrowourbusinessmaybemorecostlythanweexpect,andwemaynotbeabletoincreaseourrevenueenoughto
offsetourhigheroperatingexpenses.Wemayincursignificantlossesinthefutureforanumberofreasons,includingtheotherrisks
describedinthisprospectus,andunforeseenexpenses,difficulties,complicationsanddelays,andotherunknownevents.Ifweare
unabletoachieveandsustainprofitability,themarketpriceofourcommonstockmaysignificantlydecrease.
Worseningeconomicconditionsmayresultindecreaseddemandforourloans,causeourcustomersdefaultratestoincreaseand
harmouroperatingresults.
UncertaintyandnegativetrendsingeneraleconomicconditionsintheUnitedStatesandabroad,includingsignificant
tighteningofcreditmarkets,historicallyhavecreatedadifficultenvironmentforcompaniesinthelendingindustry.Manyfactors,
includingfactorsthatarebeyondourcontrol,mayhaveadetrimentalimpactonouroperatingperformance.Thesefactorsinclude
generaleconomicconditions,unemploymentlevels,energycostsandinterestrates,aswellaseventssuchasnaturaldisasters,actsof
war,terrorismandcatastrophes.
Ourcustomersaresmallbusinesses.Accordingly,ourcustomershavehistoricallybeen,andmayinthefutureremain,more
likelytobeaffectedormoreseverelyaffectedthanlargeenterprisesbyadverseeconomicconditions.Theseconditionsmayresultina
declineinthedemandforourloansbypotentialcustomersorhigherdefaultratesbyourexistingcustomers.Ifacustomerdefaultson
aloanpayabletous,theloanentersacollectionsprocesswhereoursystemsandcollectionsteamsinitiatecontactwiththeborrower
forpaymentsowed.Ifaloanissubsequentlychargedoff,wegenerallyselltheloantoathirdpartycollectionagencyandreceive
onlyasmallfractionoftheremainingamountpayabletousinexchangeforthissale.
Therecanbenoassurancethateconomicconditionswillremainfavorableforourbusinessorthatdemandforourloansor
defaultratesbyourcustomerswillremainatcurrentlevels.Reduceddemandforourloanswould

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negativelyimpactourgrowthandrevenue,whileincreaseddefaultratesbyourcustomersmayinhibitouraccesstocapital,hinder
thegrowthofourOnDeckMarketplaceandnegativelyimpactourprofitability.Furthermore,wehavereceivedalargenumberof
applicationsfrompotentialcustomerswhodonotsatisfytherequirementsforanOnDeckloan.Ifaninsufficientnumberofqualified
smallbusinessesapplyforourloans,ourgrowthandrevenuecoulddecline.
Ourbusinessmaybeadverselyaffectedbydisruptionsinthecreditmarkets,includingreducedaccesstocredit.
Wedependondebtfacilitiesandotherformsofdebtinordertofinancemostoftheloanswemaketoourcustomers.However,
wecannotguaranteethatthesefinancingsourceswillcontinuetobeavailablebeyondthecurrentmaturitydateofeachdebtfacility,
onreasonabletermsoratall.Asthevolumeofloansthatwemaketocustomersonourplatformincreases,wemayrequirethe
expansionofourborrowingcapacityonourexistingdebtfacilitiesandotherdebtarrangementsortheadditionofnewsourcesof
capital.Theavailabilityofthesefinancingsourcesdependsonmanyfactors,someofwhichareoutsideofourcontrol.Wemayalso
experiencetheoccurrenceofeventsofdefaultorbreachesoffinancialorperformancecovenantsunderourdebtagreements,which
couldreduceorterminateouraccesstoinstitutionalfunding.Inaddition,webegansellingloanstothirdpartiesviaourOnDeck
MarketplaceinOctober2013andcompletedourfirstsecuritizationtransactioninMay2014.Therecanbenoassurancethat
investorswillcontinuetopurchaseourloansviaourOnDeckMarketplaceorthatwewillbeabletosuccessfullyaccessthe
securitizationmarketsagain.Furthermore,becauseweonlyrecentlybeganaccessingthesesourcesofcapital,thereisagreater
possibilitythatthesesourcesofcapitalmaynotbeavailableinthefuture.Intheeventofasuddenorunexpectedshortageoffundsin
thebankingsystem,wecannotbesurethatwewillbeabletomaintainnecessarylevelsoffundingwithoutincurringhighfunding
costs,areductioninthetermoffundinginstrumentsortheliquidationofcertainassets.Ifweweretobeunabletoarrangenewor
alternativemethodsoffinancingonfavorableterms,wemayhavetocurtailouroriginationofloans,whichcouldhaveamaterial
adverseeffectonourbusiness,financialcondition,operatingresultsandcashflow.
Iftheinformationprovidedbycustomerstousisincorrectorfraudulent,wemaymisjudgeacustomersqualificationtoreceivea
loanandouroperatingresultsmaybeharmed.
Ourlendingdecisionsarebasedpartlyoninformationprovidedtousbyloanapplicants.Totheextentthattheseapplicants
provideinformationtousinamannerthatweareunabletoverify,theOnDeckScoremaynotaccuratelyreflecttheassociatedrisk.In
addition,dataprovidedbythirdpartysourcesisasignificantcomponentoftheOnDeckScoreandthisdatamaycontain
inaccuracies.Inaccurateanalysisofcreditdatathatcouldresultfromfalseloanapplicationinformationcouldharmourreputation,
businessandoperatingresults.
Inaddition,weuseidentityandfraudchecksanalyzingdataprovidedbyexternaldatabasestoauthenticateeachcustomers
identity.Thereisarisk,however,thatthesecheckscouldfail,andfraudmayoccur.Wemaynotbeabletorecoupfundsunderlying
loansmadeinconnectionwithinaccuratestatements,omissionsoffactorfraud,inwhichcaseourrevenue,operatingresultsand
profitabilitywillbeharmed.Fraudulentactivityorsignificantincreasesinfraudulentactivitycouldalsoleadtoregulatory
intervention,negativelyimpactouroperatingresults,brandandreputationandrequireustotakestepstoreducefraudrisk,which
couldincreaseourcosts.
Ourcurrentlevelofinterestratespreadmaydeclineinthefuture.Anymaterialreductioninourinterestratespreadcouldreduce
ourprofitability.
Weearnasubstantialmajorityofourrevenuesfrominterestpaymentsontheloanswemaketoourcustomers.Financial
institutionsandotherfundingsourcesprovideuswiththecapitaltofundthesetermloansandlinesofcreditandchargeusintereston
fundsthatwedrawdown.Intheeventthatthespreadbetweentherateatwhichwelendtoourcustomersandtherateatwhichwe
borrowfromourlendersdecreases,ourfinancialresultsandoperatingperformancewillbeharmed.Theinterestrateswechargetoour
customersandpaytoourlenderscouldeachbeaffectedbyavarietyoffactors,includingaccesstocapitalbasedonourbusiness
performance,thevolumeofloanswemaketoourcustomers,competitionandregulatoryrequirements.These

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interestratesmayalsobeaffectedbyachangeovertimeinthemixofthetypesofproductsweselltoourcustomersandinvestorsand
ashiftamongourchannelsofcustomeracquisition.Interestratechangesmayadverselyaffectourbusinessforecastsandexpectations
andarehighlysensitivetomanymacroeconomicfactorsbeyondourcontrol,suchasinflation,recession,thestateofthecredit
markets,changesinmarketinterestrates,globaleconomicdisruptions,unemploymentandthefiscalandmonetarypoliciesofthe
federalgovernmentanditsagencies.Anymaterialreductioninourinterestratespreadcouldhaveamaterialadverseeffectonour
business,resultsofoperationsandfinancialcondition.
Ifthechoiceoflawprovisionsinourloanagreementsarefoundtobeunenforceable,wemaybefoundtobeinviolationofstate
interestratelimitlaws.
Althoughthefederalgovernmentdoesnotcurrentlyregulatethemaximuminterestratesthatmaybechargedonprivateloan
transactions,manystateshaveenactedinterestratelimitlawsspecifyingthemaximumlegalinterestrateatwhichloanscanbemade
inthestate.WeapplyVirginialawtotheunderlyingagreementforloansthatweoriginatebecauseourloansareunderwrittenand
enteredintointhestateofVirginia,whereourunderwriting,servicing,operationsandcollectionsteamsareheadquartered.
Virginiadoesnothaveaninterestratelimitlawapplicabletoloansextendedtocorporationsorcertainotherentities.Assuming
acourtweretorecognizethischoiceoflawprovision,Virginialawwouldbeappliedtoadisputebetweenthecustomerandus
regardlessofwherethecustomerislocated.WeintendforVirginialawtocontroloverstateinterestratelimitlawsthatwould
otherwisebeapplicabletotheseloans.WearenotawareofanybroadbasedlegalchallengestodatetotheapplicabilityofVirginia
lawtotheseloansortheloansofothercompanies.However,manylawstowhichwearesubjectwereadoptedpriortotheadventof
theinternetandrelatedtechnologiesand,asaresult,donotexpresslycontemplateoraddresstheuniqueissuesoftheinternetsuchas
theapplicabilityoflawstoonlinetransactions,includinginourcase,theoriginationofloans.Inaddition,manylawsthatdo
referencetheinternetarebeinginterpretedbythecourts,buttheirapplicabilityandscoperemainuncertain.Asaresult,wecannot
predictwhetheracourtmayseektoapplyadifferentchoiceoflawtoourloansortootherwiseinvalidatetheapplicabilityof
Virginialawtoourloans.IftheapplicabilityofVirginialawtotheseloanswerechallenged,andtheseloanswerefoundtobe
governedbythelawsofanotherstate,andsuchotherstatehasaninterestratelimitlawthatprohibitstheinterestrateineffectwith
respecttosuchloans,theobligationsofourcustomerstopayalloraportionoftheinterestontheseloanscouldbefound
unenforceableorrecoverablebysuchcustomer.Ajudgmentthatthechoiceoflawprovisionsinourloanagreementsisunenforceable
couldresultincostlyandtimeconsuminglitigation,damageourreputation,triggerrepurchaseobligations,negativelyimpactthe
termsofourfutureloansandharmouroperatingresults.Likewise,ajudgmentthatthechoiceoflawprovisioninothercommercial
loanagreementsisunenforceablecouldresultinchallengestoourchoiceoflawprovisionandthatcouldresultincostlyandtime
consuminglitigation.Inaddition,itcouldcauseustoincursubstantialadditionalexpensetocomplywiththelawsofvariousstates,
includingeitherourregistrationasalenderinthevariousstates,orrequiringustoplacemoreloansthroughourissuingbank
partners.
Issuingbankpartnerswithwhomwehaveagreementslendtocustomersincertainstates.Ifourrelationshipswithissuingbank
partnersweretoend,thenwemayhavetocomplywithadditionalrestrictions,andcertainstatesmayrequireustoobtainalending
license.
Inmoststates,wemakeloansdirectlytocustomerspursuanttoVirginialaw,whichisthegoverninglawwerequireinthe
underlyingloanagreementswithourcustomers.However,11statesandjurisdictions,namelyAlaska,California,Kentucky,
Maryland,Nebraska,Nevada,NorthDakota,RhodeIsland,SouthDakota,Vermont,andWashington,D.C.,maynothonoraVirginia
choiceoflaw.Theyasserteitherthattheirownlawsandrequirementsshouldgenerallyapplytocommercialloansmadebynonbanks
orapplytocommercialloansmadebynonbanksifcertainprincipalamountsareoutsidearangeofinterestrates.Insuchstatesand
jurisdictionsandinsomeothercircumstances,loansaremadebyanissuingbankpartner,primarilyBofIFederalBank(afederally
charteredbank),andmaybesoldtous.FortheyearsendedDecember31,2012and2013andfortheninemonthsendedSeptember
30,2013and2014,loansmadebyissuingbankpartnersconstituted21.1%,

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16.1%,16.2%and16.7%,respectively,ofourtotalloanoriginations.TheseloansarenotgovernedbyVirginialaw,butratherthe
lawsoftheissuingbankpartnershomestate,CalifornialawinthecaseofBofIFederalBank.Theremainderofourloansprovidethat
theyaretobegovernedbyVirginialaw.OurissuingbankpartnercurrentlyoriginatesallofourloansinCalifornia,Nevada,North
Dakota,SouthDakotaandVermontaswellassomeloansinotherstatesandjurisdictionsinadditiontothoselistedabove.Although
suchstatesandjurisdictionsmayhaveinterestratecaps,eithergenerallyorsubjecttocertainlicensingandloansizerequirements,all
suchcapsthatwouldotherwisebeapplicablearefederallypreemptedwhentheseloansareoriginatedbyourfederallychartered
issuingbankpartner.Asaresult,loansoriginatedbyourissuingbankpartneraregenerallypricedthesameasloansoriginatedbyus
underVirginialaw.Whiletheother40U.S.stateswhereweoriginateloanscurrentlyhonorourVirginiachoiceoflaw,futurelegal
changescouldresultinanyoneormoreofthosestatesnolongerhonoringourVirginiachoiceoflaw.Inthatcase,wecouldaddress
thelegalchangeinamannersimilartohowweapproachthe11statesandjurisdictionsthatcurrentlymaynothonoraVirginia
choiceoflaw,orwecouldconsiderotherapproaches,includinglicensing.
Ifweweretoseektomakeloansdirectlyinthosestatesreferencedintheparagraphaboveorifwewereotherwisenotableto
workwithanissuingbankpartner,wewouldhavetoattempttocomplywiththelawsofthesestatesinotherways,including
throughobtaininglendinglicenses.Compliancewiththelawsofsuchstatescouldbecostly,andifweareunabletoobtainsuch
licenses,ourloanvolumecouldsubstantiallydecreaseandourrevenues,growthandprofitabilitywouldbeharmed.Inaddition,if
ouractivitiesunderthecurrentarrangementwithissuingbankpartnersweredeemedtoconstitutelendingwithinanysuch
jurisdiction,wecouldbefoundtohaveengagedinimpermissiblelendingwithinsuchjurisdictions.Asaresult,wecouldbe
subjectedtofinesandotherpenalties,alloraportionoftheinterestchargedontheapplicableloanscouldbefoundtobe
unenforceableorrecoverablebycustomersand,totheextentitisdeterminedthatsuchloanswerenotoriginatedinaccordancewith
allapplicablelaws,wecouldbeobligatedtorepurchaseanyloansfromourdebtfacilitiesandOnDeckMarketplaceparticipantsthat
failedtocomplywithsuchlegalrequirements.Anyfindingthatweengagedinlendinginstatesinwhichweareunlicensedtodoso
couldleadtolitigation,harmourreputationandnegativelyimpactouroperatingexpensesandprofitability.
Anincreaseincustomerdefaultratesmayreduceouroverallprofitabilityandcouldalsoaffectourabilitytoattractinstitutional
funding.Further,historicaldefaultratesmaynotbeindicativeoffutureresults.
Customerdefaultratesmaybesignificantlyaffectedbyeconomicdownturnsorgeneraleconomicconditionsbeyondour
controlandbeyondthecontrolofindividualcustomers.Inparticular,lossratesoncustomerloansmayincreaseduetofactorssuchas
prevailinginterestrates,therateofunemployment,thelevelofconsumerandbusinessconfidence,commercialrealestatevalues,the
valueoftheU.S.dollar,energyprices,changesinconsumerandbusinessspending,thenumberofpersonalbankruptcies,disruptions
inthecreditmarketsandotherfactors.Inaddition,asofSeptember30,2014,approximately28.3%ofourtotalloansoutstanding
relatedtocustomerswithfewerthanfiveyearsofoperatinghistory.WhileourOnDeckScoreisdesignedtoestablishthat,
notwithstandingsuchlimitedoperatingandfinancialhistory,customerswouldbeareasonablecreditrisk,ourloansmaynevertheless
beexpectedtohaveahigherdefaultratethanloansmadetocustomerswithmoreestablishedoperatingandfinancialhistories.In
addition,ifdefaultratesreachcertainlevels,theprincipalofoursecuritizednotesmayberequiredtobepaiddown,andwemayno
longerbeabletoborrowfromourdebtfacilitiestofundfutureloans.Inaddition,ifcustomerdefaultratesincreasebeyondforecast
levels,returnsforinvestorsinourOnDeckMarketplaceprogramwilldeclineanddemandbyinvestorstoparticipateinthisprogram
willdecrease,eachofwhichwillharmourreputation,operatingresultsandprofitability.
Ourriskmanagementeffortsmaynotbeeffective.
Wecouldincursubstantiallossesandourbusinessoperationscouldbedisruptedifweareunabletoeffectivelyidentify,
manage,monitorandmitigatefinancialrisks,suchascreditrisk,interestraterisk,liquidityrisk,andothermarketrelatedrisk,aswell
asoperationalrisksrelatedtoourbusiness,assetsandliabilities.Totheextentourmodelsusedtoassessthecreditworthinessof
potentialcustomersdonotadequatelyidentify

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potentialrisks,theOnDeckScoresproducedwouldnotadequatelyrepresenttheriskprofileofsuchcustomersandcouldresultin
higherriskthananticipated.Ourriskmanagementpolicies,procedures,andtechniques,includingouruseofourproprietaryOnDeck
Scoretechnology,maynotbesufficienttoidentifyalloftherisksweareexposedto,mitigatetherisksthatwehaveidentifiedor
identifyconcentrationsofriskoradditionalriskstowhichwemaybecomesubjectinthefuture.
Werelyonourproprietarycreditscoringmodelintheforecastingoflossrates.Ifweareunabletoeffectivelyforecastlossrates,it
maynegativelyimpactouroperatingresults.
Inmakingadecisionwhethertoextendcredittoprospectivecustomers,werelyheavilyonourOnDeckScore,thecreditscore
generatedbyourproprietarycreditscoringmodelanddecisioningsystem,anempiricallyderivedsuiteofstatisticalmodelsbuilt
usingthirdpartydata,datafromourcustomersandourcreditexperiencegainedthroughmonitoringtheperformanceofour
customersovertime.Ifourproprietarycreditscoringmodelanddecisioningsystemfailstoadequatelypredictthecreditworthinessof
ourcustomers,orifourproprietarycashflowanalyticssystemfailstoassessprospectivecustomersfinancialabilitytorepaytheir
loans,orifanyportionoftheinformationpertainingtotheprospectivecustomerisfalse,inaccurateorincomplete,andoursystems
didnotdetectsuchfalsities,inaccuraciesorincompleteness,oranyoralloftheothercomponentsofthecreditdecisionprocess
describedhereinfails,wemayexperiencehigherthanforecastedlosses.Furthermore,ifweareunabletoaccessthethirdpartydata
usedinourOnDeckScore,orouraccesstosuchdataislimited,ourabilitytoaccuratelyevaluatepotentialcustomerswillbe
compromised,andwemaybeunabletoeffectivelypredictprobablecreditlossesinherentinourloanportfolio,whichwould
negativelyimpactourresultsofoperations.
Additionally,ifwemakeerrorsinthedevelopmentandvalidationofanyofthemodelsortoolsweusetounderwritetheloans
thatwesecuritizeorselltoinvestors,theseinvestorsmayexperiencehigherdelinquenciesandlossesandwemaybesubjectto
liability.Moreover,iffutureperformanceofourcustomersloansdiffersfrompastexperience(drivenbyfactors,includingbutnot
limitedto,macroeconomicfactors,policyactionsbyregulators,lendingbyotherinstitutionsandreliabilityofdatausedinthe
underwritingprocess),whichexperiencehasinformedthedevelopmentoftheunderwritingproceduresemployedbyus,delinquency
ratesandlossestoinvestorsofoursecuritizeddebtfromourcustomersloanscouldincrease,therebypotentiallysubjectingusto
liability.Thisinabilitytoeffectivelyforecastlossratescouldalsoinhibitourabilitytoborrowfromourdebtfacilities,whichcould
furtherhinderourgrowthandharmourfinancialperformance.
Ourallowanceforloanlossesisdeterminedbaseduponbothobjectiveandsubjectivefactorsandmaynotbeadequatetoabsorb
loanlosses.
Wefacetheriskthatourcustomerswillfailtorepaytheirloansinfull.Wereserveforsuchlossesbyestablishinganallowance
forloanlosses,theincreaseofwhichresultsinachargetoourearningsasaprovisionforloanlosses.Wehaveestablishedan
evaluationprocessdesignedtodeterminetheadequacyofourallowanceforloanlosses.Whilethisevaluationprocessuseshistorical
andotherobjectiveinformation,theclassificationofloansandtheforecastsandestablishmentofloanlossesarealsodependenton
oursubjectiveassessmentbaseduponourexperienceandjudgment.Actuallossesaredifficulttoforecast,especiallyifsuchlosses
stemfromfactorsbeyondourhistoricalexperience,andunliketraditionalbanks,wearenotsubjecttoperiodicreviewbybank
regulatoryagenciesofourallowanceforloanlosses.Asaresult,therecanbenoassurancethatourallowanceforloanlosseswillbe
comparabletothatoftraditionalbankssubjecttoregulatoryoversightorsufficienttoabsorblossesorpreventamaterialadverse
effectonourbusiness,financialconditionandresultsofoperations.
Wefaceincreasingcompetitionand,ifwedonotcompeteeffectively,ouroperatingresultscouldbeharmed.
Wecompetewithothercompaniesthatlendtosmallbusinesses.Thesecompaniesincludetraditionalbanks,merchantcash
advanceprovidersandnewer,technologyenabledlenders.Inaddition,othertechnologycompaniesthatprimarilylendtoindividual
consumershavealreadybeguntofocus,ormayinthefuturefocus,theireffortsonlendingtosmallbusinesses.

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Insomecases,ourcompetitorsfocustheirmarketingonourindustrysectorsandseektoincreasetheirlendingandother
financialrelationshipswithspecificindustriessuchasrestaurants.Inothercases,somecompetitorsmayofferabroaderrangeof
financialproductstoourclients,andsomecompetitorsmayofferaspecializedsetofspecificproductsorservices.Manyofthese
competitorshavesignificantlymoreresourcesandgreaterbrandrecognitionthanwedoandmaybeabletoattractcustomersmore
effectivelythanwedo.
Whennewcompetitorsseektoenteroneofourmarkets,orwhenexistingmarketparticipantsseektoincreasetheirmarketshare,
theysometimesundercutthepricingand/orcredittermsprevalentinthatmarket,whichcouldadverselyaffectourmarketshareor
abilitytoexploitnewmarketopportunities.Ourpricingandcredittermscoulddeteriorateifweacttomeetthesecompetitive
challenges,whichcouldadverselyaffectourbusiness,resultsofoperations,financialconditionandfuturegrowth.
Todate,wehavederivedourrevenuefromalimitednumberofproductsandmarkets.Oureffortstoexpandourmarketreachand
productportfoliomaynotsucceedandmayreduceourrevenuegrowth.
WeoffertermloansandlinesofcredittoourcustomersintheUnitedStatesandtermloanstoourcustomersinCanada.Manyof
ourcompetitorsofferamorediversesetofproductstosmallbusinessesandinadditionalinternationalmarkets.Whileweintendto
eventuallybroadenthescopeofproductsthatweoffertoourcustomers,therecanbenoassurancethatwewillbesuccessfulinsuch
efforts.Failuretobroadenthescopeofproductsweoffertopotentialcustomersmayinhibitthegrowthofrepeatbusinessfromour
customersandharmouroperatingresults.Therealsocanbenoguaranteethatwewillbesuccessfulwithrespecttoourcurrentefforts
inCanada,aswellasanyfurtherexpansionbeyondtheUnitedStatesandCanada,ifwedecidetoattemptsuchexpansionatall,
whichmayalsoinhibitthegrowthofourbusiness.
InconnectionwithoursaleofloanstooursubsidiariesandthroughOnDeckMarketplace,wemakerepresentationsand
warrantiesconcerningtheloanswesell.Ifthoserepresentationsandwarrantiesarenotcorrect,wecouldberequiredtorepurchase
theloans.Anysignificantrequiredrepurchasescouldhaveanadverseeffectuponourabilitytooperateandfundourbusiness.
Inourassetbackedsecuritizationfacilityandourotherassetbackedrevolvingdebtfacilities,wetransferloanstoour
subsidiariesandmakenumerousrepresentationsandwarrantiesconcerningtheloanswetransferincludingrepresentationsand
warrantiesthattheloansmeettheeligibilityrequirements.Wealsomakerepresentationsandwarrantiesinconnectionwiththeloans
wesellthroughOnDeckMarketplace.Ifthoserepresentationsandwarrantiesareincorrect,wemayberequiredtorepurchasethe
loans.Wehavenotbeenrequiredtorepurchaseanyloansinconnectionwithourassetbackedsecuritizationfacility.Inconnection
withOnDeckMarketplaceandourassetbackedrevolvingdebtfacilities,wehavebeenrequiredtorepurchaseanimmaterialamount
ofloans.Failuretorepurchasesuchloanswhenrequiredwouldconstituteaneventofdefaultunderthesecuritizationandotherasset
backedfacilitiesandmayconstituteaterminationeventundertheapplicableOnDeckMarketplaceagreement.Thereisnoassurance,
however,thatwewouldhaveadequateresourcestomakesuchrepurchasesor,ifwedidmaketherepurchases,thatsucheventmight
nothaveamaterialadverseeffectonourbusiness.
Manyofourstrategicpartnershipsarenonexclusiveandsubjecttoterminationoptionsthat,ifterminated,couldharmthegrowth
ofourcustomerbaseandnegativelyaffectourfinancialperformance.Additionally,thesepartnersareconcentratedandthe
departureofasignificantpartnercouldhaveanegativeimpactonouroperatingresults.
Werelyonstrategicpartnersforreferralsofanincreasingportionofthecustomers,towhomweissueloansandourgrowth
dependsinpartonthegrowthofthesereferrals.In2012and2013andfortheninemonthsendedSeptember30,2013and2014,loans
issuedtocustomersreferredtousbyourstrategicpartnersconstituted5.5%,9.2%,9.5%and12.7%ofourtotalloanoriginations,
respectively.Manyofourstrategicpartnershipsdonotcontainexclusivityprovisionsthatwouldpreventsuchpartnersfrom
providingleadstocompetingcompanies.Inaddition,theagreementsgoverningthesepartnershipscontainterminationprovisions
that,ifexercised,would

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terminateourrelationshipwiththesepartners.Theseagreementsalsocontainnorequirementthatapartnerreferusanyminimum
numberofleads.Therecanbenoassurancethatthesepartnerswillnotterminateourrelationshipwiththemorcontinuereferring
businesstousinthefuture,andaterminationoftherelationshiporreductioninleadsreferredtouswouldhaveanegativeimpacton
ourrevenueandoperatingresults.
Inaddition,asmallnumberofstrategicpartnersrefertousasignificantportionoftheloansmadewithinthischannel.In2012
and2013andfortheninemonthsendedSeptember30,2013and2014,loansissuedtocustomersreferredtousbyourtop4strategic
partnersconstituted4.7%,7.0%,6.8%and9.4%ofourtotalloanoriginations,respectively.Intheeventthatoneormultipleofthese
significantstrategicpartnersterminatedourrelationshiporreducedthenumberofleadsprovidedtous,ourbusinesswouldbe
harmed.
TotheextentthatFundingAdvisorProgrampartnersordirectsalesagentsmisleadloanapplicantsorareengagedindisreputable
behavior,ourreputationmaybeharmedandwemayfaceliability.
Werelyonthirdpartyindependentadvisors,includingbusinessloanbrokers,whichwecallFundingAdvisorProgrampartners,
orFAPs,forreferralsofasubstantialportionofthecustomerstowhomweissueloans.In2012and2013andfortheninemonths
endedSeptember30,2013and2014,loansissuedtocustomerswhoseapplicationsweresubmittedtousviatheFAPchannel
constituted68.5%,45.6%,46.8%and32.3%ofourtotalnumberofloans,respectively.BecauseFAPsearnfeesonacommission
basis,FAPsmayhaveincentivetomisleadloanapplicants,facilitatethesubmissionbyloanapplicantsoffalseapplicationdataor
engageinotherdisreputablebehaviorsoastoearnadditionalcommissionsonthoseinaccurateloanapplications.Wealsorelyonour
directsalesagentsforcustomeracquisitioninourdirectmarketingchannel,andthesesalesagentsmayalsoengageindisreputable
behaviortoincreaseourcustomerbase.IfFAPsorourdirectsalesagentsmisleadourcustomers,ourcustomersarelesslikelytobe
satisfiedwiththeirexperienceandtobecomerepeatcustomers,andwemaybesubjecttocostlyandtimeconsuminglitigation,each
ofwhichcouldharmourreputationandoperatingperformance.
Wemaynothaveadequatefundingcapacityintheeventthatanunforeseennumberofcustomerstowhomwehaveextendedaline
ofcreditdecidetodrawtheirlinesatthesametime.
Ourcurrentcapacitytofundourcustomerslineofcreditthroughexistingdebtfacilitiesislimited.Accordingly,wemaintain
cashavailabletofundourcustomerslinesofcreditbasedontheamountthatweforeseethesecustomersdrawingdown.Forexample,
ifwemakeavailablealineofcreditfor$15,000toasmallbusiness,wemayonlyreserveaportionofthisamountatanygiventime
forimmediatedrawdown.Webasetheamountthatwereserveonouranalysisofaggregateportfoliodemandandthehistorical
activityofcustomersusingthelineofcreditproduct.However,ifweinaccuratelypredictthenumberofcustomersthatdrawdownon
theirlinesofcreditatacertaintime,orifthesecustomersdrawdowningreateramountsthanweforecast,wemaynothaveenough
fundsavailabletolendtothem.Failuretoprovidefundsdrawndownbyourcustomersontheirlinesofcreditmayexposeusto
liability,damageourreputationandinhibitourgrowth.
Asaresultofbecomingapubliccompany,wewillbeobligatedtomaintainproperandeffectiveinternalcontrolsoverfinancial
reporting.Wemaynotcompleteouranalysisofourinternalcontrolsoverfinancialreportinginatimelymanner,ortheseinternal
controlsmaynotbedeterminedtobeeffective,whichmayadverselyaffectinvestorconfidenceinourcompanyand,asaresult,the
valueofourcommonstock.
Followingthisoffering,wewillberequiredtofurnishareportbymanagementon,amongotherthings,theeffectivenessofour
internalcontroloverfinancialreportingforthefirstfiscalyearbeginningaftertheeffectivedateofthisoffering.Thisassessmentwill
needtoincludedisclosureofanymaterialweaknessesidentifiedbyourmanagementinourinternalcontroloverfinancialreporting,
aswellasastatementthatourauditorshaveissuedanattestationreportonourmanagementsassessmentofourinternalcontrols.
Wearecurrentlyevaluatingourinternalcontrols,identifyingandremediatingdeficienciesinthoseinternalcontrolsand
documentingtheresultsofourevaluation,testingandremediation.

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InconnectionwithourpreparationofthefinancialstatementsfortheyearendedDecember31,2013,whichwereissuedon
September29,2014,weidentifiedfourcontroldeficienciesthatdidnotrisetothelevelofamaterialweakness,onanindividual
basisorintheaggregate,butdidrepresentsignificantdeficienciesinourinternalcontroloverfinancialreporting.Acontrol
deficiencyisconsideredasignificantdeficiencyifitrepresentsadeficiency,oracombinationofdeficiencies,ininternalcontrolover
financialreportingthatislessseverethanamaterialweakness,yetimportantenoughtomeritattentionbythoseresponsiblefor
oversightofacompanysfinancialreporting.Theparticulardeficienciesrelatedtotheeffectivenessofourinformationtechnology
controls,theformalizationofkeycontrolsincertainoperationsandfinanceprocessesrelatingtotheretention,documentationand
evidenceofreviewsandapprovals,thetimelyreconciliationofcertainsubledgersandledgers,andthefinancialstatementclose
process,specificallytheprocessofrecordingprepaidassetsandexpensesaccurately.Wehavetakenstepstoaddressthese
deficiencies,andtheactionsweplantotakearesubjecttoongoingseniormanagementreviewandauditcommitteeoversight.
Wecannotassureyouthatthemeasureswehavetaken,orwilltake,toremediatethesesignificantdeficiencieswillbeeffective
orthatwewillbesuccessfulinimplementingthem.Moreover,wecannotassureyouthatwehaveidentifiedallsignificant
deficienciesorthatwewillnotinthefuturehaveadditionalsignificantdeficienciesoridentifymaterialweaknesses.Our
independentregisteredpublicaccountingfirmhasnotevaluatedanyofthemeasureswehavetaken,orthatweproposetotake,to
addressthesesignificantdeficienciesdiscussedabove.
Inaddition,becauseourbusinesshasgrownandwearebecomingapubliccompany,weareseekingtotransitiontoamore
developedinternalcontrolenvironmentthatincorporatesincreasedautomation.Inthecourseofpreparingourthirdquarter2014
financialstatements,weidentifiedadditionalcontroldeficienciesthatweareintheprocessofremediating.Whilewearetakingsteps
toupdateourprocessesandremediatethesecontroldeficiencies,ourindependentregisteredpublicaccountingfirmhasnotevaluated
thesecontroldeficienciesoranyoftheactionswehavetakenorproposetotaketoaddressthem.Wemaycontinuetoidentify
additionalcontroldeficienciesinthefuture.
Wealsomaynotbeabletocompleteourevaluation,testingandanyrequiredremediationinatimelyfashion.Duringthe
evaluationandtestingprocess,ifweidentifyoneormorematerialweaknessesinourinternalcontroloverfinancialreportingthatwe
areunabletoremediatebeforetheendofthesamefiscalyearinwhichthematerialweaknessisidentifiedorifweareotherwise
unabletomaintaineffectiveinternalcontrolsoverfinancialreporting,wewillbeunabletoassertthatourinternalcontrolsare
effective.Ifweareunabletoassertthatourinternalcontroloverfinancialreportingiseffective,orifourauditorsareunabletoattest
tomanagementsreportontheeffectivenessofourinternalcontrols,wecouldloseinvestorconfidenceintheaccuracyand
completenessofourfinancialreports,whichwouldcausethepriceofourcommonstocktodecline.
Wewillberequiredtodisclosematerialchangesmadeinourinternalcontrolsandproceduresonaquarterlybasis.However,our
independentregisteredpublicaccountingfirmwillnotberequiredtoformallyattesttotheeffectivenessofourinternalcontrolover
financialreportingpursuanttoSection404oftheSarbanesOxleyActuntilthelateroftheyearfollowingourfirstannualreport
requiredtobefiledwiththeSECorthedatewearenolongeranemerginggrowthcompanyasdefinedintheJOBSAct.Tocomply
withtherequirementsofbeingapubliccompany,wemayneedtoundertakevariousactions,suchasimplementingnewinternal
controlsandproceduresandhiringaccountingorinternalauditstaff.
Wewillincurincreasedcostsanddemandsuponmanagementasaresultofcomplyingwiththelawsandregulationsaffecting
publiccompanies,whichcouldharmourresultsofoperationsandourabilitytoattractandretainqualifiedexecutivesandboard
members.
Asapubliccompanywewillincursignificantlegal,accounting,andotherexpensesthatwedidnotincurasaprivatecompany
andtheseexpenseswillincreaseafterweceasetobeanemerginggrowthcompany.Inaddition,theSarbanesOxleyActandrules
subsequentlyimplementedbytheSECandtheNewYorkStockExchangeimposevariousrequirementsonpubliccompanies,
includingrequiringchangesincorporate

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governancepractices.Ourmanagementandotherpersonnelwillneedtodevoteasubstantialamountoftimetothesecompliance
initiatives.Moreover,theserulesandregulationshaveincreased,andwillcontinuetoincrease,ourlegal,accountingandfinancial
compliancecostsandhavemade,andwillcontinuetomake,someactivitiesmoretimeconsumingandcostly.Forexample,we
expecttheserulesandregulationstomakeitmoredifficultandmoreexpensiveforustoobtaindirectorandofficerliability
insurance,andwemayberequiredtoacceptreducedpolicylimitsandcoverageortoincursubstantialcoststomaintainthesameor
similarcoverage.Theserulesandregulationscouldalsomakeitmoredifficultforustoattractandretainqualifiedpersonstoserveon
ourboardofdirectorsorourboardcommitteesorasexecutiveofficers.
Inaddition,theSarbanesOxleyActrequires,amongotherthings,thatweassesstheeffectivenessofourinternalcontrolover
financialreportingannuallyandtheeffectivenessofourdisclosurecontrolsandproceduresquarterly.Inparticular,beginningwith
theyearendingDecember31,2015,wewillneedtoperformsystemandprocessevaluationandtestingofourinternalcontrolover
financialreportingtoallowmanagementtoreporton,andourindependentregisteredpublicaccountingfirmpotentiallytoattestto,
theeffectivenessofourinternalcontroloverfinancialreporting,asrequiredbySection404oftheSarbanesOxleyAct,or
Section404.Asanemerginggrowthcompanywemayelecttoavailourselvesoftheexemptionfromtherequirementthatour
independentregisteredpublicaccountingfirmattesttotheeffectivenessofourinternalcontroloverfinancialreportingunder
Section404.However,wemaynolongeravailourselvesofthisexemptionwhenweceasetobeanemerginggrowthcompanyand,
whenourindependentregisteredpublicaccountingfirmisrequiredtoundertakeanassessmentofourinternalcontroloverfinancial
reporting,thecostofourcompliancewithSection404willcorrespondinglyincrease.Ourcompliancewithapplicableprovisionsof
Section404willrequirethatweincursubstantialaccountingexpenseandexpendsignificantmanagementtimeoncompliance
relatedissuesasweimplementadditionalcorporategovernancepracticesandcomplywithreportingrequirements.Moreover,ifwe
arenotabletocomplywiththerequirementsofSection404applicabletousinatimelymanner,orifweorourindependent
registeredpublicaccountingfirmidentifiesdeficienciesinourinternalcontroloverfinancialreportingthataredeemedtobematerial
weaknesses,themarketpriceofourstockcoulddeclineandwecouldbesubjecttosanctionsorinvestigationsbytheSECorother
regulatoryauthorities,whichwouldrequireadditionalfinancialandmanagementresources.
Furthermore,investorperceptionsofourcompanymaysufferifdeficienciesarefound,andthiscouldcauseadeclineinthe
marketpriceofourstock.IrrespectiveofcompliancewithSection404,anyfailureofourinternalcontroloverfinancialreporting
couldhaveamaterialadverseeffectonourstatedoperatingresultsandharmourreputation.Ifweareunabletoimplementthese
changeseffectivelyorefficiently,itcouldharmouroperations,financialreportingorfinancialresultsandcouldresultinanadverse
opiniononinternalcontrolfromourindependentregisteredpublicaccountingfirm.
Competitionforouremployeesisintense,andwemaynotbeabletoattractandretainthehighlyskilledemployeeswhomweneed
tosupportourbusiness.
Competitionforhighlyskilledengineeringanddataanalyticspersonnelisextremelyintense,andwecontinuetofacedifficulty
identifyingandhiringqualifiedpersonnelinmanyareasofourbusiness.Wemaynotbeabletohireandretainsuchpersonnelat
compensationlevelsconsistentwithourexistingcompensationandsalarystructure.Manyofthecompanieswithwhichwecompete
forexperiencedemployeeshavegreaterresourcesthanwehaveandmaybeabletooffermoreattractivetermsofemployment.In
particular,candidatesmakingemploymentdecisions,specificallyinhightechnologyindustries,oftenconsiderthevalueofany
equitytheymayreceiveinconnectionwiththeiremployment.Anysignificantvolatilityinthepriceofourstockafterthisoffering
mayadverselyaffectourabilitytoattractorretainhighlyskilledtechnical,financialandmarketingpersonnel.
Inaddition,weinvestsignificanttimeandexpenseintrainingouremployees,whichincreasestheirvaluetocompetitorswho
mayseektorecruitthem.Ifwefailtoretainouremployees,wecouldincursignificantexpensesinhiringandtrainingtheir
replacementsandthequalityofourservicesandourabilitytoserveourcustomerscoulddiminish,resultinginamaterialadverse
effectonourbusiness.

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Werelyonourmanagementteamandneedadditionalkeypersonneltogrowourbusiness,andthelossofkeyemployeesor
inabilitytohirekeypersonnelcouldharmourbusiness.
Webelieveoursuccesshasdepended,andcontinuestodepend,ontheeffortsandtalentsofourexecutivesandemployees,
includingNoahBreslow,ourChiefExecutiveOfficer.Ourfuturesuccessdependsonourcontinuingabilitytoattract,develop,
motivateandretainhighlyqualifiedandskilledemployees.Qualifiedindividualsareinhighdemand,andwemayincursignificant
coststoattractandretainthem.Inaddition,thelossofanyofourseniormanagementorkeyemployeescouldmateriallyadversely
affectourabilitytoexecuteourbusinessplanandstrategy,andwemaynotbeabletofindadequatereplacementsonatimelybasis,
oratall.Ourexecutiveofficersandotheremployeesareatwillemployees,whichmeanstheymayterminatetheiremployment
relationshipwithusatanytime,andtheirknowledgeofourbusinessandindustrywouldbeextremelydifficulttoreplace.Wecannot
ensurethatwewillbeabletoretaintheservicesofanymembersofourseniormanagementorotherkeyemployees.Ifwedonot
succeedinattractingwellqualifiedemployeesorretainingandmotivatingexistingemployees,ourbusinesscouldbemateriallyand
adverselyaffected.
Wemayrequireadditionalcapitaltopursueourbusinessobjectivesandrespondtobusinessopportunities,challengesor
unforeseencircumstances.Ifcapitalisnotavailabletous,ourbusiness,operatingresultsandfinancialconditionmaybeharmed.
Sinceourfounding,wehaveraisedsubstantialequityanddebtfinancingtosupportthegrowthofourbusiness.Becausewe
intendtocontinuetomakeinvestmentstosupportthegrowthofourbusiness,wemayrequireadditionalcapitaltopursueour
businessobjectivesandrespondtobusinessopportunities,challengesorunforeseencircumstances,includingincreasingour
marketingexpenditurestoimproveourbrandawareness,developingnewproductsorservicesorfurtherimprovingexistingproducts
andservices,enhancingouroperatinginfrastructureandacquiringcomplementarybusinessesandtechnologies.Accordingly,wemay
needtoengageinequityordebtfinancingstosecureadditionalfunds.However,additionalfundsmaynotbeavailablewhenwe
needthem,ontermsthatareacceptabletous,oratall.Inaddition,ouragreementswithourlenderscontainrestrictivecovenants
relatingtoourcapitalraisingactivitiesandotherfinancialandoperationalmatters,andanydebtfinancingthatwesecureinthe
futurecouldinvolvefurtherrestrictivecovenantswhichmaymakeitmoredifficultforustoobtainadditionalcapitalandtopursue
businessopportunities.Volatilityinthecreditmarketsmayalsohaveanadverseeffectonourabilitytoobtaindebtfinancing.
Ifweraiseadditionalfundsthroughfurtherissuancesofequityorconvertibledebtsecurities,ourexistingstockholderscould
suffersignificantdilution,andanynewequitysecuritiesweissuecouldhaverights,preferencesandprivilegessuperiortothoseof
holdersofourcommonstock.Ifweareunabletoobtainadequatefinancingorfinancingontermssatisfactorytous,whenwerequire
it,ourabilitytocontinuetopursueourbusinessobjectivesandtorespondtobusinessopportunities,challengesorunforeseen
circumstancescouldbesignificantlylimited,andourbusiness,operatingresults,financialconditionandprospectscouldbe
adverselyaffected.
Ouragreementswithourlenderscontainanumberofearlypaymenttriggersandcovenants.Abreachofsuchtriggersorcovenants
orothertermsofsuchagreementscouldresultinanearlyamortization,default,and/oraccelerationoftherelatedfundingfacilities
whichcouldmateriallyimpactouroperations.
Primaryfundingsourcesavailabletosupportthemaintenanceandgrowthofourbusinessinclude,amongothers,anasset
backedsecuritizationfacility,otherassetbackedrevolvingdebtfacilitiesandcorporatedebt.Ourliquiditywouldbematerially
adverselyaffectedbyourinabilitytocomplywithvariouscovenantsandotherspecifiedrequirementssetforthinouragreements
withourlenderswhichcouldresultintheearlyamortization,defaultand/oraccelerationofourexistingfacilities.Suchcovenants
andrequirementsincludefinancialcovenants,portfolioperformancecovenantsandotherevents.Foradescriptionofthesecovenants,
requirementsandevents,seethesectiontitledDescriptionofIndebtednessCovenantsandEventsofDefaultforDebtFacilities.
Duringanearlyamortizationperiodoroccurrenceofaneventofdefault,principalcollectionsfromtheloansinourassetbacked
facilitieswouldbeappliedtorepayprincipalundersuchfacilitiesratherthanbeing

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availableonarevolvingbasistofundpurchasesofnewlyoriginatedloans.Duringtheoccurrenceofaneventofdefaultunderanyof
ourfacilities,theapplicablelenderscouldacceleratetherelateddebtandsuchlenderscommitmentstoextendfurthercreditunder
therelatedfacilitywouldterminate.Ourassetbackedsecuritizationtrustwouldnotbeabletoissuefutureseriesoutofsuch
securitization.Ifwewereunabletorepaytheamountsdueandpayableundersuchfacilities,theapplicablelenderscouldseek
remedies,includingagainstthecollateralpledgedundersuchfacilities.Adefaultunderonefacilitycouldalsoleadtodefaultunder
otherfacilitiesduetocrossaccelerationorcrossdefaultprovisions.
Anearlyamortizationeventoreventofdefaultwouldnegativelyimpactourliquidity,includingourabilitytooriginatenew
loans,andrequireustorelyonalternativefundingsources,whichmightincreaseourfundingcostsorwhichmightnotbeavailable
whenneeded.Ifwewereunabletoarrangeneworalternativemethodsoffinancingonfavorableterms,wemighthavetocurtailthe
originationofloans,whichcouldhaveamaterialadverseeffectonourbusiness,financialcondition,operatingresultsandcashflow,
whichinturncouldhaveamaterialadverseeffectonourabilitytomeetourobligationsunderourfacilities.
Weactasservicerwithrespecttoourfacilities.Ifwedefaultinourservicingobligations,anearlyamortizationeventofdefault
couldoccurwithrespecttotheapplicablefacilityandwecouldbereplacedasservicer.
Thelendingindustryishighlyregulated.Changesinregulationsorinthewayregulationsareappliedtoourbusinesscould
adverselyaffectourbusiness.
Theregulatoryenvironmentinwhichlendinginstitutionsoperatehasbecomeincreasinglycomplex,andfollowingthe
financialcrisisof2008,supervisoryeffortstoenactandapplyrelevantlaws,regulationsandpolicieshavebecomemoreintense.
Changesinlawsorregulationsortheregulatoryapplicationorjudicialinterpretationofthelawsandregulationsapplicabletous
couldadverselyaffectourabilitytooperateinthemannerinwhichwecurrentlyconductbusinessormakeitmoredifficultorcostly
forustooriginateorotherwisemakeadditionalloans,orforustocollectpaymentsonloansbysubjectingustoadditionallicensing,
registrationandotherregulatoryrequirementsinthefutureorotherwise.Forexample,ifourloansweredeterminedforanyreasonnot
tobecommercialloans,wewouldbesubjecttomanyadditionalrequirements,andourfeesandinterestarrangementscouldbe
challengedbyregulatorsorourborrowers.Amaterialfailuretocomplywithanysuchlawsorregulationscouldresultinregulatory
actions,lawsuitsanddamagetoourreputation,whichcouldhaveamaterialadverseeffectonourbusinessandfinancialcondition
andourabilitytooriginateandserviceloansandperformourobligationstoinvestorsandotherconstituents.
Aproceedingrelatingtooneormoreallegationsorfindingsofourviolationofsuchlawscouldresultinmodificationsinour
methodsofdoingbusinessthatcouldimpairourabilitytocollectpaymentsonourloansortoacquireadditionalloansorcouldresult
intherequirementthatwepaydamagesand/orcancelthebalanceorotheramountsowingunderloansassociatedwithsuch
violation.Wecannotassureyouthatsuchclaimswillnotbeassertedagainstusinthefuture.Totheextentitisdeterminedthatthe
loanswemaketoourcustomerswerenotoriginatedinaccordancewithallapplicablelaws,wewouldbeobligatedtorepurchase
fromtheentityholdingtheapplicableloananysuchloanthatfailstocomplywithlegalrequirements.Wemaynothaveadequate
resourcestomakesuchrepurchases.
Financialregulatoryreformrelatingtoassetbackedsecuritieshasnotbeenfullyimplementedandcouldhaveasignificantimpact
onourabilitytoaccesstheassetbackedmarket.
Werelyuponassetbackedfinancingforasignificantportionofourfundswithwhichtocarryonourbusiness.Assetbacked
securitiesandthesecuritizationmarketswereheavilyaffectedbytheDoddFrankWallStreetReformandConsumerProtectionAct,
ortheDoddFrankAct,whichwassignedintolawin2010andhavealsobeenafocusofincreasedregulationbytheSEC.However,
someoftheregulationstobeimplementedundertheDoddFrankActhavenotyetbeenfinalizedandotherassetbackedregulations
thathavebeenadoptedbytheSEChavedelayedeffectivedates.Forexample,theDoddFrankActmandatestheimplementationof
rulesrequiringsecuritizersororiginatorstoretainaneconomicinterestinaportionofthecreditriskforanyassetthat

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theysecuritizeororiginate.InOctoberofthisyear,theSECadoptedfinalrulesinrelationtosuchriskretention,butsuchruleswill
notbeeffectivewithrespecttoourtransactionsuntillatein2016.Inaddition,theSECpreviouslyproposedseparateruleswhich
wouldaffectthedisclosurerequirementsforregisteredaswellasunregisteredissuancesofassetbackedsecurities.TheSEChas
recentlyadoptedfinalruleswhichaffectthedisclosurerequirementsforregisteredissuancesofassetbackedsecuritiesbackedby
residentialmortgages,commercialmortgages,autoloans,autoleasesanddebtsecurities.However,finalrulesthatwouldaffectthe
disclosurerequirementsforregisteredissuancesofassetbackedsecuritiesbackedbyothertypesofcollateralorforunregistered
issuancesofassetbackedsecuritieshavenotbeenadopted.Anyofsuchrulesifimplementedcouldadverselyaffectourabilityto
accesstheassetbackedmarketorourcostofaccessingthatmarket.
Oursuccessandfuturegrowthdependinpartonoursuccessfulmarketingeffortsandincreasedbrandawareness.Failureto
effectivelyuseourbrandtoconvertsalesmaynegativelyaffectourgrowthandourfinancialperformance.
Webelievethatanimportantcomponentofourgrowthwillbecontinuedmarketpenetrationthroughourdirectmarketing
channel.Toachievethisgrowth,weanticipaterelyingheavilyonmarketingandadvertisingtoincreasethevisibilityoftheOnDeck
brandwithpotentialcustomers.Thegoalofthismarketingandadvertisingistoincreasethestrength,recognitionandtrustinthe
OnDeckbrand,drivemoreuniquevisitorstosubmitloanapplicationsonourwebsite,andultimatelyincreasethenumberofloans
madetoourcustomers.Weincurredexpensesof$18.1millionand$21.8milliononsalesandmarketingintheyearended
December31,2013andtheninemonthsendedSeptember30,2014,respectively.
Ourbusinessmodelreliesonourabilitytoscalerapidlyandtodecreaseincrementalcustomeracquisitioncostsaswegrow.If
weareunabletorecoverourmarketingcoststhroughincreasesinwebsitetrafficandinthenumberofloansmadebyvisitorstoour
platform,orifwediscontinueourbroadmarketingcampaigns,itcouldhaveamaterialadverseeffectonourgrowth,resultsof
operationsandfinancialcondition.
Customercomplaintsornegativepublicitycouldresultinadeclineinourcustomergrowthandourbusinesscouldsuffer.
Ourreputationisveryimportanttoattractingnewcustomerstoourplatformaswellassecuringrepeatlendingtoexisting
customers.Whilewebelievethatwehaveagoodreputationandthatweprovideourcustomerswithasuperiorexperience,therecan
benoassurancethatwewillcontinuetomaintainagoodrelationshipwithourcustomersoravoidnegativepublicity.Anydamageto
ourreputation,whetherarisingfromourconductofbusiness,negativepublicity,regulatory,supervisoryorenforcementactions,
mattersaffectingourfinancialreportingorcompliancewithSECandNewYorkStockExchangelistingrequirements,security
breachesorotherwisecouldhaveamaterialadverseeffectonourbusiness.
Securitybreachesofcustomersconfidentialinformationthatwestoremayharmourreputationandexposeustoliability.
Westoreourcustomersbankinformation,creditinformationandothersensitivedata.Anyaccidentalorwillfulsecurity
breachesorotherunauthorizedaccesscouldcausethetheftandcriminaluseofthisdata.Securitybreachesorunauthorizedaccessto
confidentialinformationcouldalsoexposeustoliabilityrelatedtothelossoftheinformation,timeconsumingandexpensive
litigationandnegativepublicity.Ifsecuritymeasuresarebreachedbecauseofthirdpartyaction,employeeerror,malfeasanceor
otherwise,orifdesignflawsinoursoftwareareexposedandexploited,and,asaresult,athirdpartyobtainsunauthorizedaccessto
anyofourcustomersdata,ourrelationshipswithourcustomerswillbeseverelydamaged,andwecouldincursignificantliability.
Becausetechniquesusedtoobtainunauthorizedaccessortosabotagesystemschangefrequentlyandgenerallyarenot
recognizeduntiltheyarelaunchedagainstatarget,weandourthirdpartyhostingfacilitiesmaybeunabletoanticipatethese
techniquesortoimplementadequatepreventativemeasures.Inaddition,manystateshaveenactedlawsrequiringcompaniesto
notifyindividualsofdatasecuritybreachesinvolvingtheirpersonaldata.These

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mandatorydisclosuresregardingasecuritybreacharecostlytoimplementandoftenleadtowidespreadnegativepublicity,which
maycauseourcustomerstoloseconfidenceintheeffectivenessofourdatasecuritymeasures.Anysecuritybreach,whetheractualor
perceived,wouldharmourreputationandwecouldlosecustomers.
Thecollection,processing,storage,useanddisclosureofpersonaldatacouldgiverisetoliabilitiesasaresultofgovernmental
regulation,conflictinglegalrequirementsordifferingviewsofpersonalprivacyrights.
Wereceive,transmitandstorealargevolumeofpersonallyidentifiableinformationandothersensitivedatafromcustomersand
potentialcustomers.Therearefederal,stateandforeignlawsregardingprivacyandthestoring,sharing,use,disclosureandprotection
ofpersonallyidentifiableinformationandsensitivedata.Specifically,personallyidentifiableinformationisincreasinglysubjectto
legislationandregulationsincluding,butnotlimitedto,theGrammLeachBlileyAct,intendedtoprotecttheprivacyofpersonal
informationthatiscollected,processedandtransmitted.Anyviolationsoftheselawsandregulationsmayrequireustochangeour
businesspracticesoroperationalstructure,addresslegalclaimsandsustainmonetarypenaltiesand/orotherharmstoourbusiness.
TheregulatoryframeworkforprivacyissuesintheUnitedStatesandinternationallyisconstantlyevolvingandislikelyto
remainuncertainfortheforeseeablefuture.Theinterpretationandapplicationofsuchlawsisoftenuncertain,andsuchlawsmaybe
interpretedandappliedinamannerinconsistentwithourcurrentpoliciesandpracticesorrequirechangestothefeaturesofour
platform.Ifeitherweorourthirdpartyserviceprovidersareunabletoaddressanyprivacyconcerns,evenifunfounded,ortocomply
withapplicablelawsandregulations,itcouldresultinadditionalcostsandliability,damageourreputationandharmourbusiness.
Ourabilitytocollectpaymentonloansandmaintainaccurateaccountsmaybeadverselyaffectedbycomputerviruses,physicalor
electronicbreakins,technicalerrorsandsimilardisruptions.
Theautomatednatureofourplatformmaymakeitanattractivetargetforhackingandpotentiallyvulnerabletocomputer
viruses,physicalorelectronicbreakinsandsimilardisruptions.Despiteeffortstoensuretheintegrityofourplatform,itispossible
thatwemaynotbeabletoanticipateortoimplementeffectivepreventivemeasuresagainstallsecuritybreachesofthesetypes,in
whichcasetherewouldbeanincreasedriskoffraudoridentitytheft,andwemayexperiencelosseson,ordelaysinthecollectionof
amountsowedon,afraudulentlyinducedloan.Inaddition,thesoftwarethatwehavedevelopedtouseinourdailyoperationsis
highlycomplexandmaycontainundetectedtechnicalerrorsthatcouldcauseourcomputersystemstofail.Becauseeachloanthatwe
makeinvolvesourproprietaryautomatedunderwritingprocess,andapproximatelytwothirdsofourloansareunderwrittenusinga
fullyautomatedunderwritingprocessthatdoesnotrequiremanualreview,anyfailureofourcomputersystemsinvolvingour
automatedunderwritingprocessandanytechnicalorothererrorscontainedinthesoftwarepertainingtoourautomatedunderwriting
processcouldcompromiseourabilitytoaccuratelyevaluatepotentialcustomers,whichwouldnegativelyimpactourresultsof
operations.Furthermore,anyfailureofourcomputersystemscouldcauseaninterruptioninoperationsandresultindisruptionsin,or
reductionsintheamountof,collectionsfromtheloanswemaketoourcustomers.
Additionally,ifahackerwereabletoaccessoursecurefiles,heorshemightbeabletogainaccesstothepersonalinformation
ofourcustomers.Whilewehavetakenstepstopreventsuchactivityfromaffectingourplatform,ifweareunabletopreventsuch
activity,wemaybesubjecttosignificantliability,negativepublicityandamateriallossofcustomers,allofwhichmaynegatively
affectourbusiness.
Ourbusinessdependsonourabilitytocollectpaymentonandservicetheloanswemaketoourcustomers.
WerelyonunaffiliatedbanksfortheAutomatedClearingHouse,orACH,transactionprocessusedtodisbursetheproceedsof
newlyoriginatedloanstoourcustomersandtoautomaticallycollectscheduledpaymentsontheloans.Aswearenotabank,wedo
nothavetheabilitytodirectlyaccesstheACHpaymentnetwork,andmustthereforerelyonanFDICinsureddepositoryinstitution
toprocessourtransactions,includingloanpayments.Althoughwehavebuiltredundancybetweenthesebanksservices,ifwe
cannotcontinuetoobtainsuchservicesfromourcurrentinstitutionsorelsewhere,orifwecannottransitiontoanotherprocessor

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quickly,ourabilitytoprocesspaymentswillsuffer.Ifwefailtoadequatelycollectamountsowinginrespectoftheloans,asaresult
ofthelossofdirectdebitingorotherwise,thenpaymentstousmaybedelayedorreducedandourrevenueandoperatingresultswill
beharmed.
Werelyondatacenterstodeliverourservices.Anydisruptionofserviceatthesedatacenterscouldinterruptordelayourabilityto
deliverourservicetoourcustomers.
WecurrentlyserveourcustomersfromtwothirdpartydatacenterhostingfacilitiesinPiscataway,NewJerseyandDenver,
Colorado.Thecontinuousavailabilityofourservicedependsontheoperationsofthesefacilities,onavarietyofnetworkservice
providers,onthirdpartyvendorsandondatacenteroperationsstaff.Inaddition,wedependontheabilityofourthirdpartyfacility
providerstoprotectthefacilitiesagainstdamageorinterruptionfromnaturaldisasters,powerortelecommunicationsfailures,
criminalactsandsimilarevents.Ifthereareanylapsesofserviceordamagetothefacilities,wecouldexperiencelengthy
interruptionsinourserviceaswellasdelaysandadditionalexpensesinarrangingnewfacilitiesandservices.Evenwithcurrentand
planneddisasterrecoveryarrangements,ourbusinesscouldbeharmed.
Wedesignedoursysteminfrastructureandprocureandownorleasethecomputerhardwareusedforourservices.Designand
mechanicalerrors,failuretofollowoperationsprotocolsandprocedurescouldcauseoursystemstofail,resultingininterruptionsin
ourplatform.Anysuchinterruptionsordelays,whetherasaresultofthirdpartyerror,ourownerror,naturaldisastersorsecurity
breaches,whetheraccidentalorwillful,couldharmourrelationshipswithcustomersandcauseourrevenuetodecreaseand/orour
expensestoincrease.Also,intheeventofdamageorinterruption,ourinsurancepoliciesmaynotadequatelycompensateusforany
lossesthatwemayincur.Thesefactorsinturncouldfurtherreduceourrevenueandsubjectustoliability,whichcouldmaterially
adverselyaffectourbusiness.
Demandforourloansmaydeclineifwedonotcontinuetoinnovateorrespondtoevolvingtechnologicalchanges.
Weoperateinanascentindustrycharacterizedbyrapidlyevolvingtechnologyandfrequentproductintroductions.Werelyon
ourproprietarytechnologytomakeourplatformavailabletocustomers,determinethecreditworthinessofloanapplicants,and
servicetheloanswemaketocustomers.Inaddition,wemayincreasinglyrelyontechnologicalinnovationasweintroducenew
products,expandourcurrentproductsintonewmarkets,andcontinuetostreamlinethelendingprocess.Theprocessofdeveloping
newtechnologiesandproductsiscomplex,andifweareunabletosuccessfullyinnovateandcontinuetodeliverasuperiorcustomer
experience,customersdemandforourloansmaydecreaseandourgrowthandoperationsmaybeharmed.
Itmaybedifficultandcostlytoprotectourintellectualpropertyrights,andwemaynotbeabletoensuretheirprotection.
Ourabilitytolendtoourcustomersdepends,inpart,uponourproprietarytechnology,includingouruseoftheOnDeckScore.
Wemaybeunabletoprotectourproprietarytechnologyeffectivelywhichwouldallowcompetitorstoduplicateourproductsand
adverselyaffectourabilitytocompetewiththem.Athirdpartymayattempttoreverseengineerorotherwiseobtainanduseour
proprietarytechnologywithoutourconsent.Thepursuitofaclaimagainstathirdpartyforinfringementofourintellectualproperty
couldbecostly,andtherecanbenoguaranteethatanysucheffortswouldbesuccessful.
Inaddition,ourplatformmayinfringeuponclaimsofthirdpartyintellectualproperty,andwemayfaceintellectualproperty
challengesfromsuchotherparties.Wemaynotbesuccessfulindefendingagainstanysuchchallengesorinobtaininglicensesto
avoidorresolveanyintellectualpropertydisputes.Thecostsofdefendinganysuchclaimsorlitigationcouldbesignificantand,if
weareunsuccessful,couldresultinarequirementthatwepaysignificantdamagesorlicensingfees,whichwouldnegativelyimpact
ourfinancialperformance.Furthermore,ourtechnologymaybecomeobsolete,andthereisnoguaranteethatwewillbeableto
successfullydevelop,obtainorusenewtechnologiestoadaptourplatformtocompetewithotherlendingplatformsastheydevelop.
Ifwecannotprotectourproprietarytechnologyfromintellectualpropertychallenges,oriftheplatformbecomesobsolete,ourability
tomaintainourplatform,makeloansorperformourservicingobligationsontheloanscouldbeadverselyaffected.

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Someaspectsofourplatformincludeopensourcesoftware,andanyfailuretocomplywiththetermsofoneormoreoftheseopen
sourcelicensescouldnegativelyaffectourbusiness.
Weincorporateopensourcesoftwareintoourproprietaryplatformandintootherprocessessupportingourbusiness.Suchopen
sourcesoftwaremayincludesoftwarecoveredbylicensesliketheGNUGeneralPublicLicenseandtheApacheLicense.Theterms
ofvariousopensourcelicenseshavenotbeeninterpretedbyU.S.courts,andthereisariskthatsuchlicensescouldbeconstruedina
mannerthatlimitsouruseofthesoftware,inhibitscertainaspectsoftheplatformandnegativelyaffectsourbusinessoperations.
Someopensourcelicensescontainrequirementsthatwemakeavailablesourcecodeformodificationsorderivativeworkswe
createbaseduponthetypeofopensourcesoftwareweuse.Ifportionsofourproprietaryplatformaredeterminedtobesubjecttoan
opensourcelicense,orifthelicensetermsfortheopensourcesoftwarethatweincorporatechange,wecouldberequiredtopublicly
releasetheaffectedportionsofoursourcecode,reengineeralloraportionofourplatformorchangeourbusinessactivities.In
additiontorisksrelatedtolicenserequirements,theuseofopensourcesoftwarecanleadtogreaterrisksthantheuseofthirdparty
commercialsoftware,asopensourcelicensorsgenerallydonotprovidewarrantiesorcontrolsontheoriginofthesoftware.Manyof
therisksassociatedwiththeuseofopensourcesoftwarecannotbeeliminated,andcouldadverselyaffectourbusiness.
Wemayevaluate,andpotentiallyconsummate,acquisitions,whichcouldrequiresignificantmanagementattention,disruptour
business,andadverselyaffectourfinancialresults.
Oursuccesswilldepend,inpart,onourabilitytogrowourbusiness.Insomecircumstances,wemaydeterminetodosothrough
theacquisitionofcomplementarybusinessesandtechnologiesratherthanthroughinternaldevelopment.Theidentificationof
suitableacquisitioncandidatescanbedifficult,timeconsuming,andcostly,andwemaynotbeabletosuccessfullycomplete
identifiedacquisitions.Wealsohaveneveracquiredabusinessbeforeandthereforelackexperienceinintegratingnewtechnology
andpersonnel.Theriskswefaceinconnectionwithacquisitionsinclude:

diversionofmanagementtimeandfocusfromoperatingourbusinesstoaddressingacquisitionintegrationchallenges

coordinationoftechnology,productdevelopmentandsalesandmarketingfunctions

transitionoftheacquiredcompanyscustomerstoourplatform

retentionofemployeesfromtheacquiredcompany

culturalchallengesassociatedwithintegratingemployeesfromtheacquiredcompanyintoourorganization

integrationoftheacquiredcompanysaccounting,managementinformation,humanresourcesandotheradministrative
systems

theneedtoimplementorimprovecontrols,proceduresandpoliciesatabusinessthatpriortotheacquisitionmayhave
lackedeffectivecontrols,proceduresandpolicies

potentialwriteoffsofloansorintangiblesorotherassetsacquiredinsuchtransactionsthatmayhaveanadverseeffectour
operatingresultsinagivenperiod

liabilityforactivitiesoftheacquiredcompanybeforetheacquisition,includingpatentandtrademarkinfringementclaims,
violationsoflaws,commercialdisputes,taxliabilitiesandotherknownandunknownliabilitiesand

litigationorotherclaimsinconnectionwiththeacquiredcompany,includingclaimsfromterminatedemployees,
customers,formerstockholdersorotherthirdparties.

Ourfailuretoaddresstheserisksorotherproblemsencounteredinconnectionwithourfutureacquisitionsandinvestments
couldcauseustofailtorealizetheanticipatedbenefitsoftheseacquisitionsorinvestments,

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causeustoincurunanticipatedliabilitiesandharmourbusinessgenerally.Futureacquisitionscouldalsoresultindilutiveissuances
ofourequitysecurities,theincurrenceofdebt,contingentliabilities,amortizationexpensesorthewriteoffofgoodwill,anyofwhich
couldharmourfinancialcondition.Also,theanticipatedbenefitsofanyacquisitionsmaynotmaterialize.
Wemaynotbeabletoutilizeasignificantportionofournetoperatinglosscarryforwards,whichcouldharmourresultsof
operations.
WehadU.S.federalnetoperatinglosscarryforwardsofapproximately$47.5millionasofDecember31,2013.Thesenet
operatinglosscarryforwardswillbegintoexpireatvariousdatesbeginningin2027.AsofDecember31,2013,werecordedafull
valuationallowanceof$26.2millionagainstournetdeferredtaxasset.
TheInternalRevenueCodeof1986,asamended,ortheCode,imposessubstantialrestrictionsontheutilizationofnetoperating
lossesandothertaxattributesintheeventofanownershipchangeofacorporation.Eventswhichmaycauselimitationinthe
amountofthenetoperatinglossesandothertaxattributesthatareabletobeutilizedinanyoneyearinclude,butarenotlimitedto,a
cumulativeownershipchangeofmorethan50%overathreeyearperiod,whichhasoccurredasaresultofhistoricalownership
changes.Accordingly,ourabilitytouseprechangenetoperatinglossandcertainotherattributesarelimitedasprescribedunder
Sections382and383oftheCode.Therefore,ifweearnnettaxableincomeinthefuture,ourabilitytoreduceourfederalincometax
liabilitywithourexistingnetoperatinglossesissubjecttolimitation.Althoughwebelievethatthisofferingmayresultinanother
cumulativeownershipchangeunderSections382and383oftheCode,wedonotbelievethatanyresultinglimitationwillfurther
limitourabilitytoultimatelyutilizeournetoperatinglosscarryforwardsandothertaxattributesinamaterialway.Futureofferings,
aswellasotherfutureownershipchangesthatmaybeoutsideourcontrolcouldpotentiallyresultinfurtherlimitationsonourability
toutilizeournetoperatinglossandtaxattributes.Accordingly,achievingprofitabilitymaynotresultinafullreleaseofthe
valuationallowance.
Ourbusinessissubjecttotherisksofearthquakes,fire,poweroutages,flood,andothercatastrophicevents,andtointerruptionby
manmadeproblemssuchasterrorism.
Eventsbeyondourcontrolmaydamageourabilitytoacceptourcustomersapplications,underwriteloans,maintainour
platformorperformourservicingobligations.Inaddition,thesecatastrophiceventsmaynegativelyaffectcustomersdemandforour
loans.Sucheventsinclude,butarenotlimitedto,fires,earthquakes,terroristattacks,naturaldisasters,computervirusesand
telecommunicationsfailures.Despiteanyprecautionswemaytake,systeminterruptionsanddelayscouldoccurifthereisanatural
disaster,ifathirdpartyproviderclosesafacilityweusewithoutadequatenoticeforfinancialorotherreasons,orifthereareother
unanticipatedproblemsatourleasedfacilities.Aswerelyheavilyonourservers,computerandcommunicationssystemsandthe
Internettoconductourbusinessandprovidehighqualitycustomerservice,suchdisruptionscouldharmourabilitytorunour
businessandcauselengthydelayswhichcouldharmourbusiness,resultsofoperationsandfinancialcondition.Wecurrentlyarenot
abletoswitchinstantlytoourbackupcenterintheeventoffailureofthemainserversite.Thismeansthatanoutageatonefacility
couldresultinoursystembeingunavailableforasignificantperiodoftime.Ourbusinessinterruptioninsurancemaynotbesufficient
tocompensateusforlossesthatmayresultfrominterruptionsinourserviceasaresultofsystemfailures.Asystemoutageordataloss
couldharmourbusiness,financialconditionandresultsofoperations.
RisksRelatedtothisOffering,theSecuritiesMarketsandOwnershipofOurCommonStock
Thepriceofourcommonstockmaybevolatileandthevalueofyourinvestmentcoulddecline.
Technologystockshavehistoricallyexperiencedhighlevelsofvolatility.Thetradingpriceofourcommonstockfollowingthis
offeringmayfluctuatesubstantially.Followingthecompletionofthisoffering,themarketpriceofourcommonstockmaybehigher
orlowerthanthepriceyoupay,dependingonmanyfactors,someofwhicharebeyondourcontrolandmaynotberelatedtoour
operatingperformance.Thesefluctuationscould

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causeyoutoloseallorpartofyourinvestmentinourcommonstock.Factorsthatcouldcausefluctuationsinthetradingpriceofour
commonstockincludethefollowing:

announcementsofnewproducts,servicesortechnologies,relationshipswithstrategicpartners,acquisitionsorotherevents
byusorourcompetitors

changesineconomicconditions

changesinprevailinginterestrates

priceandvolumefluctuationsintheoverallstockmarketfromtimetotime

significantvolatilityinthemarketpriceandtradingvolumeoftechnologycompaniesingeneralandofcompaniesinour
industry

fluctuationsinthetradingvolumeofoursharesorthesizeofourpublicfloat

actualoranticipatedchangesinouroperatingresultsorfluctuationsinouroperatingresults

quarterlyfluctuationsindemandforourloans

whetherouroperatingresultsmeettheexpectationsofsecuritiesanalystsorinvestors

actualoranticipatedchangesintheexpectationsofinvestorsorsecuritiesanalysts

regulatorydevelopmentsintheUnitedStates,foreigncountriesorboth

majorcatastrophicevents

salesoflargeblocksofourstockor

departuresofkeypersonnel.

Inaddition,ifthemarketfortechnologystocksorthestockmarketingeneralexperienceslossofinvestorconfidence,the
tradingpriceofourcommonstockcoulddeclineforreasonsunrelatedtoourbusiness,operatingresultsorfinancialcondition.The
tradingpriceofourcommonstockmightalsodeclineinreactiontoeventsthataffectothercompaniesinourindustryevenifthese
eventsdonotdirectlyaffectus.Inthepast,followingperiodsofvolatilityinthemarketpriceofacompanyssecurities,securities
classactionlitigationhasoftenbeenbroughtagainstthatcompany.Ifourstockpriceisvolatile,wemaybecomethetargetof
securitieslitigation.Securitieslitigationcouldresultinsubstantialcostsanddivertourmanagementsattentionandresourcesfrom
ourbusiness.Thiscouldhaveamaterialadverseeffectonourbusiness,operatingresultsandfinancialcondition.
Salesofsubstantialamountsofourcommonstockinthepublicmarkets,ortheperceptionthattheymightoccur,couldreducethe
pricethatourcommonstockmightotherwiseattainandmaydiluteyourvotingpowerandyourownershipinterestinus.
Salesofasubstantialnumberofsharesofourcommonstockinthepublicmarketafterthisoffering,ortheperceptionthatthese
salescouldoccur,couldadverselyaffectthemarketpriceofourcommonstockandmaymakeitmoredifficultforyoutosellyour
commonstockatatimeandpricethatyoudeemappropriate.Basedonthetotalnumberofoutstandingsharesofourcommonstockas
ofSeptember30,2014,uponcompletionofthisoffering,wewillhavesharesofcommonstockoutstanding,assumingno
exerciseofouroutstandingoptions.Allofthesharesofcommonstocksoldinthisofferingwillbefreelytradablewithoutrestrictions
orfurtherregistrationundertheSecuritiesActof1933,asamended,ortheSecuritiesAct,exceptforanysharesheldbyouraffiliates
asdefinedinRule144undertheSecuritiesAct.
SubjecttocertainexceptionsdescribedunderthesectiontitledUnderwriters,weandallofourdirectorsandofficersand
substantiallyallofourequityholdershaveagreednottooffer,selloragreetosell,directlyorindirectly,anysharesofcommonstock
withoutthepermissionofMorganStanley&Co.LLCandMerrillLynch,Pierce,Fenner&SmithIncorporatedforaperiodof180
daysfromthedateofthisprospectus.Whenthe

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lockupperiodexpires,weandourlockedupsecurityholderswillbeabletoselloursharesinthepublicmarket.Inaddition,the
underwritersmay,intheirsolediscretion,releaseallorsomeportionofthesharessubjecttolockupagreementspriortothe
expirationofthelockupperiod.SeethesectiontitledSharesEligibleforFutureSaleformoreinformation.Salesofasubstantial
numberofsuchsharesuponexpiration,ortheperceptionthatsuchsalesmayoccur,orearlyreleaseofthelockup,couldcauseour
sharepricetofallormakeitmoredifficultforyoutosellyourcommonstockatatimeandpricethatyoudeemappropriate.
Uponcompletionofthisoffering,theholdersofanaggregateof28,431,830sharesofourcommonstock(includingshares
issuablepursuanttotheexerciseofwarrantstopurchasecommonstock),ortheirpermittedtransferees,willhaverights,subjectto
someconditions,torequireustofileregistrationstatementscoveringthesaleoftheirsharesortoincludetheirsharesinregistration
statementsthatwemayfileforourselvesorotherstockholders.Wealsointendtoregistertheofferandsaleofallsharesofcommon
stockthatwemayissueunderourequitycompensationplans.
Wemayissueoursharesofcommonstockorsecuritiesconvertibleintoourcommonstockfromtimetotimeinconnectionwith
afinancing,acquisition,investmentsorotherwise.Anysuchissuancecouldresultinsubstantialdilutiontoourexistingstockholders
andcausethetradingpriceofourcommonstocktodecline.
Insiderswillcontinuetohavesubstantialcontroloverusafterthisoffering,whichcouldlimityourabilitytoinfluencetheoutcome
ofkeytransactions,includingachangeofcontrol.
Ourdirectors,executiveofficersandeachofourstockholderswhoowngreaterthan5%ofouroutstandingcommonstockand
theiraffiliates,intheaggregate,willbeneficiallyownapproximately%oftheoutstandingsharesofourcommonstockafterthis
offering,basedonthenumberofsharesoutstandingasofSeptember30,2014andaftergivingeffecttotheexerciseofoptionsin
connectionwiththisoffering.Asaresult,thesestockholders,ifactingtogether,willbeabletoinfluenceorcontrolmattersrequiring
approvalbyourstockholders,includingtheelectionofdirectorsandtheapprovalofmergers,acquisitionsorotherextraordinary
transactions.Theymayalsohaveintereststhatdifferfromyoursandmayvoteinawaywithwhichyoudisagreeandwhichmaybe
adversetoyourinterests.Thisconcentrationofownershipmayhavetheeffectofdelaying,preventingordeterringachangeof
controlofourcompany,coulddepriveourstockholdersofanopportunitytoreceiveapremiumfortheircommonstockaspartofa
saleofourcompanyandmightultimatelyaffectthemarketpriceofourcommonstock.
Wecannotassureyouthatamarketwilldevelopforourcommonstockorwhatthemarketpriceofourcommonstockwillbe.
AlthoughwehaveappliedtolistourcommonstockontheNewYorkStockExchange,wecannotassureyouthatanactive
tradingmarketforourcommonstockwilldeveloponthatexchangeorelsewhereor,ifdeveloped,thatanymarketwillbesustained.
Wecannotpredictthepricesatwhichourcommonstockwilltrade.Theinitialpublicofferingpriceofourcommonstockwas
determinedbynegotiationswiththeunderwritersandmaynotbearanyrelationshiptothemarketpriceatwhichourcommonstock
willtradeafterthisofferingortoanyotherestablishedcriteriaofthevalueofourbusiness.
Wehavebroaddiscretionintheuseofthenetproceedsthatwereceiveinthisoffering.
Theprincipalpurposesofthisofferingaretoincreaseourcapitalizationandfinancialflexibility,createapublicmarketforour
stockandtherebyenableaccesstothepublicequitymarketsbyouremployeesandstockholders,obtainadditionalcapitaland
increaseourvisibilityinthemarketplace.Wehavenotyetdeterminedthespecificallocationofthenetproceedsthatwereceivein
thisoffering.Rather,weintendtousethenetproceedswereceivefromthisofferingforgeneralcorporatepurposes,including
workingcapital,salesandmarketingactivities,productdevelopment,includingtheuseofourowncapitaltofinancenewproduct
originations,investmentinourtechnologyandanalytics,generalandadministrativemattersandcapitalexpenditures.Wealsomay
useaportionofthenetproceedstofundcontinuedoriginationsgrowthortoacquire

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complementarybusinesses,products,servicesortechnologies.Accordingly,ourmanagementwillhavebroaddiscretionoverthe
specificuseofthenetproceedsthatwereceiveinthisofferingandmightnotbeabletoobtainasignificantreturn,ifany,on
investmentofthesenetproceeds.Investorsinthisofferingwillneedtorelyuponthejudgmentofourmanagementwithrespecttothe
useofproceeds.Ifwedonotusethenetproceedsthatwereceiveinthisofferingeffectively,thenourbusiness,operatingresultsand
financialconditioncouldbeharmed.
Wedonotintendtopaydividendsfortheforeseeablefuture.
Wehaveneverdeclaredorpaidanydividendsonourcommonstock.Weintendtoretainanyearningstofinancetheoperation
andexpansionofourbusiness,andwedonotanticipatepayinganycashdividendsinthefuture.Asaresult,youmayonlyreceivea
returnonyourinvestmentinourcommonstockifthemarketpriceofourcommonstockincreases.
Therequirementsofbeingapubliccompanymaystrainourresources,divertmanagementsattentionandaffectourabilityto
attractandretainqualifiedboardmembers.
Asapubliccompany,wewillbesubjecttothereportingrequirementsoftheSecuritiesExchangeActof1934,asamended,or
theExchangeAct,thelistingstandardsoftheNewYorkStockExchangeandotherapplicablesecuritiesrulesandregulations.
Compliancewiththeserulesandregulationswillincreaseourlegalandfinancialcompliancecosts,makesomeactivitiesmore
difficult,timeconsumingorcostly,andincreasedemandonoursystemsandresources,particularlyafterwearenolongeran
emerginggrowthcompanyasdefinedintherecentlyenactedJumpstartOurBusinessStartupsActof2012,ortheJOBSAct.
Amongotherthings,theExchangeActrequiresthatwefileannual,quarterlyandcurrentreportswithrespecttoourbusinessand
operatingresultsandmaintaineffectivedisclosurecontrolsandproceduresandinternalcontroloverfinancialreporting.Inorderto
maintainand,ifrequired,improveourdisclosurecontrolsandproceduresandinternalcontroloverfinancialreportingtomeetthis
standard,significantresourcesandmanagementoversightmayberequired.Asaresult,managementsattentionmaybedivertedfrom
otherbusinessconcerns,whichcouldharmourbusinessandoperatingresults.Althoughwehavealreadyhiredadditionalemployees
tocomplywiththeserequirements,wemayneedtohireevenmoreemployeesinthefuture,whichwillincreaseourcostsand
expenses.
Inaddition,changinglaws,regulationsandstandardsrelatingtocorporategovernanceandpublicdisclosurearecreating
uncertaintyforpubliccompanies,increasinglegalandfinancialcompliancecostsandmakingsomeactivitiesmoretimeconsuming.
Theselaws,regulationsandstandardsaresubjecttovaryinginterpretations,inmanycasesduetotheirlackofspecificity,and,asa
result,theirapplicationinpracticemayevolveovertimeasnewguidanceisprovidedbyregulatoryandgoverningbodies.This
couldresultincontinuinguncertaintyregardingcompliancemattersandhighercostsnecessitatedbyongoingrevisionstodisclosure
andgovernancepractices.Weintendtoinvestresourcestocomplywithevolvinglaws,regulationsandstandards,andthis
investmentmayresultinincreasedgeneralandadministrativeexpenseandadiversionofmanagementstimeandattentionfrom
revenuegeneratingactivitiestocomplianceactivities.Ifoureffortstocomplywithnewlaws,regulationsandstandardsdifferfrom
theactivitiesintendedbyregulatoryorgoverningbodies,regulatoryauthoritiesmayinitiatelegalproceedingsagainstusandour
businessmaybeharmed.
However,forsolongasweremainanemerginggrowthcompanyasdefinedintheJOBSAct,wemaytakeadvantageof
certainexemptionsfromvariousrequirementsthatareapplicabletopubliccompaniesthatarenotemerginggrowthcompanies,
includingnotbeingrequiredtocomplywiththeindependentauditorattestationrequirementsofSection404oftheSarbanesOxley
Act,reduceddisclosureobligationsregardingexecutivecompensationinourperiodicreportsandproxystatements,andexemptions
fromtherequirementsofholdinganonbindingadvisoryvoteonexecutivecompensationandstockholderapprovalofanygolden
parachutepaymentsnotpreviouslyapproved.Wemaytakeadvantageoftheseexemptionsuntilwearenolongeranemerging
growthcompany.

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Wewouldceasetobeanemerginggrowthcompanyupontheearliestof:(i)thefirstfiscalyearfollowingthefifthanniversary
ofthisoffering,(ii)thefirstfiscalyearafterourannualgrossrevenuesare$1billionormore,(iii)thedateonwhichwehave,during
thepreviousthreeyearperiod,issuedmorethan$1billioninnonconvertibledebtsecurities,or(iv)asoftheendofanyfiscalyearin
whichthemarketvalueofourcommonstockheldbynonaffiliatesexceeded$700millionasoftheendofthesecondquarterofthat
fiscalyear.
Wealsoexpectthatbeingapubliccompanyandthesenewrulesandregulationswillmakeitmoreexpensiveforustoobtain
directorandofficerliabilityinsurance,andwemayberequiredtoacceptreducedcoverageorincursubstantiallyhighercoststo
obtaincoverage.Thesefactorscouldalsomakeitmoredifficultforustoattractandretainqualifiedmembersofourboardofdirectors,
particularlytoserveonourAuditCommittee,CompensationCommittee,RiskManagementCommitteeandasqualifiedexecutive
officers.
Weareanemerginggrowthcompany,andwecannotbecertainifthereduceddisclosurerequirementsapplicabletoemerging
growthcompanieswillmakeourcommonstocklessattractivetoinvestors.
Weareanemerginggrowthcompany,asdefinedintheJOBSAct,andwemaytakeadvantageofcertainexemptionsfrom
variousreportingrequirementsthatareapplicabletopubliccompaniesthatarenotemerginggrowthcompanies,including,butnot
limitedto,notbeingrequiredtocomplywiththeauditorattestationrequirementsofSection404oftheSarbanesOxleyAct,reduced
disclosureobligationsregardingexecutivecompensationinourperiodicreportsandproxystatementsandexemptionsfromthe
requirementsofholdinganonbindingadvisoryvoteonexecutivecompensationandshareholderapprovalofanygoldenparachute
paymentsnotpreviouslyapproved.Wecannotpredictifinvestorswillfindourcommonstocklessattractivebecausewemayrelyon
theseexemptions.Ifsomeinvestorsfindourcommonstocklessattractiveasaresult,theremaybealessactivetradingmarketforour
commonstock,andourstockpricemaybemorevolatileandmaydecline.
Inaddition,Section107oftheJOBSActalsoprovidesthatanemerginggrowthcompanycantakeadvantageofanextended
transitionperiodforcomplyingwithneworrevisedaccountingstandards.However,wearechoosingtooptoutofsuchextended
transitionperiod,andasaresult,wewillcomplywithneworrevisedaccountingstandardsontherelevantdatesonwhichadoption
ofsuchstandardsisrequiredfornonemerginggrowthcompanies.Ourdecisiontooptoutoftheextendedtransitionperiodfor
complyingwithneworrevisedaccountingstandardsisirrevocable.
Becausetheinitialpublicofferingpriceofourcommonstockwillbesubstantiallyhigherthantheproformanettangiblebook
valuepershareofouroutstandingcommonstockfollowingthisoffering,newinvestorswillexperienceimmediateandsubstantial
dilution.
Theinitialpublicofferingpricewillbesubstantiallyhigherthantheproformanettangiblebookvaluepershareofourcommon
stockimmediatelyfollowingthisofferingbasedonthetotalvalueofourtangibleassetslessourtotalliabilities.Therefore,ifyou
purchasesharesofourcommonstockinthisoffering,youwillexperienceimmediatedilutionof$pershare,thedifference
betweenthepricepershareyoupayforourcommonstockanditsproformanettangiblebookvaluepershareasofSeptember30,
2014,aftergivingeffecttotheissuanceofsharesofourcommonstockinthisoffering.SeethesectiontitledDilutionformore
information.
Ifsecuritiesorindustryanalystsdonotpublishresearchorreportsaboutourbusiness,orpublishinaccurateorunfavorable
researchreportsaboutourbusiness,oursharepriceandtradingvolumecoulddecline.
Thetradingmarketforourcommonstockwill,tosomeextent,dependontheresearchandreportsthatsecuritiesorindustry
analystspublishaboutusorourbusiness.Wedonothaveanycontrolovertheseanalysts.Ifoneormoreoftheanalystswhocoverus
shoulddowngradeoursharesorchangetheiropinionofourshares,oursharepricewouldlikelydecline.Ifoneormoreofthese
analystsshouldceasecoverageofourcompanyorfailtoregularlypublishreportsonus,wecouldlosevisibilityinthefinancial
markets,whichcouldcauseoursharepriceortradingvolumetodecline.

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OurcharterdocumentsandDelawarelawcoulddiscouragetakeoverattemptsandleadtomanagemententrenchment.
Ouramendedandrestatedcertificateofincorporationandamendedandrestatedbylawsthatwillbeineffectuponcompletion
ofthisofferingcontainprovisionsthatcoulddelayorpreventachangeincontrolofourcompany.Theseprovisionscouldalsomake
itdifficultforstockholderstoelectdirectorsthatarenotnominatedbythecurrentmembersofourboardofdirectorsortakeother
corporateactions,includingeffectingchangesinourmanagement.Theseprovisionsinclude:

aclassifiedboardofdirectorswiththreeyearstaggeredterms,whichcoulddelaytheabilityofstockholderstochangethe
membershipofamajorityofourboardofdirectors

theabilityofourboardofdirectorstoissuesharesofpreferredstockandtodeterminethepriceandothertermsofthose
shares,includingpreferencesandvotingrights,withoutstockholderapproval,whichcouldbeusedtosignificantlydilute
theownershipofahostileacquiror

theexclusiverightofourboardofdirectorstoelectadirectortofillavacancycreatedbytheexpansionofourboardof
directorsortheresignation,deathorremovalofadirector,whichpreventsstockholdersfrombeingabletofillvacancieson
ourboardofdirectors

aprohibitiononstockholderactionbywrittenconsent,whichforcesstockholderactiontobetakenatanannualorspecial
meetingofourstockholders

therequirementthataspecialmeetingofstockholdersmaybecalledonlybythechairmanofourboardofdirectors,our
president,oursecretaryoramajorityvoteofourboardofdirectors,whichcoulddelaytheabilityofourstockholdersto
forceconsiderationofaproposalortotakeaction,includingtheremovalofdirectors

therequirementfortheaffirmativevoteofholdersofatleast662 3 %ofthevotingpowerofallofthethenoutstanding
sharesofthevotingstock,votingtogetherasasingleclass,toamendtheprovisionsofouramendedandrestatedcertificate
ofincorporationrelatingtotheissuanceofpreferredstockandmanagementofourbusinessorouramendedandrestated
bylaws,whichmayinhibittheabilityofanacquirortoeffectsuchamendmentstofacilitateanunsolicitedtakeover
attempt

theabilityofourboardofdirectors,bymajorityvote,toamendthebylaws,whichmayallowourboardofdirectorstotake
additionalactionstopreventanunsolicitedtakeoverandinhibittheabilityofanacquirortoamendthebylawstofacilitate
anunsolicitedtakeoverattemptand

advancenoticeprocedureswithwhichstockholdersmustcomplytonominatecandidatestoourboardofdirectorsorto
proposematterstobeacteduponatastockholdersmeeting,whichmaydiscourageordeterapotentialacquirorfrom
conductingasolicitationofproxiestoelecttheacquirorsownslateofdirectorsorotherwiseattemptingtoobtaincontrol
ofus.

Inaddition,asaDelawarecorporation,wearesubjecttoSection203oftheDelawareGeneralCorporationLaw.These
provisionsmayprohibitlargestockholders,inparticularthoseowning15%ormoreofouroutstandingvotingstock,frommergingor
combiningwithusforacertainperiodoftime.

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SPECIALNOTEREGARDINGFORWARDLOOKINGSTATEMENTSANDINDUSTRYDATA
Thisprospectuscontainsforwardlookingstatementsthatarebasedonourmanagementsbeliefsandassumptionsandon
informationcurrentlyavailabletoourmanagement.TheforwardlookingstatementsarecontainedprincipallyinProspectus
Summary,RiskFactors,ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsand
Business.Forwardlookingstatementsincludeinformationconcerningourstrategy,futureoperations,futurefinancialposition,
futurerevenue,projectedexpenses,prospectsandplansandobjectivesofmanagement.Forwardlookingstatementsincludeall
statementsthatarenothistoricalfactsandcanbeidentifiedbytermssuchasanticipate,believe,could,seek,estimate,
expect,intend,may,plan,potential,predict,project,should,will,wouldorsimilarexpressionsandthenegatives
ofthoseterms.Forwardlookingstatementscontainedinthisprospectusinclude,butarenotlimitedto,statementsabout:

ourabilitytoattractpotentialcustomerstoourplatform

thedegreetowhichpotentialcustomersapplyfor,areapprovedforandactuallyborrowviaaloan

ourfuturefinancialperformance,includingourexpectationsregardingourrevenue,costofrevenue,grossprofitorgross
margin,operatingexpenses,abilitytogeneratecashflow,andabilitytoachieve,andmaintain,futureprofitability

anticipatedtrends,growthratesandchallengesinourbusinessandinthemarketsinwhichweoperate

thestatusofcustomersandtheabilityofcustomerstorepayloans

ourabilitytoanticipatemarketneedsanddevelopnewandenhancedproductsandservicestomeetthoseneeds,andour
abilitytosuccessfullymonetizethem

interestratesandoriginationfeesonloans

maintainingandexpandingourcustomerbase

theimpactofcompetitioninourindustryandinnovationbyourcompetitors

ouranticipatedgrowthandgrowthstrategiesandourabilitytoeffectivelymanagethatgrowth

ourabilitytosellourproductsandexpand

ourfailuretoanticipateoradapttofuturechangesinourindustry

ourabilitytohireandretainnecessaryqualifiedemployeestoexpandouroperations

theimpactofanyfailureofoursolutions

ourrelianceonourthirdpartyserviceproviders

theevolutionoftechnologyaffectingourproducts,servicesandmarkets

ourcompliancewithapplicablelocal,stateandfederallaws

ourcompliancewithapplicableregulatorydevelopmentsandregulationsthatcurrentlyapplyorbecomeapplicabletoour
business

ourabilitytoadequatelyprotectourintellectualproperty

theanticipatedeffectonourbusinessoflitigationtowhichweareaparty

ourabilitytostayabreastofnewormodifiedlaws

theincreasedexpensesandadministrativeworkloadassociatedwithbeingapubliccompany

failuretomaintainaneffectivesystemofinternalcontrolsnecessarytoaccuratelyreportourfinancialresultsandprevent
fraud

ourliquidityandworkingcapitalrequirementsandourplansforthenetproceedsfromthisoffering

theestimatesandestimatemethodologiesusedinpreparingourconsolidatedfinancialstatements

thefuturetradingpricesofourcommonstockandtheimpactofsecuritiesanalystsreportsonthesepricesand
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ourabilitytopreventsecuritybreaks,disruptioninserviceandcomparableeventsthatcouldcompromisethepersonaland
confidentialinformationheldinourdatasystems,reducetheattractivenessoftheplatformoradverselyimpactourability
toservicetheloans.

Wecautionyouthattheforegoinglistmaynotcontainalloftheforwardlookingstatementsmadeinthisprospectus.
Forwardlookingstatementsinvolveknownandunknownrisks,uncertaintiesandotherfactorsthatmaycauseouractualresults,
performanceorachievementstobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedby
theforwardlookingstatements.WediscusstheserisksingreaterdetailinRiskFactorsandelsewhereinthisprospectus.Given
theseuncertainties,youshouldnotplaceunduerelianceontheseforwardlookingstatements.Also,forwardlookingstatements
representourmanagementsbeliefsandassumptionsonlyasofthedateofthisprospectus.Youshouldreadthisprospectusandthe
documentsthatwehavefiledasexhibitstotheregistrationstatement,ofwhichthisprospectusisapart,completelyandwiththe
understandingthatouractualfutureresultsmaybemateriallydifferentfromwhatweexpect.
Exceptasrequiredbylaw,weassumenoobligationtoupdatetheseforwardlookingstatementspublicly,ortoupdatethe
reasonsactualresultscoulddiffermateriallyfromthoseanticipatedintheseforwardlookingstatements,evenifnewinformation
becomesavailableinthefuture.

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INDUSTRYANDMARKETDATA
Thisprospectuscontainsestimates,statisticaldata,andotherinformationconcerningourindustry,includingmarketsizeand
growthrates,thatarebasedonindustrypublications,surveysandforecasts,includingthosebyCivicEconomics,OliverWyman,
Gallup,NationalSmallBusinessAssociationandotherpubliclyavailablesources.Theindustryandmarketinformationincludedin
thisprospectusinvolvesanumberofassumptionsandlimitations,andyouarecautionednottogiveundueweighttosuch
information.
Thesourcesofindustryandmarketdatacontainedinthisprospectusarelistedbelow:

CivicEconomics,IndieImpactStudySeries:ANationalComparativeSurveywiththeAmericanBooksellersAssociation,
October2012.

eVoice,25HourDaySurvey,March2012.

FDIC,LoanstoSmallBusinessesandFarms,FDICInsuredInstitutions19952014,Q22014.

FederalReserveBankofNewYork,SmallBusinessCreditSurveyQ42013,February2014.

Gallup,WellsFargoSmallBusinessSurveyTopline,Quarter22014,2014.

NationalSmallBusinessAssociation,2013SmallBusinessTechnologySurvey,September2013.

KarenGordonMillsandBraydenMcCarthy,TheStateofSmallBusinessLending:CreditAccessduringtheRecoveryand
HowTechnologyMayChangetheGame,HarvardBusinessSchool,July22,2014.

OliverWyman,FinancingSmallBusinesses,2013.

OliverWyman,SmallBusinessBanking,2013.

U.S.SmallBusinessAdministration,SmallBusinessGDP:Update20022010,January2012.

U.S.SmallBusinessAdministration,UnitedStatesSmallBusinessProfile,2014.

Theindustryinwhichweoperateissubjecttoahighdegreeofuncertaintyandriskduetoavarietyoffactors,includingthose
describedinthesectiontitledRiskFactorsandelsewhereinthisprospectus.Theseandotherfactorscouldcauseouractualresults
todiffermateriallyfromthoseexpressedintheestimatesmadebytheindependentpartiesandbyus.

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USEOFPROCEEDS
Weestimatethatthenetproceedsfromoursaleofsharesofcommonstockinthisofferingatanassumedinitialpublic
offeringpriceof$pershare,themidpointofthepricerangesetforthonthefrontcoverofthisprospectus,afterdeducting
estimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses,willbeapproximately$million,or$
millioniftheunderwritersoptiontopurchaseadditionalsharesisexercisedinfull.A$1.00increase(decrease)intheassumedinitial
publicofferingpricewouldincrease(decrease)thenetproceedstousfromthisofferingby$million,assumingthenumberof
sharesofferedbyus,assetforthonthefrontcoverofthisprospectus,remainsthesameandafterdeductingtheestimatedunderwriting
discountsandcommissions.
Wecurrentlyintendtousethenetproceedstousfromthisofferingprimarilyforgeneralcorporatepurposes,includingworking
capital,salesandmarketingactivities,dataandanalyticsenhancements,productdevelopment,capitalexpendituresandtofunda
portionoftheloansmadetoourcustomers.Wemayalsouseaportionofthenetproceedstoinvestinoracquiretechnologies,
solutionsorbusinessesthatcomplementourbusinessandfortargetedinternationalexpansion.However,wehavenopresent
agreementsorcommitmentsforanysuchinvestments,acquisitionsorexpansion.Wewillhavebroaddiscretionovertheusesofthe
netproceedsinthisoffering.Pendingtheseuses,weintendtoinvestthenetproceedsfromthisofferinginshortterm,investment
gradeinterestbearingsecuritiessuchasmoneymarketaccounts,certificatesofdeposit,commercialpaperandguaranteedobligations
oftheU.S.government.
DIVIDENDPOLICY
Wehaveneverdeclaredorpaidcashdividendsonourcommonstock.Wecurrentlyintendtoretainallavailablefundsandany
futureearningsforuseintheoperationofourbusinessanddonotanticipatepayinganydividendsonourcommonstockinthe
foreseeablefuture.Anyfuturedeterminationtodeclaredividendswillbemadeatthediscretionofourboardofdirectorsandwill
dependonourfinancialcondition,operatingresults,capitalrequirements,generalbusinessconditionsandotherfactorsthatour
boardofdirectorsmaydeemrelevant.

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CAPITALIZATION
ThefollowingtablesetsforthourconsolidatedcashandcashequivalentsandcapitalizationasofSeptember30,2014on:

anactualbasis

onaproformabasistogiveeffectto:

theautomaticconversionofalloutstandingsharesofourredeemableconvertiblepreferredstockinto23,725,822
sharesofourcommonstockuponthecompletionofthisofferingand

thereclassificationoftheremainingpreferredstockwarrantliabilitytoadditionalpaidincapitalupontheautomatic
conversionofourpreferredstockwarrantsintocommonstockwarrantsuponthecompletionofthisoffering.

onaproformaasadjustedbasistoreflectourreceiptofthenetproceedsfromoursaleofsharesofcommonstock
inthisofferingatanassumedinitialpublicofferingpriceof$pershare,themidpointofthepricerangesetforthonthe
frontcoverofthisprospectus,afterdeductingestimatedunderwritingdiscountsandcommissionsandestimatedoffering
expenses.

Theinformationbelowisillustrativeonlyandourcapitalizationfollowingthecompletionofthisofferingwillbeadjusted
basedontheactualinitialpublicofferingpriceandothertermsofthisofferingdeterminedatpricing.Youshouldreadthistable
togetherwithManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsandourfinancial
statementsandtherelatednotesappearingelsewhereinthisprospectus.

AsofSeptember30,2014

Proformaas
Actual
Proforma
adjusted(1)
(inthousands,exceptshareandpersharedata)

Cashandcashequivalents

22,642

22,642

Corporatedebt(2)

3,000
2,802
436
6,238

3,000

436
3,436

Warrantliability
Capitalleaseobligations
Capitalliabilities

Redeemableconvertiblepreferredstock:
SeriesApreferredstock,parvalue$.01,2,219,331sharesauthorized,
issuedandoutstandingatSeptember30,2014,nosharesissuedand
outstandingproforma
SeriesBpreferredstock,parvalue$.01,5,631,851sharesauthorized,
issuedandoutstandingatSeptember30,2014,nosharesissuedand
outstandingproforma
SeriesCpreferredstock,parvalue$.01,4,867,769sharesauthorized,
issuedandoutstandingatSeptember30,2014,nosharesissuedand
outstandingproforma
SeriesC1preferredstock,parvalue$.01,1,293,220sharesauthorized,
1,155,720sharesissuedandoutstandingatSeptember30,2014,no
sharesissuedandoutstandingproforma
SeriesDpreferredstock,parvalue$.01,7,233,878sharesauthorized,
issuedandoutstandingatSeptember30,2014,nosharesissuedand
outstandingproforma
SeriesEpreferredstock,parvalue$.01,2,700,000sharesauthorized,
2,617,273sharesissuedandoutstandingatSeptember30,2014,no
sharesissuedandoutstandingproforma
Totalredeemableconvertiblepreferredstock

40

2,657

29,860

25,975

12,932

66,326

80,613
218,363

TableofContents

Stockholders(deficit)equity:

Commonstock,parvalue$0.01,40,000,000sharesauthorizedand
4,354,496sharesissuedandoutstanding,actual40,000,000shares
authorizedand28,080,318sharesissuedandoutstanding,proforma
andsharesauthorizedandsharesissuedand
outstanding,proformaasadjusted

Treasurystockatcost

Additionalpaidincapital

Accumulateddeficit

Totalstockholders(deficit)equity

Totalcapitalization

AsofSeptember30,2014

Proformaas
Actual
Proforma
adjusted(1)

(inthousands,exceptshareandpersharedata)

59

(5,656)

4,885
(119,721)
(120,433)
$ 104,168

296
(5,656)
225,813
(119,721)
100,732
104,168

(1) Each$1.00increaseordecreaseintheassumedinitialpublicofferingpriceof$pershare,whichisthemidpointoftheestimatedofferingprice
rangesetforthonthecoverpageofthisprospectus,wouldincreaseordecreaseeachofcashandcashequivalents,additionalpaidincapital,total
stockholdersequityandtotalcapitalizationbyapproximately$million,assumingthenumberofsharesofferedbyus,assetforthonthecover
pageofthisprospectus,remainsthesame,andafterdeductingestimatedunderwritingdiscountsandcommissions.Similarly,eachincreaseor
decreaseofonemillionsharesinthenumberofsharesofferedbyusinthisofferingwouldincreaseordecrease,asapplicable,cashandcash
equivalents,additionalpaidincapital,totalstockholdersequityandtotalcapitalizationbyapproximately$million,assuminganinitialpublic
offeringpriceof$pershare,whichisthemidpointoftheestimatedofferingpricerangesetforthonthecoverpageofthisprospectus,andafter
deductingestimatedunderwritingdiscountsandcommissions.
(2) Corporatedebtisusedtofundgeneralcorporateoperationsandexcludes$347,204offundingdebt,whichisusedtofundloanoriginationsandis
nonrecoursetoOnDeckCapital,Inc.

Thenumberofsharesofourcommonstocksetforthinthetableaboveexcludes:

4,985,401sharesofcommonstockissuableupontheexerciseofoptionsoutstandingasofSeptember30,2014,witha
weightedaverageexercisepriceof$7.51pershareandpershareexercisepricesrangingfrom$0.53to$21.32

186,000sharesofcommonstockissuableupontheexerciseofoptionsoutstandingasofNovember6,2014,whichwere
grantedafterSeptember30,2014,withanexercisepriceof$24.76pershare

sharesofcommonstockreservedforissuanceunderour2014EquityIncentivePlan,whichwillbecomeeffective
inconnectionwiththisoffering

sharesofcommonstockreservedforissuanceunderour2014EmployeeStockPurchasePlan,whichwillbecome
effectiveinconnectionwiththisoffering

1,806,263sharesofcommonstockissuableupontheexerciseofwarrantsoutstandingasofSeptember30,2014,witha
weightedaverageexercisepriceof$13.89pershareandpershareexercisepricesrangingfrom$0.65to$29.42and

1,000sharesofcommonstockissuableupontheexerciseofonewarrantissuedafterSeptember30,2014,withanexercise
priceof$24.76pershare.

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TableofContents

DILUTION
Ifyouinvestinourcommonstock,yourinterestwillbedilutedtotheextentofthedifferencebetweentheamountpershare
paidbypurchasersofsharesofcommonstockinthisinitialpublicofferingandtheproformaasadjustednettangiblebookvalueper
shareofcommonstockimmediatelyafterthisoffering.
AsofSeptember30,2014,ourproformanettangiblebookvaluewasapproximately$100.7million,or$3.34pershareof
commonstock.Nettangiblebookvaluepersharerepresentstheamountofourtotaltangibleassetslessourtotalliabilities,divided
bythesharesofcommonstockoutstandingatSeptember30,2014,assumingtheconversionofalloutstandingsharesofour
redeemableconvertiblepreferredstockintocommonstockandtheexerciseofallvestedoptionsandwarrants.
Aftergivingeffecttooursaleofsharesofcommonstockinthisofferingatanassumedinitialpublicofferingpriceof
$pershare,themidpointofthepricerangesetforthonthefrontcoverofthisprospectus,andafterdeductingestimated
underwritingdiscountsandcommissionsandestimatedofferingexpenses,ourproformaasadjustednettangiblebookvalueat
September30,2014wouldhavebeen$,or$pershareofcommonstock.Thisrepresentsanimmediateincreaseinproforma
asadjustednettangiblebookvalueof$persharetoexistingstockholdersandanimmediatedilutionof$persharetonew
investorspurchasingsharesinthisoffering.
Thefollowingtableillustratesthisdilution:

Assumedinitialpublicofferingpricepershare
ProformanettangiblebookvaluepershareasofSeptember30,2014
Increasepershareattributabletothisoffering
Proformaasadjustednettangiblebookvaluepershareafterthisoffering
Nettangiblebookvaluedilutionpersharetonewinvestorsinthisoffering

3.34

A$1.00increase(decrease)intheassumedinitialpublicofferingpriceof$pershare,themidpointofthepricerangeset
forthonthefrontcoverofthisprospectus,wouldincrease(decrease)ourproformanettangiblebookvalue,asadjustedtogiveeffect
tothisoffering,by$pershareandthedilutioninproformaasadjustednettangiblebookvaluepersharetonewinvestorsinthis
offeringby$pershare,assumingthenumberofsharesofferedbyus,assetforthonthefrontcoverofthisprospectus,remains
thesameandafterdeductingestimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses.
Iftheunderwritersexercisetheiroptiontopurchaseadditionalsharesinfull,thefollowingwilloccur:

theproformanettangiblebookvaluepershareofourcommonstockaftergivingeffecttothisofferingwouldbe$per
share,andthedilutioninnettangiblebookvaluepersharetoinvestorsinthisofferingwouldbe$pershare.

theproformaasadjustedpercentageofsharesofourcommonstockheldbyexistingstockholderswilldecreaseto
approximately%ofthetotalnumberofproformaasadjustedsharesofourcommonstockoutstandingafterthisoffering
and

theproformaasadjustednumberofsharesofourcommonstockheldbyinvestorsparticipatinginthisofferingwill
increaseto,orapproximately%ofthetotalproformaasadjustednumberofsharesofourcommonstock
outstandingafterthisoffering.

Thefollowingtablesummarizes,onaproformaasadjustedbasisasofSeptember30,2014,assumingtheconversionofall
outstandingsharesofourredeemableconvertiblepreferredstockintocommonstockandtheexerciseofallvestedoptionsand
warrants,thetotalnumberofsharesofcommonstockpurchasedfromus,the

42

TableofContents

totalconsiderationpaidtous,andtheaveragepricepersharepaidtousbyexistingstockholdersandbynewinvestorspurchasing
sharesinthisofferingattheinitialpublicofferingpriceof$pershare,themidpointofthepricerangesetforthonthefrontcover
ofthisprospectus,beforedeductingestimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses:

Existingstockholders
Exercisedoptionsandwarrants
Newinvestors
Total

SharesPurchased

Number
Percent

28,080,318
2,097,931

100%

TotalConsideration

Amount

Percent

$183,260,799
3,385,868

100%

Average
Price
PerShare

$
$

6.53
1.61

Each$1.00increase(decrease)intheassumedpublicofferingpriceof$pershare,themidpointofthepricerangesetforth
onthefrontcoverofthisprospectus,wouldincrease(decrease)totalconsiderationpaidbynewinvestors,totalconsiderationpaidby
allstockholdersandtheaveragepricepersharepaidbyallstockholdersby$million,$millionand$,respectively,
assumingthenumberofsharesofferedbyus,assetforthonthefrontcoverofthisprospectus,remainsthesameandafterdeducting
estimatedunderwritingdiscountsandcommissionsandestimatedofferingexpenses.
Theforegoingdiscussionandtablesexclude:

sharesofcommonstockreservedforissuanceunderour2014EquityIncentivePlan,whichwillbecomeeffective
inconnectionwiththisofferingand

sharesofcommonstockreservedforissuanceunderour2014EmployeeStockPurchasePlan,whichwillbecome
effectiveinconnectionwiththisoffering.

Theforegoingdiscussionandtablesassumethefollowing:

afor1forwardstocksplitofourcommonstockandredeemableconvertiblepreferredstocktobeeffectedpriortothe
completionofthisoffering

theconversionofalloutstandingsharesofourredeemableconvertiblepreferredstockintoanaggregateof23,725,822
sharesofcommonstockimmediatelypriortothecompletionofthisofferingwithoriginalissuancepricesrangingfrom
$0.73to$29.42andaveraging$7.68

thefilingofouramendedandrestatedcertificateofincorporationinconnectionwiththecompletionofthisoffering

anIPOpricepershareinexcessofourhighestoptionandwarrantexerciseprices

theexerciseofvestedoptionstopurchase1,397,416sharesofcommonstockoutstandingasofSeptember30,2014with
exercisepricesrangingfrom$0.53to$21.32andaveraging$1.36pershare

theexerciseofvestedwarrantstopurchase700,515sharesofcommonstockoutstandingasofSeptember30,2014
(includingwarrantstopurchaseourredeemableconvertiblepreferredstockthatwillautomaticallyconverttowarrantsto
purchasecommonstockuponthecompletionofthisoffering)withexercisepricesrangingfrom$0.65to$29.42and
averaging$2.12pershareand

noexerciseoftheunderwritersoptiontopurchaseadditionalshares.

Totheextentthatanyoptionsandwarrantsbecomeexercisable,newinvestorswillexperiencefurtherdilution.Inaddition,we
maygrantmoreoptionsandwarrantsinthefuture.

43

TableofContents

SELECTEDCONSOLIDATEDFINANCIALDATA
YoushouldreadthefollowingselectedconsolidatedfinancialdatabelowinconjunctionwiththesectiontitledManagements
DiscussionandAnalysisofFinancialConditionandResultsofOperationsandtheconsolidatedfinancialstatements,relatednotes
andotherfinancialinformationincludedelsewhereinthisprospectus.
TheconsolidatedstatementsofoperationsdatafortheyearsendedDecember31,2012and2013arederivedfromouraudited
consolidatedfinancialstatementsincludedelsewhereinthisprospectus.Theconsolidatedstatementsofoperationsdataforthenine
monthsendedSeptember30,2013and2014andbalancesheetdataasofSeptember30,2014arederivedfromourunaudited
consolidatedinterimfinancialstatementsincludedelsewhereinthisprospectus.Theunauditedconsolidatedfinancialdataforthe
ninemonthsendedSeptember30,2013and2014andasofSeptember30,2014includesalladjustments,consistingonlyofnormal
recurringaccruals,thatarenecessaryintheopinionofourmanagementforafairpresentationofourfinancialpositionandresultsof
operationsfortheseperiods.Ourhistoricalresultsarenotnecessarilyindicativeoftheresultsthatmaybeexpectedinanyfuture
period.

ConsolidatedStatementsofOperationsData:

Revenue:

Interestincome

Gainonsalesofloans

Otherrevenue

Grossrevenue

Costofrevenue:

Provisionforloanlosses

Fundingcosts

Totalcostofrevenue

Netrevenue

Operatingexpenses:

Salesandmarketing

Technologyandanalytics

Processingandservicing

Generalandadministrative

Totaloperatingexpenses

Lossfromoperations

Other(expense)income:

Interestexpense

Warrantliabilityfairvalueadjustment

Totalother(expense)income

Lossbeforeprovisionforincometaxes

Provisionforincometaxes

Netloss

SeriesAandSeriesBredeemableconvertiblepreferredstockredemptions

Accretionofdividendsonredeemableconvertiblepreferredstock

Netlossattributabletocommonstockholders

Netlosspershareofcommonstockbasicanddiluted

Proformanetlosspershareofcommonstockbasicanddiluted(1)

Weightedaveragesharesofcommonstockusedincomputingnetlosspersharebasicanddiluted
Weightedaveragesharesofcommonstockusedincomputingproformanetlosspersharebasic
anddiluted(1)

Stockbasedcompensationexpenseincludedabove:

Salesandmarketing

Technologyandanalytics

Processingandservicing

Generalandadministrative

Totalstockbasedcompensationexpense

Otherfinancialdata:

AdjustedEBITDA(2)

Adjustednetloss(3)

44

YearEnded
NineMonthsEnded
December31,

September30,

2012
2013
2013
2014
(inthousands,exceptshareandpersharedata)

$ 25,273
$
62,941
$ 41,073
$
99,873

788

4,569

370

1,520

1,004

3,131

25,643

65,249

42,077

16,300
9,400
25,700

47,011
12,531
59,542

16,377

48,031

21,799
11,357
5,928
13,968
53,052
(5,021)

(274)
(9,122)
(9,396)

12,469
8,294
20,763

26,570
13,419
39,989

4,880

25,260

6,633
5,001
2,919
6,935
21,488
(16,608)

18,095
8,760
5,577
12,169
44,601
(19,341)

(88)
(148)
(236)

(1,276)
(3,739)
(5,015)

13,566
6,090
3,746
9,158
32,560
(16,183)

(1,070)
(1,496)
(2,566)

107,573

(16,844)

(24,356)

(18,749)

(14,417)

(16,844)

(24,356)

(18,749)

(14,417)

47
7
9
166
229

(14,834)
(16,467)

21,544,497

$
118

47

30

243
$
438

$ (16,258)
$ (20,179)

71
20
15
161
267

(14,152)
(16,986)

25,583,884

(3,440)
$ (20,284)
$
(8.54)

2,375,220

$
$
$

(5,254)

(7,470)
$ (37,080)
$
(17.28)
$
(0.96)
2,146,013

(5,254)

(5,414)
$ (29,417)
$ (13.73)

2,142,568

$
$
$

(9,828)
$ (24,245)
$
(8.48)
$
(0.21)
2,857,871

325
290
126
706
1,447

$
$

(726)
(3,848)

TableofContents

(1) Proformabasicanddilutednetlosspershareofcommonstockhavebeencalculatedassuming(i)theconversionofalloutstandingsharesof
redeemableconvertiblepreferredstockatDecember31,2013andSeptember30,2014intoanaggregateof20,549,165and23,725,822sharesof
commonstock,respectively,asofthebeginningoftheapplicableperiodoratthetimeofissuance,iflater,(ii)theredemptionofSeriesAandSeries
Bpreferredstockasofthebeginningoftheapplicableperiod,and(iii)thereclassificationofoutstandingpreferredstockwarrantsfromliabilitiesto
additionalpaidincapitalasofthebeginningoftheapplicableperiod.
(2) AdjustedEBITDAisnotafinancialmeasurepreparedinaccordancewithGAAP.AdjustedEBITDArepresentsournetloss,adjustedtoexclude
interestexpenseassociatedwithdebtusedforcorporatepurposes,incometaxexpense,depreciationandamortization,stockbasedcompensation
expenseandwarrantliabilityfairvalueadjustment.AdjustedEBITDAdoesnotadjustforfundingcosts,whichrepresenttheinterestexpense
associatedwithdebtusedforlendingpurposes.SeeManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations
NonGAAPFinancialMeasuresformoreinformationandforareconciliationofAdjustedEBITDAtonetloss,themostdirectlycomparable
financialmeasurecalculatedinaccordancewithGAAP.
(3) AdjustednetlossisnotafinancialmeasurepreparedinaccordancewithGAAP.WedefineAdjustednetlossasnetlossadjustedtoexcludestock
basedcompensationexpenseandwarrantliabilityfairvalueadjustment.SeeManagementsDiscussionandAnalysisofFinancialConditionand
ResultsofOperationsNonGAAPFinancialMeasuresformoreinformationandforareconciliationofAdjustednetlosstonetloss,themost
directlycomparablefinancialmeasurecalculatedinaccordancewithGAAP.

ConsolidatedBalanceSheetData:
Cashandcashequivalents
Restrictedcash
Loans,netofallowanceforloanlosses
Loansheldforsale
Totalassets
Fundingdebt(3)
Corporatedebt(4)
Totalliabilities
Totalredeemableconvertiblepreferredstock
Totalstockholders(deficit)equity

AsofDecember31,
2012

$ 7,386
9,195
81,687

106,510
96,297
8,000
110,443
53,226
(57,159)

2013

$ 4,670
14,842
203,078
1,423
235,450
188,297
15,000
216,587
118,343
(99,480)

AsofSeptember30,2014
Actual

$ 22,642
22,615
393,635

2,653
466,007
347,204

3,000
368,077
218,363
(120,433)

Proforma(1)
(inthousands)

22,642
22,615
393,635
2,653
466,007
347,204
3,000
365,275

100,732

Proformaas
adjusted(2)

(1) TheproformacolumnreflectstheconversionofalloutstandingsharesofconvertiblepreferredstockatSeptember30,2014into23,725,822shares
ofcommonstockimmediatelypriortotheclosingofthisoffering.Theconsiderationpaidforeachshareofconvertiblepreferredstockoutstandingat
September30,2014rangedfrom$0.73to$29.42andaveraged$7.68.Eachshareofpreferredstockwillconvertintooneshareofcommonstock
withoutthepaymentofadditionalconsideration.Theconversionoftheconvertiblepreferredstockandthewarrantliabilityreducestotalredeemable
convertiblepreferredstockandtotalliabilitiesby$218.4millionand$2.8million,respectively.
(2) Theproformaasadjustedcolumnreflectstheproformaadjustmentsdescribedinfootnote(1)aboveandthesalebyusofsharesofcommonstock
inthisofferingatanassumedinitialpublicofferingpriceof$pershare,themidpointofthepricerangesetforthonthecoverpageofthis
prospectus,afterdeductingtheunderwritingdiscountandcommissionsandestimatedofferingexpensespayablebyus.A$1.00increase(decrease)
intheassumedinitialpublicofferingpriceof$persharewouldincrease(decrease)eachofproformaasadjustedcashandcashequivalents,
workingcapitalandtotalassetsby$anddecrease(increase)proformaasadjustedtotalstockholders(deficit)equitybyapproximately$,
assumingthenumberofsharesweareoffering,assetforthonthecoverpageofthisprospectus,remainsthesame,afterdeductingtheunderwriting
discountandcommissionsandestimatedofferingexpensespayablebyus.Theproformaasadjustedinformationisillustrativeonly,andwewill
adjustthisinformationbasedontheactualinitialpublicofferingprice,numberofsharesofferedandothertermsofthisofferingdeterminedat
pricing.
(3) FundingdebtisusedtofundloanoriginationsandisnonrecoursetoOnDeckCapital,Inc.
(4) Corporatedebtisusedtofundgeneralcorporateoperations.

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TableofContents

MANAGEMENTSDISCUSSIONANDANALYSISOFFINANCIALCONDITION
ANDRESULTSOFOPERATIONS
Youshouldreadthefollowingdiscussionandanalysisofourfinancialconditionandresultsofoperationstogetherwithour
consolidatedfinancialstatementsandtherelatednotesandotherfinancialinformationincludedelsewhereinthisprospectus.Some
oftheinformationcontainedinthisdiscussionandanalysis,includinginformationwithrespecttoourplansandstrategyforour
business,includesforwardlookingstatementsthatinvolverisksanduncertainties.YoushouldreviewtheRiskFactorssectionof
thisprospectusforadiscussionofimportantfactorsthatcouldcauseactualresultstodiffermateriallyfromtheresultsdescribedin
orimpliedbytheforwardlookingstatementscontainedinthefollowingdiscussionandanalysis.
Overview
Wearealeadingonlineplatformforsmallbusinesslending.Weareseekingtotransformsmallbusinesslendingbymakingit
efficientandconvenientforsmallbusinessestoaccesscapital.Enabledbyourproprietarytechnologyandanalytics,weaggregate
andanalyzethousandsofdatapointsfromdynamic,disparatedatasourcestoassessthecreditworthinessofsmallbusinessesrapidly
andaccurately.Smallbusinessescanapplyforatermloanorlineofcreditonourwebsiteinminutesand,usingourproprietary
OnDeckScore,wecanmakeafundingdecisionimmediatelyandtransferfundsasfastasthesameday.Wehaveoriginatedmorethan
$1.7billioninloansandcollectedmorethan4.4millioncustomerpaymentssincewemadeourfirstloanin2007.Ourloan
originationshaveincreasedatacompoundannualgrowthrateof127%from2011to2013andhadayearoveryeargrowthrateof
171%fortheninemonthsendedSeptember30,2014.
Wegeneratethemajorityofourrevenuethroughinterestincomeandfeesearnedonthetermloansweretain.Ourtermloansare
obligationsofsmallbusinesseswithfixeddollarrepayments,inprincipalamountsrangingfrom$5,000to$250,000andwith
maturitiesof3to24months.InSeptember2013,weexpandedourproductofferingsbylaunchingalineofcreditproductwitha
maximumlinesizeof$25,000,repayablewithinsixmonthsofthedateofthelatestfundsdraw.Weearninterestonthebalance
outstandingandchargeamonthlyfeeaslongasthelineofcreditisavailable.InOctober2013,wealsobegangeneratingrevenueby
sellingsomeofourtermloanstothirdpartyinstitutionalinvestorsthroughourOnDeckMarketplace.Thebalanceofourrevenue
comesfromourservicingandotherfeeincome,whichprimarilyconsistsoffeeswereceiveforservicingloanswehavesoldtothird
partyinstitutionalinvestorsandmarketingfeesfromissuingbankpartners.FortheyearsendedDecember31,2012and2013andfor
theninemonthsendedSeptember30,2013and2014,loansoriginatedviaissuingbankpartnersconstituted21.1%,16.1%,16.2%
and16.7%ofourtotalloanoriginations,respectively.
Werelyonadiversifiedsetoffundingsourcesforthecapitalwelendtoourcustomers.Ourprimarysourceofthiscapitalhas
historicallybeendebtfacilitieswithvariousfinancialinstitutions.AsofSeptember30,2014,wehad$172.2millionoutstandingand
$312.6milliontotalborrowingcapacityundersuchdebtfacilities.InOctober2013,webegansellingtermloanstothirdparty
institutionalinvestorsthroughourOnDeckMarketplace.Wehavesoldapproximately$92.5millioninloanstoOnDeck
MarketplaceinvestorsthroughSeptember30,2014.Inaddition,wecompletedourfirstsecuritizationtransactioninMay2014,
pursuanttowhichweissueddebtthatissecuredbyarevolvingpoolofOnDecksmallbusinessloans.Weraisedapproximately
$175.0millionfromthissecuritizationtransaction.Wehavealsousedproceedsfromourpreferredstockfinancingsandoperating
cashflowtofundloansinthepastandcontinuetofinanceaportionofouroutstandingloanswiththesefunds.AsofSeptember30,
2014,44%oftotalprincipaloutstandingunderourtermloanandlineofcreditproductsthataresubjecttoexternalfundingorsaleto
OnDeckMarketplaceinvestorswerefinancedviaproceedsraisedfromoursecuritizationtransaction,while46%werefundedviaour
debtfacilitiesand10%werefundedviaOnDeckMarketplace.
Weoriginateloansthroughdirectmarketing,includingdirectmail,socialmedia,andotheronlinemarketingchannels.Wealso
originateloansthroughreferralsfromourstrategicpartners,includingbanks,paymentprocessorsandsmallbusinessfocusedservice
providers,andthroughfundingadvisorswhoadvisesmallbusinessesonavailablefundingoptions.

46

TableofContents

Thefollowingtablesummarizesthepercentageofloansoriginatedbyourthreedistributionchannelsfortheperiodsindicated:

PercentageofOriginations(Numberof
Loans)
Direct
StrategicPartner
FundingAdvisor
PercentageofOriginations(Dollars)
Direct
StrategicPartner
FundingAdvisor

YearEnded
December31,
2012

23.4%
8.0%
68.6%

44.1%
10.3%
45.6%

54.3%
13.4%
32.3%

56.2%
14.9%
28.9%

19.4%
5.5%
75.1%

34.4%
9.2%
56.4%

43.0%
12.7%
44.3%

46.8%
13.8%
39.4%

YearEnded
December31,
2013

9MonthsEnded
September30,
2014

3MonthsEnded
September30,
2014

Wehaveachievedthefollowingsignificantmilestones:

WemadeourfirstsmallbusinessloaninAugust2007,whichwebelievewasoneofthefirstcommercialloansrequiring
automaticdailypaybackfromcustomersbankaccountsviaAutomatedClearingHouse,orACH.

WehavemaintainedanA+ratingfromtheBetterBusinessBureausinceMay2008.

WeintroducedthefirstgenerationoftheOnDeckScoreinFebruary2009,whichanalyzedover200dataattributesrelevant
toasmallbusinessscreditworthiness.

InSeptember2009,webeganautomaticcollectionofexternalbankdatatoaccelerateourloanapplicationand
underwritingprocesses.

WeintroducedthethirdgenerationoftheOnDeckScoreinFebruary2012,whichanalyzedover800dataattributes.

GoogleVenturesinvestedinourSeriesDPreferredStockfinancinginApril2013.

WeintroducedthefourthgenerationoftheOnDeckScoreinAugust2013,whichanalyzedover2,000dataattributes.

InSeptember2013,weintroducedalineofcreditproduct.

InOctober2013,welaunchedtheOnDeckMarketplace.

TigerGlobalinvestedinourSeriesEPreferredStockfinancinginFebruary2014.

Wesurpassed$1billionincumulativeloanoriginationsinMarch2014.

InMay2014,wecompletedourfirstsecuritizationtransaction.

WemadeourfirstloaninCanadainMay2014.

Wegeneratedgrossrevenueof$25.6millionand$65.2millionduringtheyearsendedDecember31,2012and2013,
respectively,representinganincreaseof155%.DuringtheninemonthsendedSeptember30,2013and2014,wegeneratedgross
revenueof$42.1millionand$107.6million,respectively,representinganincreaseof156%.Todate,substantiallyallofourrevenue
hasbeengeneratedintheUnitedStates,althoughwehaverecentlybegunofferingourproductsinCanada.
OurAdjustedEBITDA,whichisdescribedinfurtherdetailinthesectionbelowtitledKeyFinancialandOperating
Metrics,was$(14.8)million,$(16.3)million,$(14.2)millionand$(0.7)millionfortheyearsendedDecember31,2012and2013
andfortheninemonthsendedSeptember30,2013and2014,respectively.Weincurrednetlossesof$16.8million,$24.4million,
$18.7millionand$14.4millionfortheyearsended

47

TableofContents

December31,2012and2013andfortheninemonthsendedSeptember30,2013and2014,respectively.Inthethreemonthsended
September30,2014,wegeneratedAdjustedEBITDAof$2.6million,incomefromoperationsof$0.7millionandnetincomeof
$0.4million.
KeyFinancialandOperatingMetrics
Weregularlymonitoranumberofmetricsinordertomeasureourcurrentperformanceandprojectourfutureperformance.These
metricsaidusindevelopingandrefiningourgrowthstrategiesandmakingstrategicdecisions.

Originations
UnpaidPrincipalBalance
AverageLoans
EffectiveInterestYield
AverageFundingDebtOutstanding
CostofFundsRate
ProvisionRate
ReserveRatio
15+DayDelinquencyRatio
AdjustedEBITDA
AdjustedNetLoss

Asoforforthe
Asoforforthe
YearEnded
NineMonthsEnded
December31,

September30,
2012
2013
2013
2014
(dollarsinthousands)

$173,246
$ 90,276
$ 61,352

41.2%
$ 62,043

13.4%

7.2%

10.3%

8.9%
$ (14,834)
$ (16,467)

$458,917
$215,966
$147,398

42.7%
$124,238

10.8%

6.0%

9.0%

7.6%
$ (16,258)
$ (20,179)

$290,932
$173,805
$128,618

42.6%
$108,223

11.6%

5.6%

8.5%

6.9%
$ (14,152)
$ (16,986)

$788,306
$422,050
$323,539

41.2%
$252,152

6.6%

6.6%

9.4%

5.4%
$
(726)
$ (3,848)

Originations
Originationsrepresentthetotalprincipalamountofthetermloanswemadeduringtheperiod,plusthetotalamountdrawnon
linesofcreditduringtheperiod.Originationsexcludeanyfeespaidtousbythecustomerinconnectionwiththeoriginationofa
termloanormaintenanceofalineofcredit.Manyofourrepeatcustomersrenewtheirloansbeforetheirexistingloanisfullyrepaid.
Fororiginations,suchrepeatloansarecalculatedasthefullrenewalloanprincipal,ratherthanthenetfundedamount,whichisthe
renewalloansprincipalnetoftheunpaidprincipalbalanceontheexistingloan.Wetreatloansreferredto,andfundedby,our
issuingbankpartnersandlaterpurchasedbyusaspartofouroriginations.FortheyearsendedDecember31,2012and2013,andthe
ninemonthsendedSeptember30,2013and2014,therateoforiginationsfromrepeatcustomersasapercentageoftotaloriginations
duringtheperiodwas43.8%,43.5%,43.6%and49.2%,respectively.Thenumberofweekendsandholidaysinaperiodcanimpact
ourbusiness.Manysmallbusinessestendtoapplyforloansonweekdays,andtheirbusinessesmaybeclosedatleastpartofa
weekendandonholidays.Inaddition,ourloanfundingsandautomatedloanpaybacksonlyoccuronweekdays(otherthanbank
holidays).
UnpaidPrincipalBalance
UnpaidPrincipalBalancerepresentsthetotalamountofprincipaloutstandingfortermloansheldforinvestmentandamounts
outstandingunderlinesofcreditattheendoftheperiod.Itexcludesnetdeferredoriginationcosts,allowanceforloanlossesandany
loanssoldorheldforsaleattheendoftheperiod.
AverageLoans
AverageLoansfortheperiodisthesimpleaverageofTotalLoansoutstandingasofthebeginningoftheperiodandasofthe
endofeachquarterintheperiod.TotalLoansrepresentstheUnpaidPrincipalBalance,plusnetdeferredoriginationcosts.

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EffectiveInterestYield
EffectiveInterestYieldistherateofreturnweachieveonloansoutstandingduringaperiod,whichisourannualizedinterest
incomedividedbyAverageLoans.
NetdeferredoriginationcostsinTotalLoansconsistofdeferredoriginationfeesandcosts.Deferredoriginationfeesincludefees
paidupfrontbycustomerswhenloansarefundedanddecreasethecarryingvalueofloans,therebyincreasingtheEffectiveInterest
Yieldearned.Deferredoriginationcostsarelimitedtocostsdirectlyattributabletooriginatingloanssuchascommissions,vendor
costsandpersonnelcostsdirectlyrelatedtothetimespentbythepersonnelperformingactivitiesrelatedtoloanoriginationand
increasethecarryingvalueofloans,therebydecreasingtheEffectiveInterestYieldearned.
AverageFundingDebtOutstanding
Fundingdebtoutstandingisthedebtthatweuseforourlendingactivitiesanddoesnotincludeourcorporateoperatingdebt.
AverageFundingDebtOutstandingfortheperiodisthesimpleaverageofthefundingdebtoutstandingasofthebeginningofthe
periodandasoftheendofeachquarterintheperiod.
CostofFundsRate
CostofFundsRateisourfundingcost,whichistheinterestexpense,fees,andamortizationofdeferredissuancecostsweincur
inconnectionwithourlendingactivitiesacrossallofourdebtfacilities,dividedbytheAverageFundingDebtOutstanding,then
annualized.
ProvisionRate
ProvisionRateequalstheprovisionforloanlossesdividedbytheneworiginationsvolumeofloansheldforinvestmentina
period.Becausewereserveforprobablecreditlossesinherentintheportfoliouponorigination,thisrateissignificantlyimpactedby
theperiodsoriginationsvolume.Thisratemayalsobeimpactedbychangesinlossexpectationsforloansoriginatedpriortothe
commencementoftheperiod.
ReserveRatio
ReserveRatioisourallowanceforloanlossesasoftheendoftheperioddividedbytheUnpaidPrincipalBalanceasoftheend
oftheperiod.
15+DayDelinquencyRatio
15+DayDelinquencyRatioequalstheaggregateUnpaidPrincipalBalanceforourloansthatare15ormorecalendardayspast
dueasoftheendoftheperiodasapercentageoftheUnpaidPrincipalBalanceforsuchperiod.Themajorityofourloansrequire
dailyrepayments,excludingweekendsandholidays,andthereforemaybedeemeddelinquentmorequicklythanloansfrom
traditionallendersthatrequireonlymonthlypayments.
15+DayDelinquencyRatioisnotannualized,butreflectsbalancesasoftheendoftheperiod.
NonGAAPFinancialMeasures
WebelievethattheprovisionofnonGAAPmetricsinthisprospectuscanprovideausefulmeasureforperiodtoperiod
comparisonsofourcorebusinessandusefulinformationtoinvestorsandothersinunderstandingandevaluatingouroperating
results.However,nonGAAPmetricsarenotameasurecalculatedinaccordancewithUnitedStatesgenerallyacceptedaccounting
principles,orGAAP,andshouldnotbeconsideredanalternativetoanymeasuresoffinancialperformancecalculatedandpresented
inaccordancewithGAAP.OthercompaniesmaycalculatethesenonGAAPmetricsdifferentlythanwedo.

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AdjustedEBITDA
AdjustedEBITDArepresentsournet(loss)income,adjustedtoexcludeinterestexpenseassociatedwithdebtusedforcorporate
purposes(ratherthanfundingcostsassociatedwithlendingactivities),incometaxexpense,depreciationandamortization,stock
basedcompensationexpenseandwarrantliabilityfairvalueadjustment.
EBITDAisimpactedbychangesfromperiodtoperiodinthefairvalueoftheliabilityrelatedtopreferredstockwarrants.
ManagementbelievesthatadjustingEBITDAtoeliminatetheimpactofthechangesinfairvalueofthesewarrantsisusefulto
analyzetheoperatingperformanceofthebusiness,unaffectedbychangesinthefairvalueofpreferredstockwarrantswhicharenot
relevanttotheongoingoperationsofthebusiness.Allsuchpreferredstockwarrantswillconverttocommonstockwarrantsuponour
publicoffering.
OuruseofAdjustedEBITDAhaslimitationsasananalyticaltool,andyoushouldnotconsideritinisolationorasasubstitute
foranalysisofourresultsasreportedunderGAAP.Someoftheselimitationsare:

althoughdepreciationandamortizationarenoncashcharges,theassetsbeingdepreciatedandamortizedmayhavetobe
replacedinthefuture,andAdjustedEBITDAdoesnotreflectcashcapitalexpenditurerequirementsforsuchreplacements
orfornewcapitalexpenditurerequirements

AdjustedEBITDAdoesnotreflectchangesin,orcashrequirementsfor,ourworkingcapitalneeds

AdjustedEBITDAdoesnotreflectthepotentiallydilutiveimpactofequitybasedcompensation

AdjustedEBITDAdoesnotreflectinterestassociatedwithdebtusedforcorporatepurposesortaxpaymentsthatmay
representareductionincashavailabletous

AdjustedEBITDAdoesnotreflectthepotentialcostswewouldincurifcertainofourwarrantsweresettledincash.

Thefollowingtablepresentsareconciliationofnet(loss)incometoAdjustedEBITDAforeachoftheperiodsindicated:

AdjustedEBITDA
Net(loss)income
Adjustments:
Corporateinterestexpense
Incometaxexpense
Depreciationandamortization
Stockbasedcompensationexpense
Warrantliabilityfairvalueadjustment
AdjustedEBITDA

YearEnded
December31,
2012
2013

$(16,844)

88

1,545

229

148
$(14,834)

$(24,356)

1,276

2,645

438
3,739
$(16,258)

NineMonthsEnded
September30,
2013
2014
(inthousands)

$(18,749)

1,070

1,764

267
1,496
$(14,152)

$(14,417)

274

2,848
1,447
9,122
$ (726)

ThreeMonths
Ended
September30,
2014

354

55

1,093
809
300
2,611

AdjustedNet(Loss)Income
Adjustednet(loss)incomerepresentsournetlossadjustedtoexcludestockbasedcompensationexpenseandwarrantliability
fairvalueadjustment,eachonthesamebasisandwiththesamelimitationsasdescribedaboveforAdjustedEBITDA.

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Thefollowingtablepresentsareconciliationofnet(loss)incometoAdjustedNet(Loss)Incomeforeachoftheperiods
indicated:

AdjustedNet(Loss)Income:
Net(loss)income
Adjustments:
Stockbasedcompensationexpense
Warrantliabilityfairvalueadjustment
Adjustednet(loss)income

ThreeMonths
Ended
September30,
2014

YearEnded
NineMonthsEnded
December31,

September30,

2012
2013
2013
2014
(inthousands)

$ (16,844)

229

148
$ (16,467)

$ (24,356)

438

3,739
$ (20,179)

$ (18,749)

267

1,496
$ (16,986)

$ (14,417)

1,447

9,122
$ (3,848)

354

809
300
1,463

UnderstandinganOnDeckTermLoanandLineofCredit
Thefollowingexamplesillustratethekeytermsofourtermloansandlinesofcredit,includinghowinterestratesarecalculated,
andhowwebelieveourcustomersevaluatethecostsofourloans.
Weconstructedthefollowingtermloanexamplebasedonahypotheticaltermloanwithprincipalamountof$50,000,termof
ninemonths,loanoriginationfeesassessedbyusof$1,250anddirectcostsforustooriginateof$1,750.

TermLoanExample:
LoanPrincipal
OriginationFee(2.5%ofprincipal)
CentsonDollarPaybackRate
TotalPayback
Term(months)
#ofDailyPayments(basedon252paymentsinacalendaryear)
DailyPayment

OnDeckCosts:
DirectOriginationCosts

$ 1,750

InterestRateMetrics:
EffectiveInterestYield
AnnualizedPercentageRate(APR)

40.0%
50.0%

$50,000
$ 1,250
$ 1.17
$58,500

189
$309.52

Fromourperspective,theamountofthisloanisreflectedasanassetonourbalancesheetof$50,500.Thisreflectsthe$50,000
principalamountoftheloan,plusthe$1,750directoriginationcostsweincurredontheloan,lessthe$1,250originationfeespaidto
usbythecustomerinconnectionwiththeloan.Directoriginationcostsarecostsdirectlyattributabletooriginatingloanssuchas
commissionspaidtoourinternalsalesforce,strategicpartnersandfundingadvisors,vendorcostsandpersonnelcostsdirectlyrelated
tothetimespentbythepersonnelperformingactivitiesrelatedtoloanorigination.Oureffectiveinterestyield,whichtakesinto
accountthe$50,500assetonourbooksandtheloanstotalpaybackof$58,500over9months,equals40.0%.Theannualpercentage
rate,orAPR,ontheloaniscalculatedinasimilarmannerbutdoesnottakeintoaccounttheimpactofthedirectoriginationcosts.As
such,theAPRontheexampleloanequals50.0%.Smallbusinesscustomersarepermittedtorepaytheirtermloanatanytime
however,theyareresponsibleforthefullpaybackamountonthetermloanregardlessofwhenitisrepaid.

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Inthisexample,APRinformationisincludedtoprovidesupplementalinformationtoinvestorsforillustrativepurposesonly.
BecausemanyofourloansareshortterminnatureandAPRiscalculatedonanannualizedbasis,wedonotbelievethatAPRas
appliedtoourloansismeaningfulformeasuringtheexpectedreturnstousorcoststoourcustomer.WedonotuseAPRasaninternal
metrictoevaluatetheperformanceofourbusinessorasabasistocompensateouremployeesortomeasuretheirperformance.
WebelievethatacustomerwouldlikelyevaluatethistermloanprimarilyonaCentsonDollarPaybackRatebasis,meaning
thatthecustomerwouldviewtheloanasanobligationtorepay$1.17forevery$1.00itreceivesfromus(or,inaggregate,a
repaymentof$58,500forthe$50,000loanedtothecustomer).Thecustomerwouldanalyzethiscostagainstthepotentialreturnon
investmentfromtheloanorotherbenefitsoftheloantoitsbusiness.
Theinterestoncommercialbusinessloansisalsotaxdeductibleaspermittedbylaw,ascomparedtotypicalpersonalloans
whichdonotprovideataxdeduction.APRdoesnotgiveeffecttothesmallbusinessborrowerspossibletaxdeductionsandcash
savingsassociatedwithbusinessrelatedinterestexpenses.
APRand,forpurposesofthisexample,EffectiveInterestYield,areannualizedbasedon252periodsperyear,whichreflectsthe
typicalnumberofpaymentdaysforourloansoveracalendaryear.
Weconstructedthefollowinglineofcreditexamplebasedonahypotheticalcreditlimitof$15,000ofwhichthecustomerdrew
$8,000andthenrepaidtheprincipalandinterestoverasixmonthperiod,withnoadditionaldraws,assuminga36%annualinterest
rate,$20permonthinmonthlyfeesand$150ofdirectcostsforustooriginatethislineofcredit.

LineofCreditExample:
CreditLimit
BalanceDrawn
AnnualInterestRate
MonthlyFee
TotalInterest+Principal
TotalMonthlyFees
TotalPayback
RepaymentPeriod(months)
#ofWeeklyPayments
WeeklyPayment

OnDeckCosts:
DirectOriginationCosts

InterestRateMetrics:
EffectiveInterestYield
AnnualizedPercentageRate(APR)

28.6%
36.0%

$15,000
$ 8,000
36%
$
20
$ 8,769
$ 120
$ 8,889

26
$337.28
150

Fromourperspective,theamountofthislineofcreditisreflectedasanassetonourbalancesheetof$8,150.Thisreflectsthe
$8,000drawnfromthelineofcredit,plusthe$150ofdirectoriginationcostsweincurredonthelineofcredit.Directorigination
costsarecostsdirectlyattributabletooriginatingloanssuchascommissionspaidtoourinternalsalesforce,strategicpartnersand
fundingadvisors,vendorcostsandpersonnelcostsdirectlyrelatedtothetimespentbythepersonnelperformingactivitiesrelatedto
loanorigination.Oureffectiveinterestyield,whichtakesintoaccountthe$8,150assetonourbooksandthelineofcreditstotal
interestandprincipalpaybackof$8,769repaidin26weeklypayments,equals28.6%.TheAPRontheloaniscalculatedinasimilar
mannerexceptitdoesnottakeintoaccounttheimpactofthedirectoriginationcosts.APRdoesnotincludethe$20monthlyfee.As
such,theAPRontheexamplelineofcreditis36.0%.Customers

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areabletorepayanddrawfromtheirlinesofcreditasrequiredbytheirbusinessneeds,andassuchmaypayalowerpaybackthan
illustratedinthisexample.
Aswithtermloans,theinterestonthelineofcreditistaxdeductible,aspermittedbylaw,ascomparedtotypicalpersonalloans
whichdonotprovideataxdeduction.APRdoesnotgiveeffecttothesmallbusinessborrowerspossibletaxdeductionsandcash
savingsassociatedwithbusinessrelatedinterestexpenses.
KeyFactorsAffectingOurPerformance
InvestmentinLongTermGrowth
Thecoreelementsofourgrowthstrategyincludeacquiringnewcustomers,broadeningourdistributioncapabilitiesthrough
strategicpartners,enhancingourdataandanalyticscapabilities,expandingourproductofferings,extendingcustomerlifetimevalue
andexpandinginternationally.Weplantocontinuetoinvestsignificantresourcestoaccomplishthesegoals,andweanticipatethat
ouroperatingexpenseswillcontinuetoincreasefortheforeseeablefuture,particularlyoursalesandmarketingandtechnologyand
analyticsexpenses.Theseinvestmentsareintendedtocontributetoourlongtermgrowth,buttheymayaffectournearterm
profitability.
Originations
Ourrevenueshavegrownsince2012primarilyasaresultofgrowthinoriginations.Growthinoriginationshasbeendrivenby
theadditionofnewcustomers,increasingbusinessfromexistingandpreviouscustomers,andincreasingaverageloansize,asother
factorssuchaseffectiveinterestyieldsandannualloanlossrateshaveremainedrelativelyconstantoverthistime.
Weanticipatethatourfuturegrowthwillcontinuetodependinpartonattractingnewcustomers.Weplantoincreaseoursales
andmarketingspendingtoattractthesecustomersaswellascontinuingtoincreaseouranalyticsspendingtobetteridentifypotential
customers.Wehavehistoricallyreliedonallthreeofourchannelsforcustomeracquisitionbuthavebecomeincreasinglyfocusedon
growingourdirectandstrategicpartnerchannels.Originationsthroughourdirectandstrategicpartnerchannelsincreasedasa
percentageoftotaloriginationsfrom24.9%in2012to43.6%in2013andfrom43.2%duringtheninemonthsendedSeptember30,
2013to55.7%duringtheninemonthsendedSeptember30,2014.
Webelievethebehaviorofourrepeatcustomerswillbeimportanttoourfuturegrowth.FortheyearendedDecember31,2013
andtheninemonthsendedSeptember30,2014,totaloriginationsfromourrepeatcustomerswas43.5%and49.2%.Webelieveour
significantnumberofrepeatcustomersisprimarilyduetoourhighlevelsofcustomerserviceandcontinuedimprovementinproducts
andservices.Theextenttowhichwegeneraterepeatbusinessfromourcustomerswillbeanimportantfactorinourcontinued
revenuegrowthandourvisibilityintofuturerevenue.Inconjunctionwithrepeatborrowingactivity,ourcustomersalsotendto
increasetheirsubsequentloansizecomparedtotheirinitialloansize.Customerswhotookoutaninitialloanbetween2011and
2013,onaverageincreasedtheirsecondloansizeby24.5%andincreasedtheirthirdloansizeby48.8%whencomparedtotheir
initialloansize.
CustomerAcquisitionCosts
Ourcustomeracquisitioncosts,orCACs,differdependingupontheacquisitionchannel.CACsinourdirectchannelinclude
thecommissionspaidtoourinternalsalesforceandexpensesassociatedwithitemssuchasdirectmail,socialmedia,andotheronline
marketingactivities.CACsinourstrategicpartnerchannelincludecommissionspaidtoourinternalsalesforceandstrategicpartners.
CACsinourfundingadvisorchannelincludecommissionspaidtoourinternalsalesforceandfundingadvisors.Since2012,our
CACsinthestrategicpartnerchannelhavedeclinedslightlyasapercentageoforiginationsfromthatchannel,whileourCACsinour
fundingadvisorchannelhaveremainedstableasapercentageoforiginationsfromthatchannel.OurdirectchannelCACshave
declinedasapercentageoforiginationsasaresultoftheincreasingscaleofouroperations,improvements

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incustomertargeting,ourintroductionofourlineofcreditproductandtheadditionofpreapprovalstoourmarketingoutreachand
underwritingprocess,whichhasincreasedourconversionrate.DuringtheninemonthsendedSeptember30,2013andninemonths
endedSeptember30,2014,theaveragecustomeracquisitioncostasapercentageofprincipalfromallinitialandrepeatloan
originationsineachrespectivechannelwas8.3%and3.9%inourdirectmarketingchannel,4.4%and3.4%inourstrategicpartner
channeland8.6%and8.2%inourfundingadvisorchannel.
CustomerLifetimeValue
Theongoinglifetimevalueofourcustomerswillbeanimportantcomponentofourfutureperformance.Weanalyzecustomer
lifetimevaluenotonlybytrackingthetotaleconomicvalue(contribution)ofcustomersovertheirlifetimewithus,butalsoby
comparingthiscontributiontotheacquisitioncostsincurredinconnectionwithoriginatingsuchcustomersinitialloans.
Forillustration,weconsidercustomersthattooktheirfirsteverloanfromusduringthefirstquarterof2013,whichwerefertoas
ourQ12013cohort,andlookatalloftheirborrowingandtransactionhistoryfromthatdatethroughSeptember30,2014.We
selectedthiscohortbecauseitcontainssufficientperiodstodemonstratecontributionafterinitialacquisition,andwebelievethatthe
trendsreflectedbythiscohortarerepresentativeofthevalueofourothercustomersproximateintime.Theborrowingcharacteristics
oftheQ12013cohortthroughSeptember30,2014include:

Averagenumberofloanspercustomerduringthemeasurementperiod:2.2

Averageinitialloansize:$30,818

Averagerepeatloansize:$45,390

Totalborrowings:$116.5million

Below,forcustomersintheQ12013cohort,wecomparethecontributiongeneratedthroughSeptember30,2014withtheirinitial
customeracquisitioncosts.
Q12013CohortAcquisitionCostandCustomerLifetimeValue

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FortheQ12013cohort,weestimatetheinitialcustomeracquisitioncostwas$5.0million.
Wedefinethecontributiontoincludetheinterestincomeandfeescollectedonacohortofcustomersinitialandrepeatloans
lessacquisitioncostsfortheirrepeatloans,estimatedthirdpartyprocessingandservicingexpensesfortheirinitialandrepeatloans,
estimatedfundingcosts(excludinganycostofequitycapital)fortheirinitialandrepeatloans,andchargeoffsoftheirinitialand
repeatloans.FortheQ12013cohort,thecontributionwas$2.8millionduringthequarterofacquisitionandanaggregateof$13.9
millionthroughSeptember30,2014.This$13.9millionaggregatecontributionrepresentsareturnofapproximately2.8timesonthe
initial$5.0millionacquisitioninvestment.
WeexpectthecustomervalueofourQ12013cohortandthereturnonourinitialacquisitioncostforthiscohorttocontinueto
increaseas$4.1millionofinterestpaymentsremaindueinfuturemonths,primarilyonloansmadetorepeatcustomerswhoareinthis
cohort,andwebelievecustomersfromthiscohortwillcontinuetotakeadditionalrepeatloansfromusinthefuture.
Inthefuture,wemayincurgreatermarketingexpensestoacquirenewcustomers,wemaydecidetooffertermloanswithlower
interestrates,ourchargeoffsmayincreaseandourcustomersrepeatpurchasebehaviormaychange,anyofwhichcouldadversely
impactourcustomerslifetimevaluestousandouroperatingresults.
EconomicConditions
Changesintheoveralleconomymayimpactourbusinessinseveralways,includingdemandforourproducts,credit
performance,andfundingcosts.

DemandforOurProducts.Inastrongeconomicclimate,demandforourproductsmayincreaseasconsumerspending
increasesandsmallbusinessesseektoexpand.Inaddition,morepotentialcustomersmaymeetourunderwriting
requirementstoqualifyforaloan.Atthesametime,smallbusinessesmayexperienceimprovedcashflowandliquidity
resultinginfewercustomersrequiringloanstomanagetheircashflows.Traditionallendersmayalsoapproveloansfora
higherpercentageofourpotentialcustomers.Inaweakeningeconomicclimateorrecession,theoppositemayoccur.

CreditPerformance.Inastrongeconomicclimate,ourcustomersmayexperienceimprovedcashflowandliquidity,which
mayresultinlowerloanlosses.Inaweakeningeconomicclimateorrecession,theoppositemayoccur.Wefactoreconomic
conditionsintoourloanunderwritinganalysisandreservesforloanlosses,butchangesineconomicconditions,
particularlysuddenchanges,mayaffectouractualloanlosses.Theseeffectsmaybepartlymitigatedbytheshortterm
natureofourloans,whichshouldallowustoreactmorequicklythanifthetermsofourloanswerelonger.

LoanLosses.Ourunderwritingprocessisdesignedtolimitourloanlossestolevelscompatiblewithourbusinessstrategy
andfinancialmodel.Ouraggregateloanlossratessince2012havebeenconsistentwithourfinancialtargets.Ouroverall
loanlossesareaffectedbyavarietyoffactors,includingexternalfactorssuchasprevailingeconomicconditions,general
smallbusinesssentimentandunusualeventssuchasnaturaldisasters,aswellasinternalfactorssuchastheaccuracyofthe
OnDeckScore,theeffectivenessofourunderwritingprocessandtheintroductionofnewproducts,suchasourlineof
credit,withwhichwehavelessexperiencetodrawuponwhenforecastingtheirlossrates.Ourloanlossratesmayvaryin
thefuture.

HistoricalChargeOffs
Weillustratebelowourhistoricalloanlossesbyprovidinginformationregardingournetlifetimechargeoffratiosbycohort.
Netlifetimechargeoffsaregrossloanschargedofflessrecoveriesofloanspreviouslychargedoff,andagivencohortsnetlifetime
chargeoffratioequalsthecohortsnetlifetimechargeoffsthroughSeptember30,2014dividedbythecohortstotaloriginalloan
volume.Loansaretypicallychargedoffafter90daysofnonpayment.LoansoriginatedandchargedoffbetweenJanuary1,2012and
September30,2014were

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onaveragechargedoffneartheendoftheirloanterm.Thechartimmediatelybelowincludesalltermloanoriginations,regardlessof
fundingsource,includingloanssoldthroughourOnDeckMarketplaceorheldforsaleonourbalancesheet.
NetChargeoffRatiosbyCohortThroughSeptember30,2014

Thefollowingchartsdisplaythehistoricallifetimecumulativenetchargeoffratios,byoriginationyear.Thechartsreflectall
termloanoriginations,regardlessoffundingsource,includingloanssoldthroughourOnDeckMarketplaceorheldforsaleonour
balancesheet.Thedataisshownasastaticpoolforannualcohorts,illustratinghowthecohorthasperformedgivenequivalent
monthsofseasoning.

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The2014cohortreflectsoriginationsfortheninemonthsendedSeptember30,2014.Giventhemostrecentoriginationsinthis
cohortwerenotyetonemonthseasonedasofSeptember30,2014,the2014cohortreflectsalifetimechargeoffratioof
approximately0%ineachofthenewcustomer,repeatcustomerandtotalloanschartsbelow.Thisdiffersfromthenetchargeoff
ratiosbycohortchartabove,whichreflectsaggregatechargeoffsasofSeptember30,2014regardlessofhowmanymonthshave
elapsedsinceeachloanwasoriginated.Further,givenourloansaretypicallychargedoffafter90daysofnonpayment,allcohorts
reflectapproximately0%forthefirstfourmonthsinthebelowcharts.
NetCumulativeLifetimeChargeoffRatios
NewLoans

Originations(inthousands)

Newtermloans

2012

$97,367

2013

$256,343

2014

$367,807

NetCumulativeLifetimeChargeoffRatios
RepeatLoans

Originations(inthousands)

Repeattermloans

57

2012

$75,880

2013

$199,587

2014

$388,147

TableofContents

NetCumulativeLifetimeChargeoffRatios
AllLoans

Originations(inthousands)

Alltermloans

2012

$173,246

2013

$455,931

2014

$755,953

FundingCosts.Changesinmacroeconomicconditionsmayaffectgenerallyprevailinginterestrates,andsucheffectsmay
beamplifiedorreducedbyotherfactorssuchasfiscalandmonetarypolicies,economicconditionsinothermarketsand
otherfactors.Interestratesmayalsochangeforreasonsunrelatedtoeconomicconditions.Totheextentthatinterestrates
rise,ourfundingcostswillincreaseandthespreadbetweenoureffectiveinterestyieldandourfundingcostsmaynarrowto
theextentwecannotcorrespondinglyincreasethepaybackrateswechargeourcustomers.Aswehavegrown,wehave
beenabletolowerourfundingcostsbynegotiatingmorefavorableinterestratesonourdebtandaccessingnewsourcesof
funding,suchastheOnDeckMarketplaceandthesecuritizationmarkets.Whilewewillcontinuetoseektolowerour
fundingcosts,wedonotexpectthatourfundingcostswilldeclinemeaningfullyintheforeseeablefuture.

ComponentsofOurResultsofOperations
Revenue
InterestIncome.Wegeneraterevenueprimarilythroughinterestandoriginationfeesearnedonthetermloansweoriginateand
holdtomaturity,andtoalesserextent,interestearnedonlinesofcredit.Ourinterestandoriginationfeerevenueisamortizedover
thetermoftheloanusingtheeffectiveinterestmethod.Originationfeescollectedbutnotyetrecognizedasrevenuearenettedwith
directoriginationcostsandrecordedasacomponentofloansonourconsolidatedbalancesheetandrecognizedoverthetermofthe
loan.Directoriginationcostsincludecostsdirectlyattributabletooriginatingaloan,includingcommissions,vendorcostsand
personnelcostsdirectlyrelatedtothetimespentbythoseindividualsperformingactivitiesrelatedtoloanorigination.
GainonSalesofLoans.InOctober2013,webegansellingtermloanstothirdpartyinstitutionalinvestorsthroughourOnDeck
Marketplace.Werecognizeagainorlossonthesaleofsuchloansasthedifferencebetweentheproceedsreceivedfromthepurchaser
andthecarryingvalueoftheloanonourbooks.
OtherRevenue.Ourotherrevenueconsistsofservicingincomefromloanssoldtothirdpartyinstitutionalinvestors,the
monthlyfeeswechargeforourlineofcreditproduct,andmarketingfeesearnedfromourissuingbankpartners.Wetreatloans
referredto,andfundedby,ourissuingbankpartnersandlaterpurchasedbyusaspartofouroriginations.

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CostofRevenue
ProvisionforLoanLosses.Provisionforloanlossesconsistsofamountschargedtoincomeduringtheperiodtomaintainan
allowanceforloanlosses,orALLL,estimatedtobeadequatetoprovideforprobablecreditlossesinherentinourexistingloan
portfolio.OurALLLrepresentsourestimateoftheexpectedcreditlossesinherentinourportfoliooftermloansandlinesofcreditand
isbasedonavarietyoffactors,includingthecompositionandqualityoftheportfolio,loanspecificinformationgatheredthroughour
collectionefforts,delinquencylevels,ourhistoricalchargeoffandlossexperience,andgeneraleconomicconditions.Weexpectour
aggregateprovisionforloanlossestoincreaseinabsolutedollarsastheamountoftermloansandlinesofcreditweoriginate
increases.ThereserveratioatSeptember30,2014was9.4%.WedefinereserveratioasourALLLasoftheendoftheperioddivided
bytheUnpaidPrincipalBalanceasoftheendoftheperiod.
FundingCosts.Fundingcostsconsistoftheinterestexpensewepayonthedebtweincurtofundourlendingactivities,certain
feesandtheamortizationofdeferreddebtissuancecostsincurredinconnectionwithobtainingthisdebt,suchasbankerfees,
originationfeesandlegalfees.Suchcostsareexpensedimmediatelyuponearlyextinguishmentoftherelateddebt.Weexpect
fundingcoststocontinuetoincreaseinabsolutedollarsinthenearfutureasweincuradditionaldebttosupportfuturetermloanand
lineofcreditoriginations.Inaddition,fundingcostsasapercentageofgrossrevenuewillfluctuatebasedontheapplicableinterest
ratespayableonthedebtweincurtofundourlendingactivities,oureffectiveinterestyieldandourOnDeckMarketplacerevenue
mix.Wedonotexpectthattheinterestratesatwhichweborrowwilldeclinemeaningfullyintheforeseeablefuture.
OperatingExpenses
Operatingexpensesconsistofsalesandmarketing,technology,processingandservicing,andgeneralandadministrative
expenses.Salariesandpersonnelrelatedcosts,includingbenefits,bonusesandstockbasedcompensationexpense,comprisea
significantcomponentofeachoftheseexpensecategories.Weexpectourstockbasedcompensationexpensetoincreaseinthefuture
totheextentthefairmarketvalueofourcommonstockincreasesrelativetopriorperiods.Thenumberofemployeesrelatedtothese
operatingexpensecategoriesgrewfrom155atDecember31,2012to251atDecember31,2013,andfrom220atSeptember30,2013
to369atSeptember30,2014.Weexpecttocontinuetohirenewemployeesinordertosupportourgrowthstrategy.Alloperating
expensecategoriesalsoincludeanallocationofoverhead,suchasrentandotheroverhead,whichisbasedonemployeeheadcount.
SalesandMarketing.Salesandmarketingexpenseconsistsofsalariesandpersonnelrelatedcostsofoursalesandmarketing
andbusinessdevelopmentemployees,aswellasdirectmarketingandadvertisingcosts,onlineandofflinecustomeracquisitioncosts
(suchasdirectmail,paidsearchandsearchengineoptimizationcosts),publicrelations,radioandtelevisionadvertising,promotional
eventprograms,corporatecommunicationsandallocatedoverhead.Thenumberofemployeesinoursalesandmarketingfunctions
grewfrom68atDecember31,2012to160atSeptember30,2014,andweexpectoursalesandmarketingexpensetoincreasein
absolutedollarsandasapercentageofgrossrevenueintheforeseeablefutureaswefurtherincreasethenumberofsalesand
marketingprofessionalsandincreaseourmarketingactivitiesinordertocontinuetoexpandourdirectcustomeracquisitionefforts
andbuildourbrand.Futuresalesandmarketingexpensemayincludetheexpenseassociatedwithwarrantsissuedtoastrategic
partnerifperformanceconditionsaremetasdescribedinNote6ofNotestoUnauditedConsolidatedFinancialStatementselsewhere
inthisprospectus.
TechnologyandAnalytics.Technologyandanalyticsexpenseconsistsprimarilyofthesalariesandpersonnelrelatedcostsof
ourengineeringandproductemployeesaswellasourcreditandanalyticsemployeeswhodevelopourproprietarycreditscoring
models.Additionalexpensesincludethirdpartydataacquisitionexpenses,professionalservices,consultingcosts,expensesrelated
tothedevelopmentofnewproductsandtechnologiesandmaintenanceofexistingtechnologyassets,amortizationofcapitalized
internalusesoftwarecostsrelatedtoourtechnologyplatform,andallocatedoverhead.Thenumberofemployeesintechnologyand
analyticsfunctionsincreasedfrom35atDecember31,2012to94atSeptember30,2014.Webelievecontinuingtoinvestin
technologyisessentialtomaintainingourcompetitiveposition,andweexpectthesecoststoriseintheneartermonanabsolute
basisandasapercentageofgrossrevenue.

59

TableofContents

ProcessingandServicing.Processingandservicingexpenseconsistsprimarilyofsalariesandpersonnelrelatedcostsofour
creditanalysis,underwriting,funding,frauddetection,customerserviceandcollectionsemployees.Additionalexpensesinclude
vendorcostsassociatedwiththirdpartycreditchecks,lienfilingfeesandothercoststoevaluate,close,andfundloansandoverhead
costs.Thenumberofemployeesinprocessingandservicingfunctionsincreasedfrom36atDecember31,2012to74atSeptember30,
2014.Weanticipatethatourprocessingandservicingexpensewillriseinabsolutedollarsaswegroworiginations.
GeneralandAdministrative.Generalandadministrativeexpenseconsistsprimarilyofsalaryandpersonnelrelatedcostsforour
executive,financeandaccounting,legalandpeopleoperationsemployees.Additionalexpensesincludeconsultingandprofessional
fees,insurance,legal,occupancy,othercorporateexpensesandtravel.Thenumberofemployeesingeneralandadministrative
functionsincreasedfrom16atDecember31,2012to41atSeptember30,2014,andweexpectourgeneralandadministrative
expensestoincreaseinabsolutedollarsasaresultofourpreparationtobecomeandoperateasapubliccompany.Afterthe
completionofthisoffering,theseexpenseswillalsoincludecostsassociatedwithcompliancewiththeSarbanesOxleyActandother
regulationsgoverningpubliccompanies,increaseddirectorsandofficersliabilityinsurance,increasedaccounting,legalandother
professionalservicesfeesandanenhancedinvestorrelationsfunction.
Other(Expense)Income
InterestExpense.Interestexpenseconsistsofinterestexpenseandamortizationofdeferreddebtissuancecostsincurredondebt
associatedwithourcorporateactivities.Itdoesnotincludeinterestexpenseincurredondebtassociatedwithourlendingactivities.
Interestexpensedecreasedby$0.8million,from$1.1millionfortheninemonthsendedSeptember30,2013to$0.3millionforthe
ninemonthsendedSeptember30,2014.Interestexpenseincreasedby$1.2million,from$0.1millionfortheyearended
December31,2012to$1.3millionfortheyearendedDecember31,2013.InFebruary2013,werecognized$1.0millionofnoncash
interestexpenserelatedtoabeneficialconversionfeatureassociatedwiththeconversionofanoutstandingconvertiblenoteinto
preferredstock.
WarrantLiabilityFairValueAdjustment.WeissuedwarrantstopurchasesharesofourSeriesBandC1redeemableconvertible
preferredstockinconnectionwiththeLoanandSecurityAgreementsenteredintowithLighthouseCapitalandSFCapitalin2010
and2012,respectively.Additionally,weissuedwarrantstopurchasesharesofourSeriesEredeemableconvertiblepreferredstockin
connectionwithcertainconsultingandcommercialagreementsin2014.Asthewarrantholdershavetherighttodemandthattheir
redeemableconvertiblepreferredstockbesettledincashafterthepassageoftime,werecordedthewarrantsasliabilitiesonour
consolidatedbalancesheet.Thefairvaluesofourredeemableconvertiblepreferredstockwarrantliabilitiesareremeasuredattheend
ofeachreportingperiodandanychangesinfairvaluesarerecognizedinother(expense)income.DuringJuly,August,and
September2014,amajorityofthesewarrantswereexercised,eliminatingtheassociatedwarrantliabilities.Uponcompletionofthis
offering,theremainingoutstandingwarrantswillautomatically,inaccordancewiththeirterms,becomewarrantstopurchase
commonstock,whichwillresultinthereclassificationofthewarrantliabilitytoadditionalpaidincapital,andnofurtherchangesin
fairvaluewillberecognizedinother(expense)income.Futurewarrantliabilityfairvalueadjustmentmayincludeadjustments
associatedwithwarrantsissuedtoastrategicpartnerasdescribedinNote6ofNotestoUnauditedConsolidatedFinancialStatements
elsewhereinthisprospectus.
ProvisionforIncomeTaxes
ProvisionforincometaxesconsistsofU.S.federal,stateandforeignincometaxes,ifany.Todate,wehavenotbeenrequiredto
payU.S.federalorstateincometaxesbecauseofourcurrentandaccumulatednetoperatinglosses.AsofDecember31,2013,wehad
$47.5millionoffederalnetoperatinglosscarryforwardsand$47.2millionofstatenetoperatinglosscarryforwardsavailableto
reducefuturetaxableincome,unlesslimitedduetohistoricalorfutureownershipchanges.Thefederalnetoperatingloss
carryforwardswillbegintoexpireatvariousdatesbeginningin2027.

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TableofContents

TheInternalRevenueCodeof1986,asamended,ortheCode,imposessubstantialrestrictionsontheutilizationofnetoperating
lossesandothertaxattributesintheeventofanownershipchangeofacorporation.Eventswhichmaycauselimitationinthe
amountofthenetoperatinglossesandothertaxattributesthatareabletobeutilizedinanyoneyearinclude,butarenotlimitedto,a
cumulativeownershipchangeofmorethan50%overathreeyearperiod,whichhasoccurredasaresultofhistoricalownership
changes.Accordingly,ourabilitytouseprechangenetoperatinglossandcertainotherattributesarelimitedasprescribedunder
Sections382and383oftheCode.Therefore,ifweearnnettaxableincomeinthefuture,ourabilitytoreduceourfederalincometax
liabilitywithourexistingnetoperatinglossesissubjecttolimitation.Althoughwebelievethatthisofferingmayresultinanother
cumulativeownershipchangeunderSections382and383oftheCode,wedonotbelievethatanyresultinglimitationwillfurther
limitourabilitytoultimatelyutilizeournetoperatinglosscarryforwardsandothertaxattributesinamaterialway.Futureofferings,
aswellasotherfutureownershipchangesthatmaybeoutsideourcontrolcouldpotentiallyresultinfurtherlimitationsonourability
toutilizeournetoperatinglossandtaxattributes.Accordingly,achievingprofitabilitymaynotresultinafullreleaseofthe
valuationallowance.
AsofDecember31,2013,afullvaluationallowanceof$26.2millionwasrecordedagainstournetdeferredtaxassets.
ResultsofOperations
Thefollowingtablesetsforthourconsolidatedstatementsofoperationsdataforeachoftheperiodsindicated.

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue
Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue
Netrevenue
Operatingexpenses:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totaloperatingexpenses
Lossfromoperations
Other(expense)income:
Interestexpense
Warrantliabilityfairvalueadjustment
Totalother(expense)income
Lossbeforeprovisionforincometaxes
Provisionforincometaxes
Netloss

61

YearEnded
NineMonthsEnded
December31,

September30,
2012
2013
2013
2014
(inthousands)

$ 25,273

370
25,643

12,469
8,294
20,763
4,880

6,633
5,001
2,919
6,935
21,488
(16,608)

(88)

(148)

(236)
(16,844)

$(16,844)

$ 62,941

788
1,520
65,249

26,570
13,419
39,989
25,260

18,095
8,760
5,577
12,169
44,601
(19,341)

(1,276)
(3,739)
(5,015)
(24,356)

$(24,356)

$ 41,073

1,004
42,077

16,300
9,400
25,700
16,377

13,566
6,090
3,746
9,158
32,560
(16,183)

(1,070)
(1,496)
(2,566)
(18,749)

$(18,749)

$ 99,873
4,569
3,131
107,573

47,011
12,531
59,542
48,031

21,799
11,357
5,928
13,968
53,052
(5,021)

(274)
(9,122)
(9,396)
(14,417)

$ (14,417)

TableofContents

Thefollowingtablesetsforthourconsolidatedstatementsofoperationsdataasapercentageofgrossrevenueforeachofthe
periodsindicated.

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue
Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue
Netrevenue
Operatingexpenses:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totaloperatingexpenses
Lossfromoperations
Other(expense)income:
Interestexpense
Warrantliabilityfairvalueadjustment
Totalother(expense)income
Lossbeforeprovisionforincometaxes
Provisionforincometaxes
Netloss

62

Yearended
NineMonthsEnded
December31,

September30,

2012
2013
2013
2014
(asapercentageofgrossrevenue)

98.6%

1.4
100.0

48.6
32.3
81.0
19.0

25.9
19.5
11.4
27.0
83.8
(64.8)

(0.3)
(0.6)
(0.9)
(65.7)

(65.7)%

96.5%
1.2
2.3
100.0

40.7
20.6
61.3
38.7

27.7
13.4
8.5
18.7
68.4
(29.6)

(2.0)
(5.7)
(7.7)
(37.3)

(37.3)%

97.6%

2.4
100.0

38.7
22.3
61.1
38.9

32.2
14.5
8.9
21.8
77.4
(38.5)

(2.5)
(3.6)
(6.1)
(44.6)

(44.6)%

92.9%
4.2
2.9
100.0

43.7
11.6
55.4
44.6

20.3
10.6
5.5
13.0
49.3
(4.7)

(0.3)
(8.5)
(8.7)
(13.4)

(13.4)%

TableofContents

ComparisonofNineMonthsEndedSeptember30,2013and2014

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue
Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue
Netrevenue
Operatingexpenses:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totaloperatingexpenses
Lossfromoperations
Other(expense)income:
Interestexpense
Warrantliabilityfairvalue
adjustment
Totalother(expense)income
Lossbeforeprovisionforincome
taxes
Provisionforincometaxes
Netloss

NineMonthsEndedSeptember30,

2013

2014

Percentageof
Percentageof
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$ 41,073

1,004
42,077

16,300
9,400
25,700
16,377

13,566
6,090
3,746
9,158
32,560
(16,183)

97.6%

2.4
100.0

38.7
22.3
61.1
38.9

32.2
14.5
8.9
21.8
77.4
(38.5)

$58,800
4,569
2,127
65,496

43.7
11.6
55.4
44.6

20.3
10.6
5.5
13.0
49.3
(4.7)

(274)

(0.3)

(9,122)
(9,396)

(8.5)
(8.7)

(14,417)

$ (14,417)

(2.5)

(1,496)
(2,566)

(3.6)
(6.1)

(18,749)

$(18,749)

(44.6)

(44.6)%

92.9%
4.2
2.9
100.0

47,011
12,531
59,542
48,031

Amount

21,799
11,357
5,928
13,968
53,052
(5,021)

(1,070)

PeriodtoPeriod
Change

$ 99,873
4,569
3,131
107,573

30,711
3,131
33,842
31,654

8,233
5,267
2,182
4,810
20,492
11,162

Percentage

143.2%
*
211.9
155.7

188.4
33.3
131.7
193.3

60.7
86.5
58.2
52.5
62.9
(69.0)

796

(74.4)

(7,626)
(6,830)

*
*

(13.4)

(13.4)%

4,332

$ 4,332

(23.1)

(23.1)%

*notmeaningful
Revenue

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue

NineMonthsEndedSeptember30,

2013

2014

Percentageof
Percentageof
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$41,073

1,004
$42,077

97.6%

2.4
100.0%

*notmeaningful

63

$ 99,873
4,569
3,131
$107,573

PeriodtoPeriod
Change

Amount

92.9%
4.2
2.9
100.0%

$58,800
4,569
2,127
$65,496

Percentage

143.2%
*
211.9
155.7%

TableofContents

Grossrevenueincreasedby$65.5million,or156%,from$42.1millionfortheninemonthsendedSeptember30,2013to
$107.6millionfortheninemonthsendedSeptember30,2014.Thisgrowthingrossrevenuewasprimarilyattributabletoa
$58.8million,or143%,increaseininterestincome,whichwasprimarilydrivenbyincreasesintheaveragetotalloansoutstandingin
thelaterperiodandtheadditionoflineofcreditoriginationsintheninemonthsendedSeptember30,2014.Duringtheninemonths
endedSeptember30,2014,ouraveragetotalloansoutstandingincreased152%to$323.5millionfrom$128.6millionduringthe
ninemonthsendedSeptember30,2013.WebeganofferinglinesofcreditinSeptember2013,and$32.4millionwasdrawn
thereunderfortheninemonthsendedSeptember30,2014.Theincreaseinoriginationswaspartiallyoffsetbyadeclineinour
effectiveinterestyieldonloansoutstandingfrom42.6%to41.2%inthelaterperiod.
Inaddition,duringtheninemonthsendedSeptember30,2014,werealizedgainsof$4.6millionthroughthesaleof
$75.0millionoftermloansthroughourOnDeckMarketplace.WelaunchedOnDeckMarketplaceinOctober2013.
CostofRevenue

Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue

NineMonthsEndedSeptember30,

2013

2014

Percentageof
Percentageof
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$16,300
9,400
$25,700

38.7%
22.3
61.1%

$47,011
12,531
$59,542

PeriodtoPeriod
Change

Amount

43.7%
11.6
55.4%

$30,711
3,131
$33,842

Percentage

188.4%
33.3
131.7%

ProvisionforLoanLosses.Provisionforloanlossesincreasedby$30.7million,or188%,from$16.3millionforthenine
monthsendedSeptember30,2013to$47.0millionfortheninemonthsendedSeptember30,2014.Theincreaseinprovisionforloan
losseswasprimarilyattributabletotheincreaseinoriginationsoftermloansandlinesofcredit.UnderGAAP,werecognizerevenue
onloansovertheirterm,butprovideforprobablecreditlossesontheloansatthetimetheyareoriginatedandthenadjust
periodicallybasedonactualperformanceandchangesinlossexpectations.Asaresult,webelievethatanalyzingprovisionforloan
lossesasapercentageoforiginations,ratherthanasapercentageofgrossrevenue,providesmoreusefulinsightintoouroperating
performance.TheProvisionRateincreasedfrom5.6%fortheninemonthsendedSeptember30,2013to7.0%fortheninemonths
endedSeptember30,2014.Theincreasewasprimarilyduetothelongeraveragetermofloanoriginationsandtheincreaseof
originationsofourlineofcreditproduct.
FundingCosts.Fundingcostsincreasedby$3.1million,or33.3%,from$9.4millionfortheninemonthsendedSeptember30,
2013to$12.5millionfortheninemonthsendedSeptember30,2014.Theincreaseinfundingcostswasprimarilyattributabletothe
increasesinouraggregateoutstandingborrowings.Theaveragebalanceofourfundingdebtfacilitiesduringtheninemonthsended
September30,2014was$252.2millionascomparedtotheaveragebalanceof$108.2millionduringtheninemonthsended
September30,2013,anincreaseof133%.Inaddition,weexperienceda$0.5millionincreaseinamortizationofdebtissuancecosts
duringtheninemonthsendedSeptember30,2014ascomparedtotheninemonthsendedSeptember30,2013,primarilyrelatedto
oursecuritizationtransactioninMay2014.Asapercentageofgrossrevenue,fundingcostsdecreasedfrom22.3%fortheninemonths
endedSeptember30,2013to11.6%fortheninemonthsendedSeptember30,2014.Thedecreaseinfundingcostsasapercentageof
grossrevenuewasprimarilytheresultofmorefavorableinterestratesonourdebtfacilitiesassociatedwithourlendingactivitiesand
thecreationoftheOnDeckMarketplace,asloanssoldtotheOnDeckMarketplacedonotincurfundingcostsfromourdebtfacilities
usedtofundourloans.

64

TableofContents

OperatingExpenses
SalesandMarketing

SalesandMarketing

NineMonthsEndedSeptember30,

2013

2014

Percentageof
Percentageof
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$13,566

32.2%

$21,799

PeriodtoPeriod
Change

Amount

Percentage

20.3%

$8,233

60.7%

Salesandmarketingexpenseincreasedby$8.2million,or60.7%,from$13.6millionfortheninemonthsendedSeptember30,
2013to$21.8millionfortheninemonthsendedSeptember30,2014.Theincreaseinsalesandmarketingexpensewasinpart
attributabletoa$3.8millionincreaseinsalariesandpersonnelrelatedcostsandconsultantexpenses.Thenumberofsalesand
marketingemployeesincreasedfrom96atSeptember30,2013to160atSeptember30,2014tosupportourbusinessgrowth.In
addition,weexperienceda$4.3millionincreaseindirectmarketing,generalmarketingandadvertisingcostsasweexpandedour
marketingprogramstodriveincreasedcustomeracquisitionandbrandawareness.Asapercentageofgrossrevenue,salesand
marketingexpensedecreasedfrom32.2%fortheninemonthsendedSeptember30,2013to20.3%fortheninemonthsended
September30,2014.
TechnologyandAnalytics

Technologyandanalytics

NineMonthsEndedSeptember30,

2013

2014

Percentageof
Percentageof
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$6,090

14.5%

$11,357

PeriodtoPeriod
Change

Amount

10.6%

$5,267

Percentage

86.5%

Technologyandanalyticsexpenseincreasedby$5.3million,or86.5%,from$6.1millionfortheninemonthsendedSeptember
30,2013to$11.4millionfortheninemonthsendedSeptember30,2014.Theincreaseintechnologyexpensewasprimarily
attributabletoa$3.8millionincreaseinsalariesandpersonnelrelatedcosts,asweincreasedthenumberoftechnologypersonnel
developingourplatform,aswellasanalyticspersonneltofurtherimproveuponalgorithmsunderlyingtheOnDeckScore.The
numberoftechnologyandanalyticsemployeesincreasedfrom44atSeptember30,2013to94atSeptember30,2014.Inaddition,we
experienceda$1.4millionincreaseinamortizationofcapitalizedinternalusesoftwarecostsrelatedtoourtechnologyplatform,
expensesrelatedtoournewdatacenterfacility,technologylicensesandothercoststosupportourlargeremployeebase.Asa
percentageofgrossrevenue,technologyandanalyticsexpensedecreasedfrom14.5%fortheninemonthsendedSeptember30,2013
to10.6%fortheninemonthsendedSeptember30,2014.
ProcessingandServicing

ProcessingandServicing

NineMonthsEndedSeptember30,

2013

2014

Percentageof
Percentageof
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$3,746

8.9%

$5,928

PeriodtoPeriod
Change

Amount

5.5%

$2,182

Percentage

58.2%

Processingandservicingexpenseincreasedby$2.2million,or58.2%,from$3.7millionfortheninemonthsendedSeptember
30,2013to$5.9millionfortheninemonthsendedSeptember30,2014.Theincrease

65

TableofContents

inprocessingandservicingexpensewasprimarilyattributabletoa$1.3millionincreaseinsalariesandpersonnelrelatedcosts,aswe
increasedthenumberofprocessingandservicingpersonneltosupporttheincreasedvolumeofloanapplicationsandapprovalsand
increasedloanservicingrequirements.Thenumberofprocessingandservicingemployeesincreasedfrom58atSeptember30,2013
to74atSeptember30,2014.Inaddition,weexperienceda$0.9millionincreaseinthirdpartyprocessingcosts,creditinformation
andfilingfeesasaresultoftheincreasedvolumeofloanapplicationsandoriginations.Asapercentageofgrossrevenue,processing
andservicingexpensedecreasedfrom8.9%fortheninemonthsendedSeptember30,2013to5.5%fortheninemonthsended
September30,2014.
GeneralandAdministrative

GeneralandAdministrative

NineMonthsEndedSeptember30,

2013

2014

Percentageof
Percentageof
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$9,158

21.8%

$13,968

PeriodtoPeriod
Change

Amount

13.0%

$4,810

Percentage

52.5%

Generalandadministrativeexpenseincreasedby$4.8million,or52.5%,from$9.2millionfortheninemonthsended
September30,2013to$14.0millionfortheninemonthsendedSeptember30,2014.Theincreaseingeneralandadministrative
expensewasprimarilyattributabletoa$4.6millionincreaseinconsulting,legal,recruiting,accountingandothermiscellaneous
expenses.Thisincreasewaspartiallyoffsetbya$0.6milliondecreaseinsalariesandpersonnelrelatedcosts.Whileweincreasedthe
numberofgeneralandadministrativepersonnelduringtheninemonthsendedSeptember30,2014tosupportthegrowthofour
business,theoveralldecreaseinpersonnelrelatedcostsreflectsa$1.0millionseveranceexpenseincurredduringtheninemonths
endedSeptember30,2013inconnectionwiththedepartureofanexecutive,whichdidnotrecurintheninemonthsended
September30,2014.Thenumberofgeneralandadministrativeemployeesincreasedfrom22atSeptember30,2013to41at
September30,2014.Asapercentageofgrossrevenue,generalandadministrativeexpensedecreasedfrom21.8%fortheninemonths
endedSeptember30,2013to13.0%fortheninemonthsendedSeptember30,2014.

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TableofContents

ComparisonofYearsEndedDecember31,2012and2013

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue
Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue
Netrevenue
Operatingexpenses:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totaloperatingexpenses
Lossfromoperations
Other(expense)income:
Interestexpense
Warrantliabilityfairvalue
adjustment
Totalother(expense)income
Lossbeforeprovisionforincome
taxes
Provisionforincometaxes
Netloss

YearEndedDecember31,

2012

2013

Percentageof
Percentageof
Gross
Gross
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$ 25,273

370
25,643

12,469
8,294
20,763
4,880

6,633
5,001
2,919
6,935
21,488
(16,608)

98.6%

1.4
100.0
48.6
32.3
81.0
19.0

25.9
19.5
11.4
27.0
83.8
(64.8)

(88)

(0.3)

(148)
(236)

(0.6)
(0.9)

(16,844)

$(16,844)

26,570
13,419
39,989
25,260

18,095
8,760
5,577
12,169
44,601
(19,341)

Amount

96.5%
1.2
2.3
100.0

$37,668

788
1,150
39,606

40.7
20.6
61.3
38.7

27.7
13.4
8.5
18.7
68.4
(29.6)

(1,276)

(2.0)

(3,739)
(5,015)

(5.7)
(7.7)

(65.7)

(65.7)%

(24,356)

$(24,356)

67

PeriodtoPeriod
Change

*notmeaningful

$ 62,941

788
1,520
65,249

14,101
5,125
19,226
20,380

11,462
3,759
2,658
5,234
23,113
(2,733)

Percentage

149.0%
*
310.8
154.5

113.1
61.8
92.6
417.6

172.8
75.2
91.1
75.5
107.6
16.5

(1,188)

(3,591)
(4,779)

*
*

(37.3)

(37.3)%

(7,512)

$ (7,512)

44.6

44.6%

TableofContents

Revenue

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue

YearEndedDecember31,

2012

2013

Percentageof
Percentageof
Gross
Gross
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$25,273

370
$25,643

98.6%

1.4
100.0%

$62,941

788
1,520
$65,249

PeriodtoPeriod
Change

Amount

96.5%
1.2
2.3
100.0%

$37,668

788
1,150
$39,606

Percentage

149.0%
*
310.8
154.5%

*notmeaningful
Revenue.Grossrevenueincreasedby$39.6million,or155%,from$25.6millionfortheyearendedDecember31,2012to
$65.2millionfortheyearendedDecember31,2013.Thisgrowthwasprimarilyattributabletoa$37.7million,or149%,increasein
interestincomeduringtheyearendedDecember31,2013ascomparedtotheyearendedDecember31,2012.Thisincreasewas
drivenprimarilybyincreasesintheaverageloansoutstandingbetweentheseyears.DuringtheyearendedDecember31,2013,we
hadaverageloansoutstandingof$147.4million,comparedto$61.4millionofaverageloansoutstandingduringtheyearended
December31,2012,representinganincreaseof140%.Therewasalsoaslightincreaseinoureffectiveinterestyieldfrom41.2%to
42.7%betweentheseperiods.
Inaddition,duringtheyearendedDecember31,2013,wesold$17.5millionofloanstothirdpartyinstitutionalinvestors
throughourOnDeckMarketplace,resultingingainsof$0.8millionduringtheperiod.WelaunchedOnDeckMarketplaceinOctober
2013.
Wealsoexperiencedanincreaseof$1.2million,or311%,inotherrevenueduringtheyearendedDecember31,2013as
comparedtotheyearendedDecember31,2012.Thisincreasewasprimarilyattributabletoanincreaseinmarketingfeesfromour
issuingbankpartners.
CostofRevenue

Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue

YearEndedDecember31,

2012

2013

Percentageof
Percentageof
Gross
Gross
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$12,469
8,294
$20,763

48.6%
32.3
81.0%

$26,570
13,419
$39,989

PeriodtoPeriod
Change

Amount

40.7%
20.6
61.3%

$14,101
5,125
$19,226

Percentage

113.1%
61.8
92.6%

ProvisionforLoanLosses.Provisionforloanlossesincreasedby$14.1million,or113%,from$12.5millionfortheyearended
December31,2012to$26.6millionfortheyearendedDecember31,2013.Theincreaseinprovisionforloanlosseswasprimarily
attributabletotheincreaseinoriginationvolumeoftermloansduringtheyearendedDecember31,2013comparedtotheyearended
December31,2012.UnderGAAP,werecognizerevenueonloansovertheirterm,butprovideforprobablecreditlossesontheloans
atthetimetheyareoriginatedandthenadjustperiodicallybasedonactualperformanceandchangesinlossexpectations.Asa

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result,webelievethatanalyzingtheprovisionforloanlossesasapercentageoforiginations,ratherthanasapercentageofgross
revenue,providesmoreusefulinsightintoouroperatingperformance.TheProvisionRatedecreasedfrom7.2%fortheyearended
December31,2012to6.0%fortheyearendedDecember31,2013,attributabletoanimprovementincreditqualityofourloan
originationsanda$0.9millionreductionintheprovisionresultingfromourfirstsaleofchargedoffreceivablestoathirdparty
purchaser.
FundingCosts.Fundingcostsincreasedby$5.1million,or61.8%,from$8.3millionfortheyearendedDecember31,2012to
$13.4millionfortheyearendedDecember31,2013.Theincreaseinfundingcostswasprimarilyattributabletoanincreaseinour
aggregateoutstandingborrowingsduringtheyearendedDecember31,2013comparedtotheyearendedDecember31,2012.The
averagebalanceofourfundingdebtfacilitiesduringtheyearendedDecember31,2013was$124.2millionascomparedtothe
averagebalanceof$62.0millionduringtheyearendedDecember31,2012,anincreaseof100%.Inaddition,weexperienceda
$1.1millionincreaseinamortizationofdebtissuancecostsduringtheyearendedDecember31,2013ascomparedtotheyearended
December31,2012,primarilyasaresultofissuancefeesincurredinJuly2012relatedtoadebtfacility,aswellastheadditionoftwo
additionaldebtfacilitiesinAugust2013andOctober2013,respectively.Asapercentageofgrossrevenue,fundingcostsdecreased
from32.3%fortheyearendedDecember31,2012to20.6%fortheyearendedDecember31,2013.Thedecreaseinfundingcostsasa
percentageofgrossrevenuewasprimarilytheresultofmorefavorableinterestratesonournewdebtfacilities.
OperatingExpenses
SalesandMarketing

Salesandmarketing

YearEndedDecember31,

2012

2013

Percentageof
Percentageof
Gross
Gross
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$6,633

25.9%

$18,095

PeriodtoPeriod
Change

Amount

27.7%

$11,462

Percentage

172.8%

Salesandmarketingexpenseincreasedby$11.5million,or173%,from$6.6millionfortheyearendedDecember31,2012to
$18.1millionfortheyearendedDecember31,2013.Theincreaseinsalesandmarketingexpensewasprimarilyattributabletoa
$7.4millionincreaseindirectmarketingandadvertisingasweexpandedourmarketingprogramstodriveincreasedcustomer
acquisition.Inaddition,salariesandpersonnelrelatedcostsincreasedby$3.9million,asweincreasedthenumberofsalesand
marketingpersonneltosupportthegrowthofourbusiness.Thenumberofsalesandmarketingemployeesincreasedfrom68at
December31,2012to110atDecember31,2013.Asapercentageofgrossrevenue,salesandmarketingexpenseincreasedfrom
25.9%fortheyearendedDecember31,2012to27.7%fortheyearendedDecember31,2013.
TechnologyandAnalytics

Technologyandanalytics

YearEndedDecember31,

2012

2013

Percentageof
Percentageof
Gross
Gross
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$5,001

19.5%

$8,760

PeriodtoPeriod
Change

Amount

13.4%

$3,759

Percentage

75.2%

Technologyandanalyticsexpenseincreasedby$3.8million,or75.2%,from$5.0millionfortheyearendedDecember31,2012
to$8.8millionfortheyearendedDecember31,2013.Theincreaseinexpensewasprimarilyattributabletoa$1.8millionincreasein
salariesandpersonnelrelatedcosts.During2013,weincreasedthe

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TableofContents

numberoftechnologyandanalyticspersonneltocontinuedevelopingourtechnologyplatformandimproveuponthealgorithms
underlyingtheOnDeckScore.Thenumberoftechnologyandanalyticsemployeesincreasedfrom35atDecember31,2012to54at
December31,2013.Inaddition,weexperienceda$0.9millionincreaseinamortizationofcapitalizedinternalusesoftwarecosts
relatedtoourtechnologyplatform,anda$0.7millionincreaseinhardware,software,technologylicensesandothercoststosupport
ourgrowthinloanoriginationsandemployees.Asapercentageofgrossrevenue,technologyandanalyticsexpensedecreasedfrom
19.5%fortheyearendedDecember31,2012to13.4%fortheyearendedDecember31,2013.
ProcessingandServicing

Processingandservicing

YearEndedDecember31,

2012

2013

Percentageof
Percentageof
Gross
Gross
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$2,919

11.4%

$5,577

PeriodtoPeriod
Change

Amount

8.5%

$2,658

Percentage

91.1%

Processingandservicingexpenseincreasedby$2.7million,or91.1%,from$2.9millionfortheyearendedDecember31,2012
to$5.6millionfortheyearendedDecember31,2013.Theincreaseinprocessingandservicingexpensewasprimarilyattributableto
a$1.3millionincreaseinsalariesandpersonnelrelatedcosts,asweincreasedthenumberofprocessingandservicingpersonnelto
supporttheincreasedvolumeofloanapplicationsandloanservicingrequirements.Thenumberofprocessingandservicing
employeesincreasedfrom36atDecember31,2012to64atDecember31,2013.Inaddition,weexperienceda$1.5millionincrease
inthirdpartyprocessingcosts,creditinformationandfilingfeesduringtheyearendedDecember31,2013relatedtothehigher
volumeoftermloanandlineofcreditapplicationsandoriginationsprocessed.Asapercentageofgrossrevenue,processingand
servicingexpensedecreasedfrom11.4%fortheyearendedDecember31,2012to8.5%fortheyearendedDecember31,2013.
GeneralandAdministrative

Generalandadministrative

YearEndedDecember31,

2012

2013

Percentageof
Percentageof
Gross
Gross
Amount
Revenue
Amount
Revenue
(dollarsinthousands)

$6,935

27.0%

$12,169

PeriodtoPeriod
Change

Amount

18.7%

$5,234

Percentage

75.5%

Generalandadministrativeexpenseincreasedby$5.2million,or75.5%,from$6.9millionfortheyearendedDecember31,
2012to$12.2millionfortheyearendedDecember31,2013.Theincreaseingeneralandadministrativeexpensewasprimarily
attributabletoa$2.8millionincreaseinsalariesandpersonnelrelatedcosts,asweincreasedthenumberofgeneraland
administrativepersonneltosupportourgrowingbusiness.Thenumberofgeneralandadministrativeemployeesincreasedfrom16at
December31,2012to23atDecember31,2013.These2013personnelrelatedcostsalsoincludeda$1.0millionseveranceexpense
incurredinconnectionwiththedepartureofanexecutive.Furthermore,weexperienceda$2.2millionincreaseinconsulting,legal
andothergeneralandadministrativeexpensesduringtheyearendedDecember31,2013.Asapercentageofgrossrevenue,general
andadministrativeexpensedecreasedfrom27.0%fortheyearendedDecember31,2012to18.7%fortheyearendedDecember31,
2013.
QuarterlyResultsofOperations
Thefollowingtablesshowourunauditedconsolidatedquarterlystatementofoperationsdataforeachofoureightmostrecently
completedquarters,aswellasthepercentageofrevenueforeachlineitemshown.This

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TableofContents

informationhasbeenderivedfromourunauditedconsolidatedfinancialstatements,which,intheopinionofmanagement,havebeen
preparedonthesamebasisasourauditedconsolidatedfinancialstatementsandincludealladjustments,consistingofnormal
recurringadjustmentsandaccruals,necessaryforthefairpresentationofthefinancialinformationforthequarterspresented.
Historicalresultsarenotnecessarilyindicativeoftheresultstobeexpectedinfutureperiods,andoperatingresultsforaquarterly
periodarenotnecessarilyindicativeoftheoperatingresultsforafullyear.Thisinformationshouldbereadinconjunctionwiththe
consolidatedfinancialstatementsandrelatednotesincludedelsewhereinthisprospectus.

December31,

2012

Revenue:

Interestincome
$
8,553
Gainonsalesofloans

Otherrevenue

191
Grossrevenue

8,744
Costofrevenue:

Provisionforloanlosses
6,681
Fundingcosts

2,693
Totalcostofrevenue

9,374
Net(costofrevenue)revenue
(630)
Operatingexpenses:

Salesandmarketing

2,210
Technologyandanalytics
1,535
Processingandservicing
800
Generaland
administrative

2,744
Totaloperatingexpenses

7,289
(Loss)incomefrom
operations

(7,919)
Other(expense)income:

Interestexpense

(16)
Warrantliabilityfair
valueadjustment


Totalother(expense)income
(16)
(Loss)incomebefore
provisionforincometaxes
(7,935)
Provisionforincometaxes

Net(loss)income
$
(7,935)
Originations
$
61,203
UnpaidPrincipalBalance
$
90,276
AverageLoans
$
80,626
EffectiveInterestYield

42.4%
AverageFundingDebt
Outstanding
$
83,457
CostofFundsRate

12.9%
ProvisionRate

10.9%
ReserveRatio

10.3%
15+DayDelinquencyRatio
8.9%
AdjustedEBITDA

(7,431)
AdjustedNet(Loss)Income
(7,858)

ThreeMonthsEnded
March31,
June30,
September30,
December31,
2013 2013
2013

2013

(dollarsinthousands)

$ 10,434 $ 13,251 $
17,388 $
21,868

788

237
358
409
516

10,671 13,609
17,797
23,172

5,131 5,468
5,701
10,270

2,868 2,867
3,665
4,019

7,999 8,335
9,366
14,289

2,672 5,274
8,431
8,883

3,778 4,625
5,163
4,529

1,825 1,904
2,361
2,670

1,113 1,264
1,369
1,831

March31,
June30,
September30,

2014 2014
2014

$ 26,348 $ 32,864 $
40,661

1,343 1,584
1,642

871 1,054
1,206

28,562 35,502
43,509

16,579 13,073
17,359

4,640 3,801
4,090

21,219 16,874
21,449

7,343 18,628
22,060

6,361 7,113
8,325

2,909 3,799
4,649

1,609 2,084
2,235

2,368 3,910
9,084 11,703

2,880
11,773

3,011
12,041

3,392 4,434
14,271 17,430

(6,412) (6,429)

(948)
(2)

(3,342)

(120)

(3,158)

(206)

(6,928)

(157)

1,198

(62)

709

(1,601)
(1,721)

(2,243)
(2,449)

(6,632) (2,190)
(6,789) (2,252)

(300)
(355)

71
(877)

34
32

(55)

(7,289) (6,397)

$ (7,289) $ (6,397)
$ 75,220 $ 93,441
$ 112,850 $136,994
$ 101,551 $123,604

41.1%
42.9%

$
$
$
$

(5,063)

(5,063)
122,271
173,805
155,684
44.7%

$
$
$
$

(5,607)

(5,607)
167,985
215,966
199,404
43.9%

$
$
$
$

(1,054)

$ (1,054)
$248,067
$338,815
$319,122

41.2%

$
$
$
$

354

354
312,889
422,050
391,034
41.6%

121,756
12.0%
4.7%
8.5%
6.9%
(2,529)
(3,353)

162,334
9.9%
6.9%
9.0%
7.6%
(2,106)
(3,193)

$ 199,545 $236,553

9.3%
6.4%

8.4%
5.8%

9.9%
9.4%

7.2%
6.1%

(5,817) $ 2,480

(6,852) $ 1,541

$
$

304,758
5.4%
6.0%
9.4%
5.4%
2,611
1,463

94,690
12.1%
6.8%
9.2%
7.8%
(5,921)
(7,297)

$100,112

11.5%

5.9%

8.7%

6.9%
(5,702)
(6,336)

71

(13,717)

(13,717)
227,350
280,117
256,044
41.2%

6,142
21,351

TableofContents

ThreeMonthsEnded

December31,
March31,
June30,
September30,
December31,
March31,
June30,
September30,

2012

2013 2013
2013

2013

2014 2014
2014

(asapercentageofgrossrevenue)

97.8%
97.8%
97.4%
97.7%
94.4%
92.3%
92.5%
93.4%

Revenue:
Interestincome
Gainonsalesof
loans

Otherrevenue

Grossrevenue

Costofrevenue:

Provisionforloan
losses

Fundingcosts

Totalcostofrevenue

Net(costofrevenue)
revenue

Operatingexpenses:

Salesandmarketing
Technologyand
analytics

Processingand
servicing

Generaland
administrative

Totaloperatingexpenses
(Loss)incomefrom
operations

Other(expense)income:
Interestexpense

Warrantliability
fairvalue
adjustment

Totalother(expense)
income

Lossbeforeprovisionfor
incometaxes

Provisionforincome
taxes

Netloss

2.2
100.0

2.2
100.0

2.6
100.0

2.3
100.0

3.4
2.2
100.0

4.7
3.0
100.0

4.5
3.0
100.0

3.8
2.8
100.0

76.4
30.8
107.2

48.1
26.9
75.0

40.2
21.1
61.3

32.0
20.6
52.6

44.3
17.3
61.6

58.0
16.2
74.2

36.8
10.7
47.5

39.9
9.4
49.3

25.0

35.4

38.7

34.0

47.4

29.0

38.4

19.5

25.8

22.3

52.5

20.0

50.7

(7.2)

25.3

17.6

17.1

14.0

13.3

11.5

10.2

10.7

10.7

9.1

10.4

9.3

7.7

7.9

5.6

5.9

5.1

31.4
83.4

22.2
85.1

28.7
86.0

16.2
66.2

13.0
51.9

11.9
50.0

12.5
49.1

14.1
49.1

(60.1)

(8.9)

(47.3)

(18.8)

(0.7)

(13.5)

(0.9)

(24.2)

(0.5)

3.4

(0.2)

1.6

(90.6)

(0.2)

(0.1)

0.7

0.2

(9.0)

(9.7)

(23.2)

(6.2)

(0.7)

(0.2)

(8.2)

0.2

(9.7)

(10.6)

(23.7)

(6.4)

(0.8)

(90.8)

(68.3)

(47.1)

(28.5)

(24.1)

(47.9)

(3.0)

0.8

(90.8)%

(68.3)%

(47.1)%

(28.5)%

(24.1)%

(47.9)%

(3.0)%

0.8%

19.1

QuarterlyTrends
OurgrossrevenuehasincreasedeachquarterovertheeightquartersendedSeptember30,2014.Thisgrowthhasbeenprimarily
attributabletoanincreaseininterestincome,drivenbyincreasesinbothloanoriginationsandtheloanbalancesduringthe
respectivequarters.Ournetrevenuerepresentsgrossrevenuelessprovisionforloanlossesandfundingcosts.Asexpected,the
provisionforloanlosseshasgenerallyincreasedquartertoquarterinabsolutedollarsasourloanoriginationshaveincreased.The
provisionforloanlossesasapercentageofgrossrevenuedeclinedinthethirdquarterof2013duetoourshifttowardselling
historicallychargedoffloanstoathirdparty,whichresultedinareversalinamodestamountofthesechargeoffsduringthisperiod.
Fundingcostsasapercentageofgrossrevenuehavedeclinedquartertoquarterforallquartersincludedinthetableabove.Aswe
havegrown,wehavebeenabletolowerourfundingcostsbynegotiatingmorefavorableinterestratesonourdebtandaccessingnew
sourcesoffunding,includingoursecuritizationfacilitybeginninginthesecondquarterof2014.
Generally,ourtotaloperatingexpenseshaveincreasedquartertoquarterfortheeightquartersendedSeptember30,2014,
primarilyduetoincreasedpersonnelrelatedcostsreflectingtheincreaseinourheadcounttosupportourgrowth.Inaddition,there
wereothersignificantincreasesinoperatingexpensessuchasdirectmarketingandadvertising,thirdpartydataacquisitionexpenses,
developmentofnewproductsandtechnologies(includingamortizationofcapitalizedinternalusesoftware)andcoststoevaluate,
close,andfundloans.Despitetheincreasesinabsolutedollaramounts,totaloperatingexpensesasapercentageofgrossrevenuehas
generallydecreasedforeachquartersincethesecondquarterof2013aswehaveachievedgreatereconomiesofscale.

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TableofContents

Other(expense)incomeiscomprisedofinterestexpenseoncorporatedebtandthewarrantliabilityfairvalueadjustment.
Interestexpenseoncorporatedebtwasarelativelysmallpercentageofrevenueforallperiodsexceptthethirdquarterof2013,during
whichperiodsignificantinterestexpensewasrecognizeduponaconversionofcertainnotespayableintopreferredstockata
discountedrate.Thewarrantliabilityfairvalueadjustmenthasbecomeamoresignificantexpenseasapercentageofrevenuein
recentquartersastheexpenseisdrivenbytheincreasedfairvalueofcertainpreferredstockwarrants,whichreflectstheincreasein
ourenterprisevalueovertheseperiods.Uponcompletionofthisoffering,thesewarrants,totheextentthattheyremainoutstanding,
willautomatically,inaccordancewiththeirterms,becomewarrantstopurchasecommonstock,whichwillresultinthe
reclassificationoftherelatedwarrantliabilitytoadditionalpaidincapital,andnofurtherchangesinfairvaluewillberecognizedin
other(expense)income.
LiquidityandCapitalResources
SourcesofLiquidity
Todate,wehavefundedourlendingactivitiesandoperationsprimarilythroughprivateplacementsofredeemableconvertible
preferredstock,issuancesofdebtfacilities,cashfromoperatingactivitiesand,beginninginOctober2013,thesaleoftermloansto
thirdpartyinstitutionalinvestorsthroughourOnDeckMarketplace.
EquityFinancings
Sinceinception,wehaveraised$182.9millionfromthesaleofredeemableconvertiblepreferredstocktothirdparties,
including$77millioninourSeriesEfinancinginFebruary2014.ThefundsreceivedfromtheissuanceofourSeriesEredeemable
convertiblepreferredstockarecurrentlyourprimarysourceofcapitalforoperatingexpenditures.Wealsouseaportionofthiscapital
tofinanceasmallpercentageoftheloanvolumeweoriginate.
CurrentDebtFacilities
Thefollowingtablesummarizesourcurrentdebtfacilitiesavailableforfundingourlendingactivitiesandouroperating
expendituresasofSeptember30,2014:

Subsidiary

Fundingdebt:
OnDeckAssetSecuritizationTrustLLC
OnDeckAssetPool,LLC
OnDeckAccountReceivablesTrust20131LLC
OnDeckAssetCompany,LLC
SmallBusinessAssetFund2009LLC
Totalfundingdebt
Corporatedebt:
OnDeckCapital,Inc.

Maturity
Date

5/17/2018
8/15/2016
9/15/2016
10/23/2015
Ongoing

Weighted
Average
InterestRate

9/7/2015

3.4%
5.0%
3.7%
8.3%
8.1%

5.0%

Borrowing
Principal
Capacity
Outstanding
(inmillions)

$ 175.0

75.0
167.6

50.0

20.0
$ 487.6
$

15.0

175.0
40.5
84.6
28.3
18.8
347.2

3.0

InNovember2014,weamendedourcorporatedebtfacilityto(i)extenditsmaturitydatetoOctober30,2015(ii)decreasethe
interestratetoprimeplus1.25%,withafloorof4.5%perannumand(iii)increaseourborrowingcapacityto$20million.
Theoutstandingamountssetforthinthetableaboveareconsolidatedonourbalancesheetwhereasloanssoldpursuanttothe
OnDeckMarketplacearenotonourbalancesheetoncesold.Wecurrentlyactasservicerinexchangeforaservicingfeewithrespect
totheloansheldbyoursubsidiariesandtheloanspurchasedbytheapplicableOnDeckMarketplaceparticipant.

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Whilethelendersunderourcorporatedebtfacilityhavedirectrecoursetousastheborrowerthereunder,lenderstoour
subsidiariesdonothavedirectrecoursetous.
FundingDebt
AssetBackedSecuritizationFacility.AsignificantportionofourloansatSeptember30,2014werefundedthroughthe
securitizationofsmallbusinessloanswegenerated.InMay2014,weaccessedtheassetbackedsecuritizationmarketusingOnDeck
AssetSecuritizationTrustLLC,orODAST,awhollyownedsubsidiary,whichissuedourinauguralseriesofFixedRateAsset
Backednotes,theSeries20141Notes,ina$175millionratedtransactiontoover15thirdpartyinstitutionalinvestors.The
Series20141Noteswereissuedintwoclasses:ClassA,ratedBBB(sf)byDBRS,Inc.,intheinitialprincipalamountof
$156.7millionandClassB,ratedBB(sf)byDBRS,Inc.,intheinitialprincipalamountof$18.3million.TheSeries20141Notesand
anyotherseriesissuedunderthesameindenturearesecuredbyandpayablefromarevolvingpoolofsmallbusinessloanstransferred
fromustoODAST.LoanstransferredtoODASTareaccountedforandincludedinourconsolidatedfinancialstatementsasifowned
byus.AtthetimeofissuanceoftheSeries20141Notes,theportfolioofloansheldbyODASTandpledgedtosecurethe
Series20141Noteswasapproximately$183.2million.TheClassAnotesandClassBnotesbearinterestat3.15%and5.68%,
respectively,andprovideuswithablendedcostofcapitalfixedat3.41%.TheSeries20141Notescontainatwoyearrevolving
period,afterwhichprincipalontheassetbackedsecuritieswillbepaidsequentiallytotheClassAandClassBNotesmonthlyfrom
collectionsontheloans.ThefinalmaturitydateoftheSeries20141isinMay2018.Monthlypaymentsofinterestonthe
Series20141NotesbeganJune17,2014.AsofSeptember30,2014,theoutstandingprincipalbalanceoftheSeries20141Notes
was$175.0millionandtheprincipalamountofloanspledgedtosecuretheSeries20141Noteswas$184.5million.Additional
seriesofassetbackedsecuritiesareexpectedtobeissuedthroughODASTinthefuture.Lendersunderourassetbackedsecuritization
facilitydonothavedirectrecoursetous.
Ourabilitytoutilizeourassetbackedsecuritizationfacilityasdescribedhereinissubjecttocompliancewithvarious
requirements.Suchrequirementsinclude:

EligibilityCriteria.InorderforourloanstobeeligibleforpurchasebyODAST,theymustmeetallapplicableeligibility
criteria.

ConcentrationLimits.TheODASTcollateralpoolissubjecttocertainconcentrationlimitsthat,ifexceeded,would
requiretheapplicablesubsidiaryborrowertoaddadditionalcollateral.

CovenantsandOtherRequirements.ODASTcontainsseveralfinancialcovenants,portfolioperformancecovenantsand
othercovenantsorrequirementsthat,ifnotcompliedwith,mayresultineventsofdefault,theacceleratedrepaymentof
amountsowed,oftenreferredtoasanearlyamortizationevent,and/ortheterminationofthefacility.

Weactasservicerinexchangeforaservicingfeewithrespecttotheloansheldbyourassetbackedsecuritizationfacility.These
servicingfeesareeliminatedinconsolidation.
Formoreinformationregardingourassetbackedsecuritizationfacility,includinginformationregardingrequirementsthatmust
bemetinordertoutilizesuchfacility,pleaseseethesectiontitledDescriptionofIndebtedness.
AssetBackedRevolvingDebtFacilities.Wealsofundloansthroughassetbackedrevolvingdebtfacilities.Withrespecttoeach
suchfacility,thelenderscommittomakeloanstooneofourwhollyownedsubsidiaries,theproceedsofwhichareusedtofinance
thesubsidiaryspurchaseofsmallbusinessloansfromusinabankruptcyremotetransaction.Therevolvingpoolofsmallbusiness
loanstransferredtoeachsuchwhollyownedsubsidiaryservesascollateralfortheloansmadetothesubsidiaryborrowerunderthe
debtfacility.Suchtransferredloansareaccountedforandincludedinourconsolidatedfinancialstatementsasifownedbyus.The
subsidiariesrepaytheborrowingsfromcollectionsreceivedontheloans.Wecurrentlyutilizefoursuchassetbackedrevolvingdebt

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facilitystructuresthroughfourseparatesubsidiaries:OnDeckAccountReceivablesTrust20131LLC,orODARTOnDeckAsset
Company,LLC,orODACSmallBusinessAssetFund2009LLC,orSBAFandOnDeckAssetPool,LLC,orODAP.Asof
September30,2014,theaggregateoutstandingprincipalbalanceundertheserevolvingdebtfacilitieswas$172.2millionandthe
principalamountofloanspledgedtosecuretheserevolvingdebtfacilitieswas$193.4million.Additionalassetbackeddebt
facilitiesareexpectedtobeusedbyusinthefuture.Lendersunderourassetbackedrevolvingdebtfacilitiesdonothavedirect
recoursetous.
Ourabilitytoutilizeourassetbackedrevolvingdebtfacilitiesasdescribedhereinissubjecttocompliancewithvarious
requirements.Suchrequirementsinclude:

EligibilityCriteria.Inorderforourloanstobeeligibleforpurchasebytheapplicablesubsidiary,theymustmeetall
applicableeligibilitycriteria.

ConcentrationLimits.Thesubsidiarycollateralpoolsaresubjecttocertainconcentrationlimitsthat,ifexceeded,would
requiretheapplicablesubsidiaryborrowertoaddadditionalcollateral.

CovenantsandOtherRequirements.Thesubsidiaryfacilitiescontainseveralfinancialcovenants,portfolioperformance
covenantsandothercovenantsorrequirementsthat,ifnotcompliedwith,mayresultineventsofdefault,theaccelerated
repaymentofamountsowed,oftenreferredtoasanearlyamortizationevent,and/ortheterminationofthefacility.

AsofSeptember30,2014,wewereincompliancewithallfinancialcovenantsrequiredperthedebtagreements.
Weactasservicerinexchangeforaservicingfeewithrespecttotheloansheldbyourassetbackedrevolvingdebtfacilities.
Theseservicingfeesareeliminatedinconsolidation.
Formoreinformationregardingourassetbackedrevolvingdebtfacilities,includinginformationregardingrequirementsthat
mustbemetinordertoutilizesuchfacilities,pleaseseethesectiontitledDescriptionofIndebtedness.
CorporateDebt
During2013,weenteredintoarevolvingdebtfacilitywithSquare1Banktofinanceourcorporateinvestmentsintechnology,
salesandmarketing,processingandservicingandothergeneralcorporateexpenditures.Weamendedandrestatedthisrevolvingdebt
facilityinNovember2014to(i)extenditsmaturitydatetoOctober30,2015(ii)decreasetheinterestratetoprimeplus1.25%,with
afloorof4.5%perannumand(iii)increaseourborrowingcapacityto$20million.Thisborrowingarrangementiscollateralizedby
substantiallyallofourassets.AsofSeptember30,2014,theoutstandingprincipalbalanceunderthisrevolvingdebtfacilitywas$3.0
million.
Ourabilitytoutilizeourcorporatedebtfacilityasdescribedhereinissubjecttocompliancewithvariousrequirements.The
corporatedebtfacilitycontainsfinancialcovenants,portfolioperformancecovenantsandothercovenantsorrequirementsthat,ifnot
compliedwith,mayresultineventsofdefault,theacceleratedrepaymentofamountsowed,and/ortheterminationofthefacility.
Formoreinformationregardingourcorporatedebtfacility,includinginformationregardingrequirementsthatmustbemetin
ordertoutilizesuchfacility,pleaseseethesectiontitledDescriptionofIndebtedness.
OnDeckMarketplace
OurOnDeckMarketplaceisaproprietarywholeloansaleplatformthatallowsparticipatingthirdpartyinvestorstodirectly
purchasesmallbusinessloansfromus.Pursuanttoawholeloanpurchaseagreement,each

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OnDeckMarketplaceparticipantcommitstopurchase,onwhatisknownasaforwardflowbasis,apredetermineddollaramountof
loansthatsatisfycertaineligibilitycriteria.Theloansaresoldtotheparticipantatapredeterminedpurchasepriceabovepar.We
recognizeagainorlossfromOnDeckMarketplaceloanswhensoldasopposedtotheloansheldinourassetbackedsecuritization
facilityandassetbackedrevolvingdebtfacilitiesfromwhichwerecognizerevenueoverthetermoftheloan.Theloansalesoccur
shortlyafterloanoriginationandareconductedasfrequentlyasthreetimesperweek.Wecurrentlyactasservicerinexchangefora
servicingfeewithrespecttotheloanspurchasedbytheapplicableOnDeckMarketplaceparticipant.AsofSeptember30,2014,there
wereeightinstitutionalinvestorswithcommitmentstopurchaseloansthroughourOnDeckMarketplace.
CashandCashEquivalents,Loans(NetofAllowanceforLoanLosses),andCashFlows
Thefollowingtablesummarizesourcashandcashequivalents,loans(netofALLL)andcashflowsfortheperiodsindicated:

Cashandcashequivalents
Loans,netofallowanceforloanlosses
Cashprovidedby(usedin):
Operatingactivities
Investingactivities
Financingactivities

Asofandforthe
AsofandfortheYear
NineMonthsEnded
EndedDecember31,

September30,
2012
2013

2013

2014
(inthousands)

$ 7,386
$ 81,687

$ 1,682
$(59,133)
$ 62,012

$ 4,670
$ 203,078

$ 14,063
$(159,407)
$ 142,628

$ 3,595
$ 161,541

$ 6,853
$(101,442)
$ 90,798

$ 22,642
$ 393,635
$ 49,874
$(254,888)
$ 222,986

OurcashandcashequivalentsatSeptember30,2014wereheldprimarilyforworkingcapitalpurposes.Wemay,fromtimeto
time,useexcesscashandcashequivalentstofundourlendingactivities.Wedonotenterintoinvestmentsfortradingorspeculative
purposes.Ourpolicyistoinvestanycashinexcessofourimmediateworkingcapitalrequirementsininvestmentsdesignedto
preservetheprincipalbalanceandprovideliquidity.Accordingly,ourexcesscashisinvestedprimarilyindemanddepositaccounts
thatarecurrentlyprovidingonlyaminimalreturn.
CashFlows
OperatingActivities
Cashflowsfromoperatingactivitiesprimarilyincludesnetlossesadjustedfor(i)noncashitemsincludedinnetlosses,
includingprovisionsforloanlosses,depreciationandamortizationexpense,amortizationofdebtissuancecosts,stockbased
compensationexpense,proceedsfromthesaleoftermloansthroughourOnDeckMarketplaceandwarrantliabilityfairvalue
adjustmentand(ii)changesinthebalancesofoperatingassetsandliabilities,whichcanvarysignificantlyinthenormalcourseof
businessduetotheamountandtimingofvariouspayments.
FortheninemonthsendedSeptember30,2014,ournetcashprovidedbyoperatingactivitiesof$49.9millionconsistedofanet
lossof$14.4millionoffsetby$63.3millionofnoncashitems,$2.2millionofcashprovidedbychangesinthebalancesofoperating
assetsandliabilitiesand$1.2millionofcashfromsalesofloansheldforsaleinexcessofproceedsfromloansheldforsale.
Adjustmentsfornoncashitemsconsistedofprovisionforloanlossesof$47.0million,warrantliabilityfairvalueadjustmentof
$9.1million,depreciationandamortizationexpenseof$2.8million,amortizationofdebtissuancecostsof$2.0millionandstock
basedcompensationexpenseof$1.4million.Thewarrantliabilityfairvalueadjustmentisassociatedwiththeconvertible
redeemablepreferredstockwarrants,whichhavebeenaccountedforasliabilitiesandareremeasuredatfairvalueattheendofeach
reportingperiod.

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FortheninemonthsendedSeptember30,2013,ournetcashprovidedbyoperatingactivitiesof$6.9millionconsistedofanet
lossof$18.7millionoffsetby$22.3millionofnoncashitemsand$3.3millionofcashprovidedbychangesinthebalancesof
operatingassetsandliabilities.Adjustmentsfornoncashitemsconsistedprimarilyofprovisionforloanlossesof$16.3million
preferredstockwarrantissuanceandwarrantliabilityfairvalueadjustmentof$1.5million,depreciationandamortizationof
$1.8million,debtdiscountof$1.0millionandamortizationofdebtissuancecostsof$1.5million.Theincreaseincashresulting
fromchangesinthebalancesofoperatingassetsandliabilitieswasprimarilyduetoanincreaseinaccruedexpensesandother
liabilitiesresultingfromnewleaseagreementswithcorrespondingleaseholdliabilitiesof$3.6million,partiallyoffsetbyadecrease
inaccountspayableof$1.2millionduetothetimingofvendorsinvoicesreceivedandpaymentsmade.
FortheyearendedDecember31,2013,ournetcashprovidedbyoperatingactivitiesof$14.1millionconsistedofanetlossof
$24.4millionandoriginationsofloansheldforsaleinexcessofsalesofloansheldforsaleof$1.4million,offsetby$36.6millionin
adjustmentsfornoncashitemsand$3.3millionofcashprovidedchangesinthebalancesofoperatingassetsandliabilities.
Adjustmentsfornoncashitemsconsistedprimarilyofprovisionforloanlossesof$26.6million,warrantliabilityfairvalue
adjustmentof$3.7million,depreciationandamortizationoffixedassetsof$2.6millionandamortizationofdebtissuancecostsof
$2.2million.Theincreaseincashresultingfromchangesinthebalancesofoperatingassetsandliabilitiesprimarilyconsistedofan
increaseinaccruedexpensesandotherliabilitiesof$4.0million,primarilydrivenbyanincreaseinpayrollandpayrollrelated
expensesresultingfromanincreasednumberofemployees,anincreaseincommissionspayabletothirdpartiesthatoriginatedloans
onourbehalf,andanincreaseinaccruedsalesandmarketingexpenseforinvoicesnotyetreceived.Theseincreaseswerepartially
offsetbyadecreaseinaccountspayableof$0.6millionduetothetimingofvendorsinvoicesreceivedandpaymentsmade.
FortheyearendedDecember31,2012,ournetcashprovidedbyoperatingactivitiesof$1.7millionconsistedofanetlossof
$16.8millionoffsetby$15.8millioninadjustmentsfornoncashitemsand$2.7millionofcashprovidedbychangesinthebalances
ofoperatingassetsandliabilities.Adjustmentsfornoncashitemsconsistedprimarilyofprovisionforloanlossesof$12.5million,
depreciationandamortizationoffixedassetsof$1.5millionandamortizationofdebtissuancecostsof$1.1million.Theincreasein
cashresultingfromchangesinthebalancesofoperatingassetsandliabilitiesprimarilyconsistedofanincreaseinaccruedexpenses
andotherliabilitiesof$2.2million,primarilydrivenbyincreasesindeferredrentfromournewlongtermfacilityleaseagreementand
payrollandpayrollrelatedexpensesresultingfromanincreasednumberofemployees.Inaddition,weexperienceda$1.4million
increaseinaccountspayable,primarilydrivenbyincreasedoperatingcostsduringtheperiod.Theseincreaseswerepartiallyoffsetby
adecreaseinoperatingcashflowduetoa$1.3millionincreaseinotherassets,primarilydrivenbythesecuritydepositand
constructionreceivablerelatedtoournewoperatingleaseagreement.
InvestingActivities
Ourinvestingactivitieshaveconsistedprimarilyoffundingourtermloanandlineofcreditoriginations,offsetbyrepayments
oftermloansandlinesofcredit,changesinthenetdeferredoriginationcostsbalanceofloansoutstanding,purchasesofproperty,
equipmentandsoftware,capitalizedinternalusesoftwaredevelopmentcosts,andchangesinrestrictedcash.Ournetdeferred
originationcostsmayvaryfromperiodtoperiodbasedprimarilyonthevolumeofloanoriginationsandtheamountofdirectcosts
incurredtooriginateourloans,offsetbytheamountofloanoriginationfeesreceived.Purchasesofproperty,equipmentandsoftware
andcapitalizedinternalusesoftwaredevelopmentcostsmayvaryfromperiodtoperiodduetothetimingoftheexpansionofour
operations,theadditionofemployeeheadcountandthedevelopmentcyclesofourinternalusetechnology.
FortheninemonthsendedSeptember30,2014,netcashusedtofundourinvestingactivitieswas$254.9million,andconsisted
primarilyof$232.8millionofloanoriginationsinexcessofloanrepaymentsreceived,$9.5millionforthepurchaseofproperty,
equipmentandsoftwareandcapitalizedinternalusesoftwaredevelopmentcostsanda$4.8millionincreaseinthenetdeferred
originationcostsbalance.Thegrowthinourloanoriginationswasconsistentwiththeoverallincreaseinrevenueduringtheperiod.
Wealsorestrictedmorecashascollateralforfinancingagreementsduringtheperiod,resultingina$7.8milliondecreasein
unrestrictedcash.

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FortheninemonthsendedSeptember30,2013,netcashusedtofundourinvestingactivitieswas$101.4million,andconsisted
primarilyof$94.4millionofloanoriginationsinexcessofloanrepaymentsreceivedand$5.0millionforthepurchaseofproperty,
equipmentandsoftwareandcapitalizedinternalusesoftwaredevelopmentcosts.Thegrowthinourloanoriginationswasconsistent
withtheoverallincreaseinrevenueduringtheperiod.
FortheyearendedDecember31,2013,netcashusedtofundourinvestingactivitieswas$159.4million,andconsisted
primarilyof$142.1millionofloanoriginationsinexcessofloanrepaymentsreceived,a$5.9millionincreaseinthenetdeferred
originationcostsbalanceand$5.8millionforthepurchaseofproperty,equipmentandsoftwareandcapitalizedinternalusesoftware
developmentcosts.Thegrowthinourloanoriginationswasconsistentwiththeoverallincreaseinrevenueduringtheyear.Wealso
restrictedmorecashascollateralforfinancingarrangements,resultingina$5.6milliondecreaseinunrestrictedcashduringtheyear.
FortheyearendedDecember31,2012,netcashusedtofundourinvestingactivitieswas$59.1million,andconsistedprimarily
of$53.7millionofloanoriginationsinexcessofloanrepaymentsreceivedand$3.2millionforthepurchaseofproperty,equipment
andsoftwareandcapitalizedinternalusesoftwaredevelopmentcosts.Thegrowthinourloanoriginationswasconsistentwiththe
overallincreaseinrevenueduringtheyear.Wealsorestrictedmorecashascollateralforfinancingarrangements,resultingina
$2.5milliondecreaseinunrestrictedcashduringtheyear.
FinancingActivities
Ourfinancingactivitieshaveconsistedprimarilyoftheissuanceofredeemableconvertiblepreferredstockandnetborrowings
fromoursecuritizationfacilityandourrevolvingdebtfacilities.
FortheninemonthsendedSeptember30,2014,netcashprovidedbyfinancingactivitieswas$223.0millionandconsisted
primarilyof$77.0millioninnetproceedsfromtheissuanceofredeemableconvertiblepreferredstockand$146.9millioninnet
borrowingsfromoursecuritizationfacilityandrevolvingdebtfacilities,primarilyassociatedwiththeincreaseinloanoriginations
duringtheperiod.
FortheninemonthsendedSeptember30,2013,netcashprovidedbyfinancingactivitieswas$90.8millionandconsisted
primarilyof$49.7millioninnetproceedsfromtheissuanceofredeemableconvertiblepreferredstockand$55.1millioninnet
borrowingsfromourrevolvingdebtfacilities,primarilyassociatedwiththeincreaseinloanoriginationsduringtheperiod.These
amountswerepartiallyoffsetby$6.3millionusedtorepurchaseredeemableconvertiblepreferredstockfrominvestorsand
$6.1millionusedtorepurchasecommonstockandwarrantsandretirestockoptionsfromcurrentandformeremployees.
FortheyearendedDecember31,2013,netcashprovidedbyfinancingactivitieswas$142.6millionandconsistedprimarilyof
$107.0millioninnetborrowingsfromourrevolvingdebtfacilities,primarilyassociatedwiththeincreaseinloanoriginationsduring
theyear,and$49.7millioninnetproceedsfromtheissuanceofredeemableconvertiblepreferredstock.Theseamountswerepartially
offsetby$6.3millionusedtorepurchaseredeemableconvertiblepreferredstockfrominvestorsand$6.1millionusedtorepurchase
commonstockwarrantsandretirestockoptionsfromcurrentandformeremployees.
FortheyearendedDecember31,2012,netcashprovidedbyfinancingactivitieswas$62.0millionandconsistedprimarilyof
$60.0millioninnetborrowingsfromourrevolvingdebtfacilities,primarilyassociatedwiththeincreaseinloanoriginationsduring
theyear,and$4.7millioninnetproceedsfromtheissuanceofredeemableconvertiblepreferredstock.
OperatingandCapitalExpenditureRequirements
Webelievethatourexistingcashbalances,togetherwiththeavailableborrowingcapacityunderourrevolvinglinesofcredit,
willbesufficienttomeetouranticipatedcashoperatingexpenseandcapitalexpenditure

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requirementsthroughatleastthenext12months.Ifouravailablecashbalancesandnetproceedsfromthisofferingareinsufficientto
satisfyourliquidityrequirements,wewillseekadditionalequityordebtfinancing.Thesaleofequitymayresultindilutiontoour
stockholdersandthosesecuritiesmayhaverightsseniortothoseofourcommonshares.Ifweraiseadditionalfundsthroughthe
issuanceofadditionaldebt,theagreementsgoverningsuchdebtcouldcontaincovenantsthatwouldrestrictouroperationsandsuch
debtwouldrankseniortosharesofourcommonstock.Wemayrequireadditionalcapitalbeyondourcurrentlyanticipatedamounts
andadditionalcapitalmaynotbeavailableonreasonableterms,oratall.
ContractualObligations
Ourprincipalcommitmentsconsistofobligationsunderouroutstandingdebtfacilitiesandsecuritizationfacilityandnon
cancelableleasesforourofficespaceandcomputerequipment.Thefollowingtablesummarizesthesecontractualobligationsat
September30,2014.Futureeventscouldcauseactualpaymentstodifferfromtheseestimates.

ContractualObligations:
Longtermdebt:
Fundingdebt
Corporatedebt
Interestpayments(1)
Capitalleases,includinginterest
Operatingleases
Purchaseobligations
Totalcontractualobligations

Total

$347,234
3,000
29,487

479
23,638
2,385
$406,223

PaymentDuebyPeriod
Lessthan
1Year
13Years 35Years
(inthousands)

$11,806
3,000
14,325

232
2,553
1,007
$32,923

$277,095

14,415

247
6,070
1,378
$299,205

$58,333

747

5,986

$65,066

Morethan
5Years

9,029

$ 9,029

(1) InterestpaymentsonourdebtfacilitieswithvariableinterestratesiscalculatedusingtheinterestrateasofSeptember30,2014.
Theobligationsofoursubsidiariesforthefundingdebtdescribedaboveandrelatedinterestpaymentobligationsarestructured
tobenonrecoursetoOnDeckCapital,Inc.
OffBalanceSheetArrangements
AsofSeptember30,2014,wedidnothaveanyoffbalancesheetarrangements,asdefinedinItem303(a)(4)(ii)ofRegulationS
K,suchastheuseofunconsolidatedsubsidiaries,structuredfinance,specialpurposeentitiesorvariableinterestentities.
CriticalAccountingPoliciesandSignificantJudgmentsandEstimates
Ourmanagementsdiscussionandanalysisofourfinancialconditionandresultsofoperationsisbasedonourconsolidated
financialstatements,whichhavebeenpreparedinaccordancewithGAAP.Thepreparationoftheseconsolidatedfinancialstatements
requiresustomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilities,disclosureofcontingentassets
andliabilitiesatthedateoftheconsolidatedfinancialstatementsandthereportedamountsofrevenueandexpensesduringthe
reportedperiod.InaccordancewithGAAP,webaseourestimatesonhistoricalexperienceandonvariousotherassumptionsthatwe
believearereasonableunderthecircumstances.Actualresultsmaydifferfromtheseestimatesunderdifferentassumptionsor
conditions.

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WhileoursignificantaccountingpoliciesaremorefullydescribedinNote2toourconsolidatedfinancialstatementsappearing
elsewhereinthisprospectus,webelievethefollowingaccountingpoliciesarecriticaltotheprocessofmakingsignificantjudgments
andestimatesinthepreparationofourconsolidatedfinancialstatements.
AllowanceforLoanLosses(ALLL)
OurALLLisestablishedthroughperiodicchargestotheprovisionforloanslosses.LoanlossesarechargedagainsttheALLL
whenwedetermineitisprobablethatwewillbeunabletocollectalloftheremainingprincipalamountdueonaloan.Generallythis
happensonthe90thdayofdelinquency.Subsequentrecoveries,ifany,arecreditedtotheALLL.
Weevaluateourloanportfolioonapooledbasis,duetoitscompositionofsmallbalance,homogenousloanswithsimilar
generalcreditriskcharacteristicsanddiversificationamongvariablesincludingindustryandgeography.Weuseaproprietary
forecastlossrateatoriginationfornewloansthathavenothadtheopportunitytomakepaymentswhentheyarefirstfunded.The
allowanceissubjectiveasitrequiresmaterialestimatesincludingsuchfactorsashistoricaltrends,knownandinherentrisksinthe
loanportfolio,adversesituationsthatmayaffectcustomersabilitytorepayandcurrenteconomicconditions.Otherqualitative
factorsconsideredmayincludeitemssuchasuncertaintiesinforecastingandmodelingtechniques,changesinportfoliocomposition,
seasonality,businessconditionsandemergingtrends.Recoveryofthecarryingvalueofloansisdependenttoagreatextenton
conditionsthatmaybebeyondmanagementscontrol.Anycombinationofthesefactorsmayadverselyaffectourloanportfolio
resultinginincreaseddelinquenciesandloanlossesandcouldrequireadditionalprovisionsforcreditlosseswhichcouldimpact
futureperiods.
AccrualforUnfundedLoanCommitments
InSeptember2013,weintroducedalineofcreditproduct.Customersmaydrawontheirlinesofcredituptodefinedmaximum
amounts.AsofSeptember30,2014,ouroffbalancesheetcreditexposurerelatedtotheundrawnlineofcreditbalanceswas$17.6
million,andtheaccrualforunfundedloancommitmentswas$0.2million.Wedeterminedtheaccrualwithconsiderationofthe
probabilityofcommitmentusage,creditriskfactorsforlinesofcreditoutstandingtothesecustomers,andthetermsandexpiration
datesoftheunfundeddebtfacilities.Wehavesufficientcashandcashequivalentstoprovidefundingfortheundrawnlinesofcredit
anddonotbelievetheexistenceoftheopencreditbalancesnegativelyimpactsourliquidity.
AccrualforRepresentationsMadeinConnectionwithSaleofLoans
Asacomponentofourloansaleagreements,wehavemadecertainrepresentationstothirdpartyinstitutionalinvestorsthat
purchaseloans.Anysignificantestimatedpostsaleobligationsorcontingentobligationstothepurchaseroftheloans,suchas
delinquentorfraudulentloanrepurchaseobligationsorexcesslossindemnificationobligations,wouldbeaccrued.Thereareno
restrictedassetsrelatedtotheseagreements.AsofSeptember30,2014,wehadnotincurredanysignificantlossestodaterelatedto
suchpostsaleobligations,andwehavenoestimableandprobableobligationsrequiringaccrual.
NonaccrualLoansandChargedOffLoans
Weconsideraloantobedelinquentwhenthedailyorweeklypaymentsareonedaypastdue.Wedonotrecognizeinterest
incomeonloansthataredelinquentandnonpaying.Weonlybeginrecognizingrevenueagainoncecustomersresumemaking
payments.Theremainingunpaidprincipalbalanceischargedoffwhenwedetermineitisprobablethatwewillbeunabletocollect
additionalprincipalamountsontheloan.Generally,chargeoffsoccurafterthe90thdayofdelinquency.

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Thefollowingisasummaryofourannualizednetchargeoffrate,definedasloanschargedoff,netofrecoveriesdividedby
averageUnpaidPrincipalBalance,thenannualized,fortheyearsendedDecember31,2012and2013andtheninemonthsended
September30,2013and2014.AverageUnpaidPrincipalBalancefortheperiodisthesimpleaverageoftheUnpaidPrincipal
Balanceasofthebeginningoftheperiodandasoftheendofeachquarterintheperiod.

Loanschargedoff,netofrecoveries
AverageUnpaidPrincipalBalance
Annualizednetchargeoffrate

YearEnded
NineMonthsEnded
December31,

September30,
2012
2013
2013
2014
(dollarsinthousands)

$ 6,844
$60,508
11.3%

$ 16,415
$145,978

11.2%

$ 10,842
$128,481

11.3%

$ 26,697
$314,237

11.3%

InternalUseSoftwareDevelopmentCosts
Wecapitalizecertaincostsrelatedtosoftwaredevelopedforinternaluse,primarilyassociatedwiththeongoingdevelopment
andenhancementofourtechnologyplatformandotherinternaluses.Webegintocapitalizeourcoststodevelopsoftwarewhen
preliminarydevelopmenteffortsaresuccessfullycompleted,managementhasauthorizedandcommittedprojectfunding,anditis
probablethattheprojectwillbecompletedandthesoftwarewillbeusedtoperformthefunctionasintended.Thesecostsare
amortizedonastraightlinebasisovertheestimatedusefullifeoftherelatedasset,generallythreeyears.Costsincurredpriorto
meetingthesecriteriatogetherwithcostsincurredfortrainingandmaintenanceareexpensedasincurredandrecordedintechnology
andanalyticsexpenseonourconsolidatedstatementsofoperations.
StockBasedCompensation
Weincurstockbasedcompensationexpenseinconnectionwiththeissuanceofstockoptionsandwarrantstoemployees,
directorsandconsultants.Werecognizecompensationexpenseratablyovertherequisiteserviceperiodoftheaward.Optionawards
generallyvest25%oneyearfromthegrantdateandthenmonthlyinequalinstallmentsoverthesubsequentthreeyearperiod.
Stockbasedcompensationcostismeasuredonthegrantdate,basedontheestimatedgrantdatefairvalueoftheawardusinga
BlackScholespricingmodel,andrecognizedasanexpenseovertheemployeesrequisiteserviceperiodonastraightlinebasis.We
recordedstockbasedcompensationexpenseof$0.2millionand$0.4millionforyearsendedDecember31,2012and2013and
$0.3millionand$1.4millionfortheninemonthsendedSeptember30,2013and2014,respectively.AtSeptember30,2014,wehad
$15.8millionoftotalunrecognizedstockbasedcompensationexpense,netofestimatedforfeitures,relatedtostockoptiongrants
thatwillberecognizedoveraweightedaverageperiodofapproximately3.7years.Weexpecttocontinuetograntstockoptionsin
thefuture,andtotheextentthatwedo,ourstockbasedcompensationexpenserecognizedinfutureperiodswilllikelyincrease.
Weaccountforstockbasedcompensationarrangementswithdirectorsandconsultantsusingafairvalueapproach.Thefair
valueoftheseoptionsismeasuredusingtheBlackScholesoptionpricingmodelreflectingthesameassumptionsasappliedto
employeeoptionsineachofthereportedperiods,otherthantheexpectedlife,whichisassumedtobetheremainingcontractuallife
oftheoption.Fordirectorandconsultantoptionssubjecttovesting,thecompensationcostsofthesearrangementsaresubjectto
remeasurementoverthevestingperiod.
KeyAssumptions
OurBlackScholesoptionpricingmodelrequirestheinputofhighlysubjectiveassumptions,includingthefairvalueofthe
underlyingcommonstock,theexpectedvolatilityofthepriceofourcommonstock,theexpectedtermoftheoption,riskfreeinterest
ratesandtheexpecteddividendyieldofourcommonstock.These

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estimatesinvolveinherentuncertaintiesandtheapplicationofmanagementsjudgment.Iffactorschangeanddifferentassumptions
areused,ourstockbasedcompensationexpensecouldbemateriallydifferentinthefuture.
Indeterminingthefairvalueofstockoptionsgranted,thefollowingweightedaverageassumptionswereusedintheBlack
Scholesoptionpricingmodelforawardsgrantedintheperiodsindicated:

Assumptions:
Riskfreeinterestrate
Expectedlife(years)
Expectedvolatility
Dividendyield

YearEndedDecember31,
2012

2013

NineMonthsEndedSeptember30,
2013

2014

0.83%0.96% 0.88%2.29% 0.88%1.29% 1.02%2.08%

5.866.13 5.768.52 5.766.08 3.226.13
59%60% 54%60% 59%60% 35%59%

0%

0%

0%

0%

CommonStockValuations
Thefairvalueofourcommonstockunderlyingstockoptionshashistoricallybeendeterminedbyourboardofdirectors,with
assistancefrommanagement,baseduponinformationavailableatthetimeofgrant.Giventheabsenceofapublictradingmarketfor
ourcommonstock,andinaccordancewiththeAmericanInstituteofCertifiedPublicAccountantsPracticeAid,Valuationof
PrivatelyHeldCompanyEquitySecuritiesIssuedasCompensation,orthePracticeAid,ourboardofdirectorshasexercised
reasonablejudgmentandconsiderednumerousobjectiveandsubjectivefactorstodeterminethebestestimateofthefairvalueofour
commonstockateachgrantdate.Thesefactorsincluded:

contemporaneousandretrospectivethirdpartyvaluationsofourcommonstock

thepricesofsharesofourcommonstockandredeemableconvertiblepreferredstock(preferredstock)soldtoinvestorsin
armslengthtransactions,andtherights,preferencesandprivilegesofourpreferredstockrelativetoourcommonstock

ouroperatingandfinancialperformance

currentbusinessconditionsandprojections

ourstageofdevelopmentandbusinessstrategy

thelikelihoodofachievingaliquidityeventforthesharesofcommonstockunderlyingthesestockoptions,suchasan
initialpublicofferingorsaleofourCompany,givenprevailingmarketconditions

anyadjustmentnecessarytorecognizealackofmarketabilityforourcommonstock

themarketperformanceofcomparablepubliclytradedcompanies

theU.S.andglobalcapitalmarketconditions

Theestimatedfairvaluepershareofourcommonstockinthetablebelowrepresentsthedeterminationbyourboardofdirectors
ofthefairvalueofourcommonstockasofthedateofgrant,takingintoconsiderationthevariousobjectiveandsubjectivefactors
describedabove,includingthevaluationsofourcommonstock.Inconnectionwiththepreparationofthefinancialstatements
necessaryforthefilingoftheregistrationstatementofwhichthisprospectusformsapart,inthespringof2014weundertook
retrospectivevaluationsofthefairvalueofourcommonstockasofJune30,2013,September30,2013andDecember31,2013for
financialreportingpurposes.Incertaininstances,theestimatedfairvaluepershareusedforfinancialreportingpurposes,as
determinedbytheseretrospectivevaluations,exceededtheexercisepriceassignedtotherespectiveoptiongrants.Theestimatedfair
valuesofcommonstockasdeterminedbytheseretrospectivevaluationswereusedtomeasurethestockbasedcompensationexpense
foroptionsgrantedduringtheseperiods.Thereisinherentuncertaintyintheseestimatesand,ifwehadmadedifferentassumptions
thanthosedescribed,thefairvalueof

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theunderlyingcommonstockandamountofourstockbasedcompensationexpense,netlossandnetlosspershareamountswould
havediffered.Followingtheclosingofthisinitialpublicoffering,thefairvaluepershareofourcommonstockforpurposesof
determiningstockbasedcompensationwillbetheclosingpriceofourcommonstockasreportedontheapplicablegrantdate.
Thefollowingtablesummarizesbygrantmonththenumberofsharesofcommonstocksubjecttostockoptionsgrantedfrom
January1,2013throughNovember6,2014,aswellastheassociatedpershareexercisepriceandtheestimatedfairvaluepershareof
ourcommonstockonthegrantdate:

GrantDate:

March2013
April2013
May2013
June2013
July2013
August2013
September2013
October2013
December2013
January2014
January2014
February2014
May2014
June2014(1)
June2014
August2014
September2014
October2014

NumberofShares
UnderlyingOptions
Granted

ExercisePrice
perShare

EstimatedFairValue
perShare

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

266,500
240,000
49,500
97,500
100,000
475,000
247,500
324,000
56,500
4,813
68,000
109,000
348,000
19,470
128,500
1,028,000
84,500
149,000

1.53
1.36
1.36
1.36
1.36
1.36
1.36
1.36
1.36
1.36
7.42
7.42
18.95
7.42
18.95
21.32
21.32
24.76

1.53
1.36
1.36
1.36
1.48
1.48
1.48
4.08
4.08
7.42
7.42
7.42
18.95
18.95
18.95
21.32
21.32
24.76

(1) Representsstockoptionsgrantedtooptionholdersimpactedbyanexercisepricemodificationofpreviouslygrantedand
unvestedoptions.Thesestockoptionsweregrantedwithanexercisepriceequivalenttothemodifiedexercisepriceofthe
originalgrantsandareexercisableforashortperiodaftervesting.
Basedonanassumedinitialpublicofferingpriceof$pershare,themidpointofthepricerangesetforthonthecover
pageofthisprospectus,theintrinsicvalueofstockoptionsoutstandingatSeptember30,2014was$million,ofwhich
$millionand$millionrelatedtostockoptionsthatwerevestedandunvested,respectively,atthatdate.
Invaluingourcommonstock,theboardofdirectorshashistoricallydeterminedtheequityvalueusingeitherthemarket
approachorthepricingofrecenttransactionsinvolvingourequitysecurities,whichweviewasastrongindicatorofthevalueof
illiquidsecuritiessuchasourcommonstock.
Themarketapproachestimatesthefairvalueofacompanybyapplyingmarketmultiplesofcomparablepubliclytraded
companiesinthesameindustryorsimilarlinesofbusiness.Themarketmultiplesarebasedonkeymetricsimpliedbytheprice
investorshavepaidforpubliclytradedcompanies.Givenoursignificantfocusoninvestinginandgrowingourbusiness,we
primarilyutilizedarevenuemultiplewhenperformingvaluationassessmentsunderthemarketapproach.Whenconsideringwhich
companiestoincludeinourcomparableindustrypeercompanies,wefocusedonU.S.basedpubliclytradedcompanieswith
businessessimilartoours.Theselectionofourcomparableindustrypeercompaniesrequiresustomakejudgmentsastothe
comparabilityofthesecompaniestous.Weconsideredanumberoffactorsincludingbusinessdescription,businesssize,market
share,revenuemodel,developmentstageandhistoricalresultsofoperations.Wethenanalyzedthe

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businessandfinancialprofilesoftheselectedcompaniesforrelativesimilaritiestousand,basedonthisassessment,weselectedour
comparableindustrypeercompanies.
FortheDecember31,2012andMarch31,2013valuations,weusedthepricingofourprivateplacementofSeriesDredeemable
convertiblepreferredstockasthebaselinefordeterminingourequityvalueduetothecloseproximityintimeoftheequityissuances
inFebruaryandApril2013tothevaluationdates.FortheJune30,2013andSeptember30,2013retrospectivevaluations,weused
themarketapproachtodetermineourequityvalue.FortheDecember31,2013retrospectivevaluation,weusedthepricingofour
privateplacementofSeriesEredeemableconvertiblepreferredstockasthebaselinefordeterminingourequityvalueduetotheclose
proximityintimeoftheequityissuanceinFebruary2014tothevaluationdate.Foreachofthesevaluationsobtainedthrough
December31,2013,theequityvaluedeterminedwasthenallocatedtothecommonstockusingtheOptionPricingMethod,orOPM.
TheOPMtreatscommonstockandpreferredstockascalloptionsonanequityvalue,withexercisepricesbasedontheliquidation
preferenceofthepreferredstock.Therefore,thecommonstockhasvalueonlyifthefundsavailablefordistributiontothe
stockholdersexceedthevalueoftheliquidationpreferenceatthetimeofaliquidityeventsuchasamerger,saleorinitialpublic
offering,assumingtheenterprisehasfundsavailabletomakealiquidationpreferencemeaningfulandcollectiblebythestockholders.
Thecommonstockismodeledasacalloptionwithaclaimontheenterpriseatanexercisepriceequaltotheremainingvalue
immediatelyaftertheredeemableconvertiblepreferredstockisliquidated.TheOPMusestheBlackScholesoptionpricingmodelto
pricethecalloptions.TheOPMisappropriatetousewhentherangeofpossiblefutureoutcomesissodifficulttopredictthat
forecastswouldbehighlyspeculative.
FortheMarch31,2014valuation,wedeterminedthatthemostreasonableapproachtovaluingourcommonstockwasbasedon
thepricingofourrecentlycompletedprivateplacementofSeriesEredeemableconvertiblepreferredstock,aswellasthepriceofour
commonandredeemableconvertiblepreferredstocksoldinatenderoffer.Thetenderofferallowedcurrentinvestorsandcurrentand
formeremployeestoselldefinedamountsofoutstandingcommonandpreferredstockandpreferredstockwarrantsattheSeriesE
redeemableconvertiblepreferredstockissuepricetothirdpartyinvestors,withinadefinedtimeframe.Weassigneda50%weighting
totheOPMapproachusingtheequityvaluebasedontheSeriesEredeemableconvertiblepreferredstockofferingprice,anda50%
weightingtothepricepaidforcommonandredeemableconvertiblepreferredstockandpreferredstockwarrantssoldthroughthe
tenderoffer.Thisvaluationapproachwasdeemedmostappropriateasthesecondarytransactionswereauniquesetofsalesofour
equitysecuritieswiththemajorityoccurringinadefinedtimeframeandreliantontheavailabilityandinterestofthirdparty
institutionstopurchasethesecurities,thusjustifyinganequalweightingtotheOPMapproach.
FortheJune30andSeptember30,2014valuations,wedeterminedthemostreasonableapproachtovaluingourcommonstock
tobeacombinationoftheOPM,theprobabilityweightedexpectedreturnmethod,orthePWERM,andrecentsalesofourcommon
andredeemableconvertiblepreferredstockthroughatenderoffer.WeintroducedthePWERMmethodatJune30,2014asgreater
certaintydevelopedregardingapossibleliquidityevent,specificallyanIPO.ThePWERMreliesonaforwardlookinganalysisto
predictthepossiblefuturevalueofourcompany.Underthismethod,discretefutureoutcomes,includinganIPO,nonIPOscenarios,
andastrategicmergerorsaleareweightedbasedonourestimateoftheprobabilityofeachscenario.AtbothJune30andSeptember
30,2014,weassigned100%oftheliquidityeventweightinginthePWERMmethodtotheIPOscenarioaswehadrecentlyinitiated
theprocesstopursueanIPOandourBoardofDirectorsdeemedthistobethemostlikelyfutureoutcomeforpurposesofthePWERM
calculation.
InvaluingourcommonstockasofJune30,2014,weassigneda37.5%weightingtotheOPMusingtheequityvaluebasedon
themarketapproach,a37.5%weightingtothePWERM(IPOscenario)usingtheequityvaluebasedonthemarketapproach,anda
25%weightingtothepricepaidforcommonandredeemableconvertiblepreferredstockandpreferredstockwarrantssoldthrough
thetenderoffercompletedduringthequarterendedJune30,2014.

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AtSeptember30,2014,wevaluedourcommonstockbyassigninga30%weightingtotheOPMusingtheequityvaluesbased
onthemarketapproach,a50%weightingtothePWERM(IPOscenario)usingtheequityvaluebasedonthemarketapproach,anda
20%weightingtothepricepaidforcommonandredeemableconvertiblepreferredstockandpreferredstockwarrantssoldthrough
thetenderoffercompletedduringthequarterendedJune30,2014.TheincreasedweightingofthePWERM(IPO)scenarioat
September30,2014comparedtoJune30,2014wasduetoincreasedlikelihoodofanIPOasaresultofthesubmissionofa
preliminarydraftregistrationstatementwiththeSEConAugust21,2014,followedbythesubmissionofanamendmenton
September29,2014.
IncomeTaxes
Werecognizedeferredtaxassetsandliabilitiesforthefuturetaxconsequencesattributabletodifferencesbetweenthefinancial
statementcarryingamountsofexistingassetsandliabilitiesandtheirrespectivetaxbases,aswellasforoperatinglossandtaxcredit
carryforwards.Wemeasuredeferredtaxassetsandliabilitiesusingenactedtaxratesexpectedtoapplytotaxableincomeintheyears
inwhichweexpecttorecoverorsettlethosetemporarydifferences.Werecognizetheeffectofachangeintaxratesondeferredtax
assetsandliabilitiesintheresultsofoperationsintheperiodthatincludestheenactmentdate.Wereducethemeasurementofa
deferredtaxasset,ifnecessary,byavaluationallowanceifitismorelikelythannotthatwewillnotrealizesomeorallofthedeferred
taxasset.
Uncertaintaxpositionsarerecognizedonlywhenwebelieveitismorelikelythannotthatthetaxpositionwillbeupheldupon
examinationbythetaxingauthoritiesbasedonthemeritsoftheposition.Werecognizeinterestandpenalties,ifany,relatedto
unrecognizedincometaxuncertaintiesinincometaxexpense.Wedidnothaveanyaccruedinterestorpenaltiesassociatedwith
uncertaintaxpositionsinanyofthereportingperiodsincludedinthisprospectus.
QuantitativeandQualitativeDisclosuresAboutMarketRisk
Marketriskistheriskoflosstofutureearnings,valuesorfuturecashflowsthatmayresultfromchangesinthepriceofa
financialinstrument.Thevalueofafinancialinstrumentmaychangeasaresultofchangesininterestrates,exchangerates,
commodityprices,equitypricesandothermarketchanges.Weareexposedtomarketriskrelatedtochangesininterestratesand
foreigncurrencyexchangerates.Wedonotusederivativefinancialinstrumentsforspeculative,hedgingortradingpurposes,
althoughinthefuturewemayenterintointerestrateorexchangeratehedgingarrangementstomanagetherisksdescribedbelow.
InterestRateSensitivity
OurcashandcashequivalentsasofSeptember30,2014consistedofcashmaintainedinseveralFDICinsuredoperating
accounts.Ourprimaryexposuretomarketriskforourcashandcashequivalentsisinterestincomesensitivity,whichisaffectedby
changesinthegenerallevelofU.S.interestrates.GiventhecurrentlylowU.S.interestrates,wegenerateonlyademinimisamount
ofinterestincomefromthesedeposits.
Wearesubjecttointerestrateriskinconnectionwithborrowingsunderourdebtagreementswhicharesubjecttovariable
interestrates.AsofSeptember30,2014,wehad$156.4millionofoutstandingborrowingsunderdebtagreementswithvariable
interestrates.Asaresult,eachchangeofonepercentagepointininterestrateswouldresultinanapproximate$2.5millionchangein
ourannualinterestexpenseonouroutstandingborrowingsatSeptember30,2014.Anydebtweincurinthefuturemayalsobear
interestatvariablerates.Anyincreaseininterestratesinthefuturewilllikelyaffectourborrowingcostsunderallofoursourcesof
capitalforourlendingactivities.

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ForeignCurrencyExchangeRisk
SubstantiallyallofourrevenueandoperatingexpensesaredenominatedinU.S.dollars.Therefore,wedonotbelievethatour
exposuretoforeigncurrencyexchangeriskismaterialtoourfinancialcondition,resultsofoperationsorcashflows.Ifasignificant
portionofourrevenueandoperatingexpensesweretobecomedenominatedincurrenciesotherthanU.S.dollars,wemaynotbeable
toeffectivelymanagethisrisk,andourbusiness,financialconditionandresultsofoperationscouldbeadverselyaffectedby
translationandbytransactionalforeigncurrency.
RecentlyIssuedAccountingPronouncementsandJOBSActElection
InJuly2013,theFinancialAccountingStandardsBoard,ortheFASB,issuedASU201311,PresentationofanUnrecognized
TaxBenefitWhenaNetOperatingLossCarryforward,aSimilarTaxLoss,oraTaxCreditCarryforwardExists,whichamendsASC
740,IncomeTaxes.ASU201311requiresentitiestopresentunrecognizedtaxbenefitsasaliabilityandnotcombineitwith
deferredtaxassetstotheextentanetoperatinglosscarryforward,asimilartaxloss,orataxcreditcarryforwardisnotavailableatthe
reportingdate.WeadoptedthispronouncementeffectiveJanuary1,2014but,duetothenatureandamountsofourunrecognizedtax
benefitsandnetoperatinglosscarryforward,ithasnothadasignificantimpactonourconsolidatedfinancialstatements.
InMay2014,theFASBissuedASU201409,RevenueRecognitionwhichcreatesASC606,RevenuefromContractswith
Customers,andsupersedesASC605,RevenueRecognition.ASU201409requiresrevenuetoberecognizedatanamountthat
reflectstheconsiderationtheentityexpectstobeentitledtoreceiveinexchangeforthosegoodsorservices.Thisaccounting
standardiseffectiveforusbeginningJanuary1,2017.Wearecurrentlyassessingtheimpactthisaccountingstandardwillhaveon
ourconsolidatedfinancialstatements.
UndertheJumpstartOurBusinessStartupsAct(JOBSAct),wemeetthedefinitionofanemerginggrowthcompany.Wehave
irrevocablyelectedtooptoutoftheextendedtransitionperiodforcomplyingwithneworrevisedaccountingstandardspursuantto
Section107(b)oftheJOBSAct.

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BUSINESS
OurCompany
Wearealeadingonlineplatformforsmallbusinesslending.Weareseekingtotransformsmallbusinesslendingbymakingit
efficientandconvenientforsmallbusinessestoaccesscapital.Enabledbyourproprietarytechnologyandanalytics,weaggregate
andanalyzethousandsofdatapointsfromdynamic,disparatedatasourcestoassessthecreditworthinessofsmallbusinessesrapidly
andaccurately.Smallbusinessescanapplyforatermloanorlineofcreditonourwebsiteinminutesand,usingourproprietary
OnDeckScore,wecanmakeafundingdecisionimmediatelyandtransferfundsasfastasthesameday.Wehaveoriginatedmorethan
$1.7billioninloansandcollectedmorethan4.4millioncustomerpaymentssincewemadeourfirstloanin2007.Ourloan
originationshaveincreasedatacompoundannualgrowthrateof127%from2011to2013andhadayearoveryeargrowthrateof
171%fortheninemonthsendedSeptember30,2014.
The28millionsmallbusinessesintheUnitedStatesareintegraltotheU.S.economyandthevibrancyoflocalcommunities,
employingapproximately50%oftheprivateworkforce.AccordingtoCivicEconomics,spendingatlocalretailersandrestaurants
returnstothelocalcommunityonaveragemorethandoubletheamountperdollarspentascomparedtospendingatnationalchains.
Smallbusinessgrowthdependsonefficientandfrictionlessaccesstocapital,yetsmallbusinessesfacenumerouschallengesthat
makeitdifficulttosecuresuchcapital.Smallbusinessownersaretimeandresourceconstrained,butthetraditionalborrowing
processistimeconsumingandburdensome.SmallbusinessessurveyedbytheFederalReserveBankofNewYorkindicatedthatthe
traditionalfundingprocessrequiredthem,onaverage,todedicate26hours,contact2.6financialinstitutionsandsubmit2.7loan
applications.Thesechallengesexistinpartbecauseitisinherentlydifficulttoassessthecreditworthinessofsmallbusinesses.Small
businessesareadiversegroupspanningmanydifferentindustries,stagesindevelopment,geographies,financialprofilesand
operatinghistories,historicallymakingitdifficulttoassesscreditworthinessinauniformmanner.Smallbusinessdataisscattered
acrossdynamiconlineandofflinesources,makingitdifficulttoaggregate,analyzeandmonitor.Thereisnowidelyacceptedcredit
scoreforasmallbusiness,andfrequentlyasmallbusinessownerspersonalcreditscoreisusedtoassesscreditworthinesseven
thoughitmaynotbeindicativeofthebusinessscreditprofile.Furthermore,smallbusinessesarenotwellservedbytraditionalloan
products.Inaddition,smallbusinessesoftenseeksmall,shorttermloanstofundshorttermprojectsandinvestments,buttraditional
lendersmayonlyofferproductsthatfeaturelargeloansizes,longerdurationsandrigidcollateralrequirementsthatarenotwellsuited
totheirneeds.
Thesmallbusinesslendingmarketisvastandunderserved.AccordingtotheFDIC,therewere$178billioninbusinessloan
balancesunder$250,000intheUnitedStatesinthesecondquarterof2014across21.7millionloans.OliverWyman,amanagement
consultingfirmandbusinessunitofMarsh&McLennan,estimatesthatthereisapotential$80to$120billioninunmetdemandfor
smallbusinesslinesofcredit,andwebelievethatthereisalsosubstantialunmetdemandforothercreditrelatedproducts,including
termloans.Wealsobelievethattheapplicationofourtechnologytocreditassessmentcanstimulateadditionaldemandforour
productsandexpandthetotaladdressablemarketforsmallbusinesscredit.
Tobettermeetthecapitalneedsofsmallbusinesses,weareseekingtousetechnologytotransformthewaythiscapitalis
accessed.Webuiltourintegratedplatformspecificallytomeettheirfinancingneeds.Ourplatformtoucheseveryaspectofthe
customerlifecycle,includingcustomeracquisition,sales,scoringandunderwriting,funding,andservicingandcollections.Asmall
businesscancompleteanonlineapplication24hoursaday,7daysaweek.Ourproprietarydataandanalyticsengineaggregatesand
analyzesthousandsofonlineandofflinedataattributesandtherelationshipsamongthoseattributestoassessthecreditworthinessof
asmallbusinessinrealtime.Thedatapointsincludecustomerbankactivityshownontheirbankstatements,governmentfilings,tax
andcensusdata.Inaddition,incertaininstanceswealsoanalyzereputationandsocialdata.Welookatbothindividualdatapoints
andrelationshipsamongthedata,witheachtransactionoractionbeingaseparatedata

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pointthatwetakeintoaccount.AkeydifferentiatorofoursolutionistheOnDeckScore,theproductofourproprietarysmall
businesscreditscoringsystem.BothourdataandanalyticsengineandthealgorithmspoweringtheOnDeckScoreundergo
continuousimprovementtoautomateandoptimizethecreditassessmentprocess,enablingmorerapidandpredictivecreditdecisions.
Eachloanthatwemakeinvolvesourproprietaryautomatedunderwritingprocess,andapproximatelytwothirdsofourloansare
underwrittenusingafullyautomatedunderwritingprocess,withoutrequiringmanualreview.Ourplatformsupportssameday
fundingandautomatedloanrepayment.Thistechnologyenabledapproachprovidessmallbusinesseswithefficient,frictionless
accesstocapital.
Ourbusinesshasgrownrapidly.In2013,weoriginated$458.9millionofloans,representingyearoveryeargrowthof165%,
andinthefirstninemonthsof2014,weoriginated$788.3millionofloans,representingyearoveryeargrowthof171%,allwhile
maintainingconsistentcreditquality.Ourgrowthinoriginationshasbeensupportedbyadiverseandscalablesetoffundingsources,
includingcommitteddebtfacilities,asecuritizationfacilityandourOnDeckMarketplace,ourproprietarywholeloansaleplatform
forinstitutionalinvestors.In2013,werecordedgrossrevenueof$65.2million,representingyearoveryeargrowthof155%,andin
thefirstninemonthsof2014,werecordedgrossrevenueof$107.6million,representingyearoveryeargrowthof156%.Fortheyear
endedDecember31,2013andthethreemonthsendedSeptember30,2014,ourAdjustedEBITDAwas$(16.3)millionand
$2.6million,respectively,our(loss)incomefromoperationswas$(19.3)millionand$0.7million,respectively,andournet(loss)
incomewas$(24.4)millionand$0.4million,respectively.SeethesectiontitledManagementsDiscussionandAnalysisof
FinancialConditionandResultsofOperationsNonGAAPFinancialMeasuresforadiscussionandreconciliationofAdjusted
EBITDAtonetloss.AsofDecember31,2013andSeptember30,2014,ourtotalassetswere$235.5millionand$466.0million,
respectively,andtheunpaidprincipalbalanceonloansoutstandingwas$216.0millionand$422.1million,respectively.
IndustryBackgroundandTrends
SmallBusinessesareanEnormousDriveroftheU.S.Economy
ThegrowthandprosperityofsmallbusinessesarevitaltothesuccessoftheU.S.economyandessentialtothestrengthoflocal
communities.AccordingtothemostrecentdataavailablefromtheU.S.SmallBusinessAdministration,thereare28millionsmall
businessesintheUnitedStates.Thesesmallbusinessescontributeapproximately45%ofU.S.nonagriculturalgrossdomestic
productandemployapproximately50%oftheprivateworkforce.Smallbusinesseshelpbuildvibrantcommunitieswithlocal
characterandhelpsupportthegrowthoflocaleconomies.AccordingtoCivicEconomics,spendingatlocalretailersandrestaurants
returnstothelocalcommunityonaveragemorethandoubletheamountperdollarspentascomparedtospendingatnationalchains.
SmallBusinessesNeedCapitaltoSurviveandThrive
Webelievethatsmallbusinessesdependonefficientandfrictionlessaccesstocapitaltopurchasesuppliesandinventory,hire
employees,markettheirbusinessesandinvestinnewpotentialgrowthopportunities.Theneedforcapitalmaybeseasonal,suchas
anicecreamvendorhiringforthesummermonthsoraretailerbuyinginventoryinanticipationoftheholidayseason.Itmayalsobe
suddenandunexpected,suchasarestaurantrespondingtoalastminutecateringrequestoramanufacturerwinningavaluablenew
contractthatrequiresmorerawmaterials.AccordingtoasurveybytheFederalReserveBankofNewYork,abilitytomanageuneven
cashflowwascitedasthemostfrequentconcernofsmallbusinesses.Thepaybackperiodontheseinvestmentscanbeshortwhilethe
returnoninvestmentmaybenefitthesmallbusinessforyears.
SmallBusinessesareUniqueandDifficulttoAssess
Smallbusinessesareadiversegroupspanningmanydifferentindustries,stagesindevelopment,geographies,financialprofiles
andoperatinghistories,historicallymakingitdifficulttoassesscreditworthiness

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inauniformmanner,andthereisnowidelyacceptedcreditscoreforsmallbusinesses.Forexample,arestauranthasaverydifferent
operatingandfinancialprofilefromaretailstoreandbothareverydifferentfromadoctorsoffice.Creditassessmentisinherently
difficultbecausesmallbusinessdataisconstantlychangingasthebusinessevolvesandisscatteredacrossamyriadofonlineand
offlinesources,unlikeconsumercreditassessmentwherealendercangenerallylooktoscoresprovidedbyconsumercreditbureaus.
Thisdataincludesfinancialdata,creditdata,governmentandpublicrecords,transactionaldata,onlinesocialdata,accountingdata
andbehavioraldata.Whilemuchofthisdataisrapidlymovingonline,certaindataremainspredominantlyoffline.Inaddition,small
businessesarenotconsistentlycoveredbytraditionalcreditbureaus.Onceobtained,thedataneedstobecleansed,normalized,
weightedandanalyzedtobeusefulinthecreditscoringdecision.
SmallBusinessesarenotAdequatelyServedbyTraditionalLenders
Webelievetraditionallendersfaceanumberofchallengesandlimitationsthatmakeitdifficulttoaddressthecapitalneedsof
smallbusinesses,suchas:

OrganizationalandStructuralChallenges.Thecostlycombinationofphysicalbranchesandmanuallyintensive
underwritingproceduresmakesitdifficultfortraditionallenderstoefficientlyservesmallbusinesses.Theyalsoservea
broadsetofcustomers,includingbothconsumersandenterprises,andarenotsolelyfocusedonaddressingtheneedsof
smallbusinesses.

TechnologyLimitations.Manytraditionallendersuselegacyorthirdpartysystemsthataredifficulttointegrateoradaptto
theshiftingneedsofsmallbusinesses.Thesetechnologylimitationsmakeitchallengingfortraditionallendersto
aggregatenewdatasources,leverageadvancedanalyticsandstreamlineandautomatecreditdecisionsandfunding.

ProductsnotDesignedforSmallBusinesses.Smallbusinessesarenotwellservedbytraditionalloanproducts.Webelieve
thattraditionallendersoftenofferproductscharacterizedbylargerloansizes,longerdurationsandrigidcollateral
requirements.Bycontrast,smallbusinessesoftenseeksmallloansforshortterminvestments.

Asaresult,webelievethatsmallbusinessesfeelunderservedbytraditionallenders.AccordingtotheFDIC,thepercentageof
commercialandindustrialloanswithabalancelessthan$250,000hasdeclinedfrom20%oftotaldollarsborrowedin2004to13%
inthesecondquarterof2014.AccordingtoOliverWyman,75%ofsmallbusinessesarelookingtoborrowlessthan$50,000.In
addition,accordingtothesecondquarter2014WellsFargoGallupSmallBusinessIndex,only25%ofsmallbusinessesreportedthat
obtainingcreditwaseasy.
ChallengesforSmallBusinesses
SmallBusinessOwnersareTimeandResourceConstrained
Webelievethatsmallbusinessownerslackmanyoftheresourcesavailabletolargerbusinessesandhavefewerstaffonwhichto
relyforcriticalbusinessissues.AccordingtoasurveybyeVoice,timeisviewedasthemostvaluableassettosmallbusinessowners.
Smallbusinessestypicallydonotemployafinancialstafforinternaladvisors,andsmallbusinessownersoftenactasbothmanager
andemployee.Accordingtothesamesurvey,91%ofsmallbusinessownersperformthreeormoreemployeerolesinanygivenday.
Timespentinefficientlymaymeanlostsales,extraexpensesandpersonalsacrifices.
TraditionalLendingisnotGearedTowardsSmallBusinesses
Traditionallendersdonotmeettheneedsofsmallbusinessesforanumberofreasons,includingthefollowing:

TimeConsumingProcess.AccordingtoaHarvardBusinessSchoolstudy,thetraditionalborrowingprocessincludes
applicationformswhicharetimeconsumingtoassembleandcomplete,long
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inpersonmeetingsduringbusinesshoursandmanualproceduresthatdelaydecisions.Smallbusinessessurveyedbythe
FederalReserveBankofNewYorkindicatedthatthetraditionalfundingprocessrequiredthem,onaverage,todedicate
26hours,contact2.6financialinstitutionsandsubmit2.7loanapplications.

NonTailoredCreditAssessment.Thereisnowidelyacceptedcreditscoreforsmallbusinesses.Traditionallenders
frequentlyrelyuponthesmallbusinessownerspersonalcreditasaprimaryindicatorofthebusinessscreditworthiness,
eventhoughitisnotnecessarilyindicativeofthebusinessscreditprofile.Asaresult,acreditworthybusinessmaybe
deniedfundingorofferedaproductthatfitspoorlywithitsneeds.

ProductMismatch.AccordingtoOliverWyman,smallbusinessesoftenseeksmallloansandevaluatetheirinvestment
opportunitiesonadollarsin,dollarsoutbasis,sincethepaybackperiodisshort.Accordingtosurveydatareportedby
OliverWyman,75%ofsmallbusinessesarelookingtoborrowlessthan$50,000.Smallbusinessesoftenseeksmall,short
termloanstofundshorttermprojectsandinvestments,butaremetwithtraditionalloanproductsthatfeaturelargeloan
sizes,longerdurationsandrigidcollateralrequirementsthatarenotwellsuitedtotheirneeds.

AlternativestoTraditionalBankLoansareInadequate
Smallbusinesseswhoselendingneedsarenotmetbytraditionalbankloanshavehistoricallyresortedtoafragmentedlandscape
ofproducts,includingmerchantcashadvances,creditcards,receivablesfactoring,equipmentleasesandhomeequitylines,eachof
whichcomeswithitsownchallengesandlimitations.Merchantcashadvancesareexpensiveandlimitedtocertainindustries.Credit
cardsarepervasivebutcannotbeusedforcertaintypesofexpensesandfacelimitationsonsize.Equipmentleasingandreceivables
factoringbothhaveacumbersomeapplicationprocessandareonlyappropriateforspecificusecases.Homeequitylineshavestrict
collateralrequirements,areunappealingtobusinessownersonapersonallevelandarechallengingforbusinesseswithmultiple
owners.
ModernizationofSmallBusinesses
SmallBusinessesareEmbracingTechnology
Theproliferationoftechnologyischangingthewaysmallbusinessownersmanagetheiroperations.AccordingtoaNational
SmallBusinessAssociationsurvey,70%ofsmallbusinessesviewtechnologyasveryimportanttothesuccessofabusiness.Small
businessesareincreasinglyusingtechnologytopurchaseinventory,paybills,manageaccountingandconductdigitalmarketing.
Accordingtothesurvey,85%ofsmallbusinessespurchasesuppliesonline,83%managebankaccountsonline,82%maintaintheir
ownwebsite,72%paybillsonlineand41%usetabletsfortheirbusiness.Webelievesmallbusinessownersexpectauserfriendly
onlineborrowingexperience.
TheDigitalFootprintofSmallBusinessesisExpanding
Anincreasingamountofinformationaboutsmallbusinessesisavailableelectronically.Traditionaldatasourcesusedtoassess
businesscreditworthiness,includinggovernmentdata,transactionalinformation,bankaccounts,publicrecordsandcreditbureau
data,arealltransitioningonline.Inaddition,manysmallbusinessesusesocialmediasuchasFacebook,TwitterandLinkedInto
interactwithcustomers,partnersandstakeholdersandmanagetheironlinebusinesslistingsonreviewsitessuchasYelp.ANational
SmallBusinessAssociationsurveyreportsthat73%ofsmallbusinessesuseasocialmediaplatformfortheironlinestrategies.This
vastamountofrealtimedigitaldataaboutsmallbusinessescanbeusedtogeneratevaluableinsightsthathelpbetterassessthe
creditworthinessofasmallbusiness.

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TheOpportunity
Thesmallbusinesslendingmarketisvastandunderserved.AccordingtotheFDIC,therewere$178billioninbusinessloan
balancesunder$250,000intheUnitedStatesinthesecondquarterof2014,across21.7millionloans.OliverWymanestimatesthat
thereisapotential$80to$120billioninunmetdemandforsmallbusinesslinesofcredit,andwebelievethatthereisalsosubstantial
unmetdemandforothercreditrelatedproducts,includingtermloans.Wealsobelievethattheapplicationofourtechnologytocredit
assessmentcanstimulateadditionaldemandforourproductsandexpandthetotaladdressablemarketforsmallbusinesscredit.
OurSolution
Ourmissionistopowerthegrowthofsmallbusinessthroughlendingtechnologyandinnovation.Wearecombiningour
passionforsmallbusinesswithtechnologyandanalyticstotransformthewaysmallbusinessesaccesscapital.Oursolutionwasbuilt
specificallytoaddresssmallbusinessescapitalneedsandconsistsofourloanproducts,ourendtoendintegratedplatformandthe
OnDeckScore.Weoffertwoproductstosmallbusinessestoenablethemtoaccesscapital:termloansandlinesofcredit.Our
proprietary,endtoendintegratedplatformincludes:ourwebsite,whichallowssmallbusinessestoapplyforaloaninminutes,
24hoursaday7daysaweekourproprietarydataandanalyticsenginethatanalyzesthousandsofdataattributesfromdisparate
sourcestoassesstherealtimecreditworthinessofasmallbusinessthetechnologythatenablesforseamlessfundingofourloansour
dailyandweeklycollectionsandongoingservicingsystem.AkeydifferentiatorofoursolutionistheOnDeckScore,theproductof
ourproprietarysmallbusinesscreditscoringsystem.TheOnDeckScoreaggregatesandanalyzesthousandsofdataelementsand
attributesrelatedtoabusinessanditsownersthatarereflectiveofthecreditworthinessofthebusinessaswellaspredictiveofits
creditperformance.OurproprietarydataandanalyticsengineandthealgorithmspoweringtheOnDeckScoreundergocontinuous
improvementthroughmachinelearningtoautomateandoptimizethecreditassessmentprocess.
Ourcustomerschooseusbecauseweprovidethefollowingkeybenefits:

Access.Bycombiningtechnologywithcomprehensiveandrelevantdatathatcapturestheuniqueaspectsofsmall
businesses,weareabletobetterassessthecreditworthinessofsmallbusinessesandapprovemoreloans.Inaddition,we
providecustomerswithaccesstoproductsthatmatchtheircapitalneeds.

Speed.Smallbusinessescansubmitanapplicationonourwebsiteinaslittleasminutes.Weareabletoprovidemostloan
applicantswithanimmediateapprovaldecisionandtransferfundsasfastasthesameday.Becausewerequirenoinperson
meetingsandhaveanintuitiveonlineapplicationform,wehavebeenabletosignificantlyincreasetheconvenienceand
efficiencyoftheapplicationprocesswithoutburdensomedocumentationrequirements.

CustomerExperience.OurU.S.basedinternalsalesforceandcustomerservicerepresentativesprovidehightech,high
touch,personalizedsupporttoourapplicantsandcustomers.Ourteamanswersquestionsandprovidesassistance
throughouttheapplicationprocessandthelifeoftheloan.OurrepresentativesareavailableMondaythroughSaturday
before,duringandafterregularbusinesshourstoaccommodatethebusyschedulesofsmallbusinessowners.Wealsooffer
ourcustomerscrediteducationandconsultingservicesandothervalueaddedservices.Ourcommitmenttoprovideagreat
customerexperiencehashelpedusearna71NetPromoterScore,awidelyusedsystemofmeasuringcustomerloyalty,and
consistentlyachieveA+ratingfromtheBetterBusinessBureau.Furthermore,theOnDeckScoreincorporatesdatafrom
eachcustomershistorywithus,ensuringthatwedeliverincreasingefficiencytoourcustomersinmakingrepeatloan
decisions.Wealsoreportbacktoseveralbusinesscreditbureauagencies,whichcanhelpsmallbusinessesbuildtheir
businesscredit.

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OurCompetitiveStrengths
Webelievethefollowingcompetitivestrengthsdifferentiateusandserveasbarriersforothersseekingtoenterourmarket:

SignificantScale.Sincewemadeourfirstloanin2007,wehavefundedmorethan$1.7billioninloansacrossmorethan
700industriesinall50U.S.statesandhaverecentlybegunlendinginCanada.Wehavecollectedmorethan4.4million
customerpaymentsandmaintainaproprietarydatabaseofmorethan10millionsmallbusinesses.In2013,weoriginated
$458.9millionofloans,representingyearoveryeargrowthof165%,andinthefirstninemonthsof2014,wegenerated
$788.3millionofloans,representingyearoveryeargrowthof171%,allwhilemaintainingconsistentcreditquality.Our
increasingscaleofferssignificantbenefitsincludinglowercustomeracquisitioncosts,accesstoabroaderdataset,better
underwritingdecisionsandalowercostofcapital.

ProprietaryDataandAnalyticsEngine.Weusedataanalyticsandtechnologytooptimizeourbusinessoperationsandthe
customerexperienceincludingsalesandmarketing,underwriting,servicingandriskmanagement.Ourproprietarydataand
analyticsengineandtheOnDeckScoreprovideuswithsignificantvisibilityandpredictabilityinassessingthe
creditworthinessofsmallbusinessesandallowustobetterservemorecustomersacrossmoreindustries.Witheachloan
application,eachfundedloanandeachdailyorweeklypayment,ourdatasetexpandsandourOnDeckScoreimproves.
Ouranalysissuggeststhatthecurrentiterationofourproprietarycreditscoringmodelhasbecome85%moreaccurateat
predictingbadcreditriskinsmallbusinessesacrossarangeofcreditriskprofilesthanpersonalcreditscoresalone.Weare
thereforeabletolendtomoresmallbusinessesthantraditionallenders,whichneedtocompensatefortheirmorelimited
analyticalmodelbybeingmorerestrictiveinlendingdecisions.Wearealsoabletouseourproprietarydataandanalytics
enginetopreapprovecustomersandtargetthosecustomerspredisposedtotakealoanandthathaveahighlikelihoodof
approval.

EndtoEndIntegratedTechnologyPlatform.Webuiltourintegratedplatformspecificallytomeetthefinancingneedsof
smallbusinesses.Ourplatformtoucheseveryaspectofthecustomerlifecycle,includingcustomeracquisition,sales,
scoringandunderwriting,funding,andservicingandcollections.Thispurposebuiltinfrastructureisenhancedbyrobust
fraudprotection,multiplelayersofsecurityandproprietaryapplicationprogramminginterfaces.Itenablesustodelivera
superiorcustomerexperience,facilitatesagiledecisionmakingandallowsustoefficientlyrolloutnewproductsand
features.Weuseourplatformtounderwrite,processandserviceallofoursmallbusinessloansregardlessofdistribution
channel.

DiversifiedDistributionChannels.Wearebuildingourbrandawarenessandenhancingdistributioncapabilitiesthrough
diversifieddistributionchannels,includingdirectmarketing,strategicpartnershipsandfundingadvisors.Ourdirect
marketingincludesdirectmail,radio,TV,socialmediaandotheronlinemarketingchannels.Ourstrategicpartners,
includingbanks,paymentprocessorsandsmallbusinessfocusedserviceproviders,offerusaccesstotheirbaseofsmall
businesscustomers,anddatathatcanbeusedtoenhanceourtargetingcapabilities.Wealsohaverelationshipswithalarge
networkoffundingadvisors,includingbusinessesthatprovideloanbrokerageservices,whichdrivedistributionandaid
brandawareness.Ourstrategicpartnersandfundingadvisorsreceivedaveragecommissionsof2.1%and7.0%ofloan
principal,respectively,forthethreemonthsendedSeptember30,2014,2.5%and7.4%,respectively,fortheninemonths
endedSeptember30,2014,and2.5%and7.5%,respectively,fortheyearendedDecember31,2013.Ourinternalsalesforce
contactspotentialcustomers,respondstoinboundinquiriesfrompotentialcustomers,andisavailabletoassistall
customersthroughouttheapplicationprocess.

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Thefollowingtablesummarizesthepercentageofloansoriginatedbyourthreedistributionchannelsfortheperiodsindicated:

PercentageofOriginations(NumberofLoans):

PercentageofOriginations(Dollars):

Direct
StrategicPartner
FundingAdvisor
Direct
StrategicPartner
FundingAdvisor

YearEnded
December31,
2012

YearEnded
December31,
2013

23.4%
8.0%
68.6%

44.1%
10.3%
45.6%

19.4%
5.5%
75.1%

34.4%
9.2%
56.4%

9MonthsEnded
September30,
2014

54.3%
13.4%
32.3%

43.0%
12.7%
44.3%

3MonthsEnded
September30,
2014

56.2%
14.9%
28.9%

46.8%
13.8%
39.4%

HighCustomerSatisfactionandRepeatCustomerBase.Ourstrongvaluepropositionhasbeenvalidatedbyour
customers.WehadaNetPromoterScoreof71in2013basedonourinternalsurveyofcustomersthatweacquiredviaour
directmarketingandstrategicpartnerchannels.TheNetPromoterScoreisawidelyusedindexrangingfromnegative100
to100thatmeasurescustomerloyalty.Ourscoreplacesusattheupperendofcustomersatisfactionratingsandcompares
favorablytotheaverageNPSscoreof9fornationalbanks,19forregionalbanksand46forcommunitybanks.Wehave
alsoconsistentlyachievedanA+ratingfromtheBetterBusinessBureau.Webelievethathighcustomersatisfactionhas
playedanimportantroleinrepeatborrowingbyourcustomers.In2013,43.5%ofloanoriginationswerebyrepeat
customers,whoeitherreplacedtheirexistingloanwithanew,usuallylarger,loanortookoutanewloanafterpayingoff
theirexistingOnDeckloaninfull.Thirtypercentofouroriginationvolumefromrepeatcustomersin2013wasdueto
unpaidprincipalbalancesrolledfromexistingloansdirectlyintosuchrepeatoriginations.Fortheninemonthsended
September30,2014,49.2%ofloanoriginationswerebyrepeatcustomers.

DurableBusinessModel.Sincewebeganlendingin2007,wehavesuccessfullyoperatedourbusinessthroughbothstrong
andweakeconomicenvironments.Ourrealtimedata,shortdurationloans,automateddailyandweeklycollection,risk
managementcapabilitiesanduniteconomicsenableustoreactrapidlytochangingmarketconditionsandgenerate
attractivefinancialresults.Inaddition,webelievetheconsistencyandstabilityofthecreditperformanceofourloan
portfolioareappealingtooursourcesoffundingandhelpvalidateourproprietarycreditscoringmodel.

DifferentiatedFundingPlatform.Wesourcecapitalthroughmultiplechannels,includingdebtfacilities,securitizationand
theOnDeckMarketplace,ourproprietarywholeloansaleplatformforinstitutionalinvestors.Thisdiversityprovidesus
withmultiple,scalablefundingsources,longtermcapitalcommitmentsandaccesstoflexiblefundingforgrowth.In
addition,becausewecontributeaportionofthecapitalforeachloanwefundviaourdebtfacilitiesandsecuritization,we
areabletoaligninterestswithourinvestors.

100%SmallBusinessFocused.Wearepassionateaboutsmallbusinesses.Wehavedevelopedsignificantexpertiseover
oursevenyearoperatinghistoryexclusivelyfocusedonassessinganddeliveringcredittosmallbusinesses.Webelieve
thispassion,focusandsmallbusinesscreditexpertiseprovidesuswithsignificantcompetitiveadvantages.

OurStrategyforGrowth
Ourvisionistobecomethemosttrustedlendertosmallbusinesses,andtoaccomplishthis,weintendto:

ContinuetoAcquireCustomersThroughDirectMarketingandSales.Weplantocontinueinvestingindirectmarketing
andsalestoaddnewcustomersandincreaseourbrandawareness.Asourdataset
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expands,wewillcontinuetopreapproveandtargetthosecustomerspredisposedtotakealoanandthathaveahigh
likelihoodofapproval.Wehavealreadyseensuccessfromthisstrategywithanincreaseinloantransactionsattributableto
directmarketingof350%in2013.

BroadenDistributionCapabilitiesThroughPartners.Weplantoexpandournetworkofpartners,includingbanks,
paymentprocessors,fundingadvisorsandsmallbusinessfocusedserviceproviders,andleveragetheirrelationshipswith
smallbusinessestoacquirenewcustomers.

EnhanceDataandAnalyticsCapabilities.Weplantomakesubstantialinvestmentsinourdataandanalyticscapabilities.
Ourdatascienceteamcontinuallyuncoversnewinsightsaboutsmallbusinessesandtheircreditperformanceandconsiders
newdatasourcesforinclusioninourmodels,allowingustoevaluateandlendtomorecustomers.Asourdatasetexpands,
ourselfreinforcingscoringalgorithmcontinuestoimprovethroughmachinelearning,enablingustomakebetterlending
decisions.

ExpandProductOfferings.Wewillcontinuedevelopingproductsthatsupportsmallbusinessesfrominceptionthrough
maturity.Followingthesuccessfulrecentintroductionofourlineofcreditand24monthtermloanproducts,overtimewe
plantoexpandourofferingsbyintroducingnewcreditrelatedproductsforsmallbusinesses.Webelievethiswillallowus
toprovideamorecomprehensiveofferingforourcurrentcustomersandintroducesmallbusinessownerstoourplatform
whoseneedsarenotcurrentlymetbyourtermloanandlineofcreditproducts.Wemayfundtheexpansionofourproduct
offeringsinpartfromtheproceedswereceivefromourIPO,butwehavenotyetfinalizedthespecificproductswewill
introduceorestablishedaspecifictimelinetoexpandourproductofferings.

ExtendCustomerLifetimeValue.Webelievewehaveanopportunitytoincreaserevenueandloyaltyfromnewand
existingcustomers.Wehavetheabilitytoaccommodateourcustomersneedsastheygrowandastheirfundingneeds
increaseandchange.Weplantointroducenewfeaturesandproductcrosssellcapabilitiestocontinuedrivingthe
increaseduseofourplatform,includingmobilefunctionalitytoincreaseuserengagement.Wearefocusedonprovidinga
positivecustomerexperienceandoncontinuingtodrivecustomerloyalty.

TargetedInternationalExpansion.Webelievesmallbusinessesaroundtheworldneedcapitaltogrow,andthereisan
opportunitytoexpandoursmallbusinesslendinginselectcountriesoutsideoftheUnitedStates.Forexample,inthe
secondquarterof2014,westartedprovidingloansinCanada,andwecontinuetoevaluateadditionalinternationalmarket
opportunities.WemayfundourinternationalexpansioninpartfromtheproceedswereceivefromourIPObutwehavenot
yetcommittedtoanyspecifiedlocationorestablishedaparticulartimelinetopursuethisopportunity.

OurSalesandMarketing
Weoriginatesmallbusinessloansthroughthreechannels:directmarketing,strategicpartnersandafundingadvisorprogram.
Whilecustomerscanapplyforaloandirectlyonourwebsite,theyalsohavetheabilitytoinitiatecontactwithusthroughother
means,suchasbytelephoneorthroughastrategicpartnerorfundingadvisor.Weunderwrite,processandserviceallofoursmall
businessloansonourplatformregardlessofdistributionchannel.Thefollowingtablesummarizesthepercentageofloansoriginated
byourthreedistributionchannelsfortheperiodsindicated:

PercentageofOriginations
(NumberofLoans):

Direct
StrategicPartner
FundingAdvisor

PercentageofOriginations
(Dollars):

Direct
StrategicPartner
FundingAdvisor

YearEnded
December31,2012

YearEnded
December31,2013

9MonthsEnded
September30,2014

3MonthsEnded
September30,2014

23.4%
8.0%
68.6%
19.4%
5.5%
75.1%

44.1%
10.3%
45.6%

34.4%
9.2%
56.4%
94

54.3%
13.4%
32.3%
43.0%
12.7%
44.3%

56.2%
14.9%
28.9%

46.8%
13.8%
39.4%

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DirectMarketing
Wehaveoriginatedsmallbusinesstermloansthroughthedirectmarketingchannelsince2007andhaverecentlybegun
originatinglinesofcredit.Throughthischannelwemakecontactwithprospectivecustomersutilizingdirectmail,socialmedia,
television,radioandonlinemarketing.Wealsoengageinsomeoutboundcalling.Supportedbyourdirectsalesteam,wefunnel
customerleadsgeneratedthroughsucheffortstoourwebsite.
OurdirectsalesteamislocatedinourNewYorkCityandDenveroffices.Thisteamprimarilyfocusesongeneratingloan
originationsandassistingapplicantsthroughouttheapplicationprocessbyrespondingtoapplicantquestions,collecting
documentationandprovidingnotificationofapplicationoutcomes.Whileourwebsitefacilitatestheloanapplicationprocess,
borrowersmayelecttomail,faxoremailusdocumentation.Insuchcases,ourdirectsalesteamassistsincollectingthis
documentation.Membersofthedirectsalesteamhaveacommissioncomponenttotheircompensationthatisbasedonloanvolume.
StrategicPartners
Wehaveoriginatedsmallbusinessloansthroughourstrategicpartnerchannelsince2011.Throughthischannel,weare
introducedtoprospectivecustomersbythirdparties,whowerefertoasstrategicpartners,thatserveorotherwisehaveaccesstothe
smallbusinesscommunityintheregularcourseoftheirbusiness.Strategicpartnersconducttheirownmarketingactivitieswhichmay
includedirectmail,onlinemarketingorleveragingexistingbusinessrelationships.Strategicpartnersinclude,amongothers,banks,
smallbusinessfocusedserviceproviders,otherfinancialinstitutions,financialandaccountingsolutionproviders,payment
processors,independentsalesorganizations,leasingcompaniesandfinancialandotherwebsites.Thematerialtermsofour
agreementswithstrategicpartnersincludethepaymentbyusofreferralfees,generallybasedontheamountofthefundedloan,in
exchangeforcustomersreferredtoourplatform.Suchagreementsalsotypicallycontainothercustomaryterms,including
representationsandwarranties,covenants,terminationprovisionsandexpenseallocation.Strategicpartnersdifferfromfunding
advisors(describedbelow)inthattheygenerallyprovideareferraltoourdirectsalesteamandourdirectsalesteamisthemainpoint
ofcontactwiththeborrower.Ontheotherhand,fundingadvisorsserveasthemainpointofcontactwiththeborrowerandmayhelp
aborrowerassessmultiplefundingopportunities.Assuch,fundingadvisorscommissionsgenerallyexceedstrategicpartnersreferral
fees.Ourrelationshipswithstrategicpartnersprovideforthepaymentofareferralfeeuponthefundingofaloan.Suchfeeis
generallybasedontheamountofthefundedloan.During2013,theaveragecommissionwepaidtoastrategicpartnerwas2.5%of
loanprincipal.Wehaveenteredintoageneralmarketingagreementwithonestrategicpartnerthatprovidesforcommonstock
purchasewarrantsthatvestuponreachingcertainperformancegoals.
FundingAdvisorProgram
Wehaveoriginatedsmallbusinessloansthroughthefundingadvisorprogramchannelsince2007.Throughthischannelwe
makecontactwithprospectivecustomersbyenteringintorelationshipswiththirdpartyindependentadvisorsthattypicallyoffera
varietyoffinancialservicestosmallbusinesses,includingcommissionbasedbusinessloanbrokerageservices,each,aFAP.FAPs
conducttheirownmarketingactivitieswhichmayincludedirectmail,onlinemarketing,paidleads,televisionandradioadvertising
orleveragingexistingbusinessrelationships.FAPsincludeindependentsalesorganizations,commercialloanbrokersandequipment
leasingfirms.FAPsactasintermediariesbetweenpotentialcustomersandlendersbybrokeringbusinessloansonbehalfofpotential
customers.InordertobecomeaFAP,theFAPmusthaveprovenexperienceperformingsuchrole,completeaninterviewwithus,clear
abackgroundcheck,undergotrainingandsignanagreementwithus.During2013,theaveragecommissionwepaidtoaFAPwas
7.5%ofloanprincipal.OurrelationshipswithFAPsprovideforthepaymentofacommissionuponthefundingofaloan.Asof
September30,2014,wehadrelationshipswithmorethan650FAPsandnosingleFAPwasassociatedwithmorethan3%ofthetotal
loanswemade.

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OurCustomers
Weprovidetermloansandlinesofcredittoadiversesetofsmallbusinesses.Wehavefundedmorethan$1.7billioninloan
volumeacrossmorethan700industriesinall50U.S.statesandhaverecentlybegunlendinginCanadaandhavecollectedmorethan
4.4millioncustomerpaymentssinceourfirstloanin2007.Thetopfivestatesinwhichweoriginatedloansin2013andinthenine
monthsendedSeptember30,2014wereCalifornia,Florida,NewYork,TexasandNewJersey,representingapproximately14%,10%,
8%,8%and4%ofourtotalloanoriginations,respectively,fortheyearendedDecember31,2013andapproximately15%,9%,8%,
8%and4%ofourtotalloanoriginations,respectively,fortheninemonthsendedSeptember30,2014.Ourcustomershaveamedian
of$568,000inannualrevenue,with90%ofourcustomershavingbetween$150,000and$3.2millioninannualrevenue,andhave
beeninbusinessforamedianof7.5years,with90%inbusinessbetween2and31years.
DuringtheninemonthsendedSeptember30,2014,theaveragesizeofatermloanmadeonourplatformwas$44,602andthe
averagesizeofalineofcreditextendedtoourcustomerswas$15,944.
Weoftenmakeadditionalloanstoformercustomersaftertheyhavefulfilledalloftheirpaymentobligationstous.Wealso
makeadditionalloanstoexistingcustomerswhiletheirpaymentobligationsontheiroriginalloansremainoutstanding.Inorderfora
currentcustomertoqualifyforanewloanwhileapaymentobligationremainsoutstanding,thecustomermustbecurrentonits
scheduledloanpaymentsandapproximatelyhalfofanyexistingOnDeckloanmustbepaiddown.Ourunderwritingprocessfor
repeatcustomersisselectiveandwefullyreunderwriteeachrepeatcustomeroneachloanandtakeintoaccountthepaymenthistory
oftherepeatcustomerspriororexistingloans.In2013andduringtheninemonthsendedSeptember30,2014,repeatcustomers
madeup43.5%and49.2%,respectivelyofouroriginations.
OurProducts
Weofferfinancingtosmallbusinessesthroughatermloanproductandarevolvinglineofcreditproduct.
TermLoanProduct
Ourprimarybusinessistoofferfixedtermloanstoeligiblesmallbusinesses.Theprincipalamountofeachtermloanranges
from$5,000to$250,000.Theprincipalamountofourtermloanisafunctionoftherequestedborrowingamountandourcreditrisk
assessment,usingtheOnDeckScore,ofthecustomersabilitytorepaytheloan.Theoriginaltermofeachindividualtermloanranges
from324months.Webelievethatthehighlytailoredloantermsareacompetitiveadvantagegiventheshortterm,projectspecific
natureofmanyofourcustomersborrowingneeds.CustomersrepayourtermloansthroughfixedautomaticACHcollectionsfrom
theirbusinessbankaccountoneitheradailyorweeklybasis.Certaintermloansareoriginatedbyourissuingbankpartnersandloans
thatwepurchasefromtheissuingbankshavesimilarperformancetoloansthatweoriginate.Wegenerallypayourissuingbank
partnersafeeofapproximately0.7%ofloanprincipal.
LineofCreditProduct
Oursecondloanproductisarevolvinglineofcreditwithfixedsixmonthlevelyieldamortizationonamountsoutstandingand
automatedweeklypayments.Thecreditlinesofferedtocustomersarefrom$5,000to$25,000.Acustomermaybeofferedalineof
creditbasedonourcreditriskassessmentofthecustomersabilitytorepaythelineofcredit.Wedonotcurrentlypurchaselinesof
creditfromissuingbankpartners.
OurLoanPricing
Ourloansarepricedbasedonariskassessmentgeneratedbyourproprietarydataandanalyticsengine,whichincludesthe
OnDeckScore.CustomerpricingisdeterminedprimarilybasedonthecustomersOnDeckScore,theloantermandorigination
channel.Loansoriginatedthroughdirectmarketingandstrategicpartnersaregenerallylowercostthanloansoriginatedthrough
FAPsduetothecommissionstructureoftheFAPprogram.

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Ourloansarequotedincentsonthedollarorbasedonaninterestrate,dependingonthetypeofloan.Ingeneral,termloans
arequotedinCODterms,andlinesofcreditarequotedwithaninterestrate.Giventheusecaseandpaybackperiodassociatedwith
shortertermproducts,manyofourcustomersprefertounderstandpricingonadollarsin,dollarsoutbasisandareprimarilyfocused
ontotalpaybackcost.
Ourborrowerspaybetween$0.01to$0.06permonthininterestforeverydollartheyborrowunderoneofourtermloans,with
theactualamounttypicallydrivenbythelengthoftermoftheparticularloan.Webelievesmallbusinessborrowerstendtoevaluate
termloansprimarilyonacentsondollarpaybackratebasis,ratherthanAPR.Becauseofthis,andbecausemanyofourloansare
shortterminnatureandAPRiscalculatedonanannualizedbasis,wedonotbelievethatAPRasappliedtoourloansismeaningful
formeasuringtheexpectedreturnstousorcoststoourcustomer.TheAPRsofourtermloansrangefrom19.9%to99%.TheAPRsof
ourlinesofcreditrangefrom30%to36%.WedonotuseAPRasaninternalmetrictoevaluatetheperformanceofourbusinessoras
abasistocompensateouremployeesortomeasuretheirperformance.Theinterestoncommercialbusinessloansisalsotax
deductibleaspermittedbylaw,ascomparedtotypicalpersonalloanswhichdonotprovideataxdeduction.APRdoesnotgiveeffect
tothesmallbusinessborrowerspossibletaxdeductionsandcashsavingsassociatedwithbusinessrelatedinterestexpenses.We
believethatourproductpricinghashistoricallyfallenbetweentraditionalbankloanstosmallbusinessesandnonbanksmall
businessfinancingalternativessuchasmerchantcashadvances.
OurPlatformandtheUnderwritingProcess
Webelievethatourtechnologyplatformenablesasignificantlyfasterprocesstoapplyforaloan,acreditassessmentthatmore
accuratelydeterminesasmallbusinessapplicantscreditworthinessandasuperioroverallexperience.Ourplatformtoucheseach
pointofourrelationshipwithcustomers,fromtheapplicationprocessthroughthefundingandservicingofloans.
Weprovideanautomated,streamlinedapplicationprocessthatpotentialcustomersmaycompleteinaslittleasminutes.Our
proprietaryscoringmodelprovidesapplicantswithafundingdecisionrapidlyandwecanthenfundcustomersasfastasthesame
day.Oncefunded,ourcustomerscanuseouronlineportaltomonitortheirloanbalanceinrealtime.Tothecustomer,theprocess
appearssimple,seamlessandefficientbutourplatformleveragessophisticated,proprietarytechnologytomakeitpossible.

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OnlineApplicationProcess

Sinceinception,ourplatformhasprocessedmorethan4.4millioncustomerpaymentsandcurrentlyincorporatesaproprietary
databaseofmorethan10millionsmallbusinesses.Wemaintainourplatformwith94fulltimetechnologyandanalyticsemployees
andhaveinvestedover$125millioninourplatformtodate.Webelieveourtechnologyplatformisasignificantcompetitive
advantageandisoneofthemostimportantreasonsthatcustomerstakeloansfromus.Fromthecustomersperspective,ourplatform
touchesallfivestagesofthecustomerlifecycle:applicationdataaggregationcreditassessmentfundingandservicingand
collections.
Stage1:Application
Ourunderwritingprocessbeginswithsubmissionofaloanapplicationbyaprospectivecustomer.Wemakeavailableseveral
methodsforsubmittingloanapplications.Themajorityofourcustomersapplyonourwebsiteandtheycanalsoapplyoverthe
phone,viafaxorthroughafundingadvisor.Ourcustomerswhocometousthroughthestrategicpartnerchannelaregenerally
directedtoourwebsiteandinteractwithourdirectsalesteam.Interactionwiththestrategicpartneroftenendsoncethereferralis
made.Ontheotherhand,fundingadvisorsserveasthemainpointofcontactwiththeborrowerandmayhelpaborrowerassess
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opportunities.Thefundingadvisortypicallyhelpsthecustomercompleteitsapplicationwhilethestrategicpartnergenerallyleaves
theinteractiontoourwebsiteand/orourdirectsalesteam.Aspartoftheapplicationprocess,theprospectivecustomerisonlyasked
toprovidepersonaldetails,bankaccountinformationandbusinesshistory.Applicantsmaycompleteanapplicationonourwebsite
inaslittleasminutes,significantlyreducingthetimenormallyspentapplyingforasmallbusinessloan.
Stage2:DataAggregation
Uponsubmissionofacompletedapplication,ourcreditmodelsarepopulatedwithallinformationcontainedinthesubmitted
loanapplication.Thisinformationincludes,amongotherdata,theprospectivecustomerstimeinbusiness,industry,selfreported
revenue,desiredloanamountanduseofproceeds.Additionaldatafromanumberofexternalsourcesmayincludebusinessbank
accountdata,businessandpersonalcreditbureaudata,governmentandpublicrecords,transactionaldataandaccountingdatais
aggregated,cleansedandnormalized.Incertaininstances,wealsocollectandanalyzebusinessreputationandsocialdatafrom
differentsources(suchasGooglePlaces,Foursquare,OpenTableandZocDoc)asoneamongmanyfactorsusedtoverifyan
applicantsidentity,forpossiblefrauddetectionandforpossibleuseasacomponentinourdeterminationofcreditworthiness.For
example,ifwecannotconfirmarestaurantslocationviaGooglePlacesorcannotfinditonOpenTable,thenthatmaybeanindicator
ofpotentialfraud.Wealsousebehavioraldata,whichwedefineasinformationwegleanfrommerchantbehaviorastheyapplytous
forloans,suchasselfreporteduseofproceeds,choiceofloanparametersandsignalsinbankandcashflowdatasuchasfrequent
overdraftpenaltiestoevaluateriskofdefault.Intotal,ourplatformcanaggregateandanalyzeover2,000uniquedatapointsfrom
over100sourcesperapplication.Webelievethattheaggregationandanalysisofamyriadofbusinessspecificdatabyourplatform
providesapplicantstheopportunitytohavethecurrenthealthoftheirbusinessevaluatedwithbetteraccuracy.
Stage3:CreditAssessment
Inordertoefficientlyscreenapplicants,wedesignedaninitialqualificationphasetoreviewbasicinformationregardinga
prospectivecustomerthathasbeensubmittedwiththeapplicationorgatheredbyusfromavailablesources.Oncecomplete,either
theprospectivecustomersloanapplicationproceedstothenextphaseoftheunderwritingprocessortheprospectivecustomeris
notifiedofthedecisiontodeclineitsapplication.
Followinginitialqualification,weinitiateacreditreviewutilizingourproprietaryriskscoringmodelanddecisioningsystemto
generateanOnDeckScorefortheprospectivecustomerthatdrivesthedecisionwhethertoextendcredit.Ourproprietarycredit
scoringmodelanddecisioningsystem,developedbyourcreditanalyticsteam,isroutinelymonitored,testedandvalidatedbyour
riskmanagementteam.FollowingthegenerationoftheOnDeckScore,eithertheprospectivecustomerwillbenotifiedofthe
decisiontodeclineitsapplicationforfailingtomeetminimumrequirementsortheloanapplicationwillundergoaseparate
proprietarysystemanalysisofthebusinesssoperatingcashflows.
Followingcreditevaluationandanalysisofthebusinesssoperatingcashflows,wewilleither(i)autoapprovethecustomerfor
asmallbusinessloanwithoneormoreapprovedsetsofloancharacteristics,(ii)haveourunderwritingteamreviewtheloan
applicationor(iii)declinetheprospectivecustomersloanapplication.Mostoftheloanswemaketoourcustomersareauto
approvedanddonotrequiremanualunderwriting.Ourteamreviewsloanapplicationswhenourcreditunderwritingsystem
determinesadditionalinformationorverificationisneededtocompletethecreditdecisioningprocess.Followingthisreview,our
underwritingteamwill(i)approvetheprospectivecustomerforasmallbusinessloanwithoneormoreapproved(orrevised)setsof
loancharacteristics,(ii)declinetomakeanyrevisionstoanexistingloanofferor(iii)declinetheprospectivecustomersloan
application.OurunderwritingteamislocatedinourArlington,Virginiaoffice.
Ourplatformenablesustoautomateasignificantportionofthecreditassessmentprocess,reducingthepersonaltime
commitmentnecessaryforanapplicanttoreceiveafundingdecisionandacceleratingthetimetofunding.

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Loanspurchasedfromourissuingbankpartnerarepricedandofferedtothecustomerusingratesandparameterssetbythe
issuingbankpartnerandrecommendedbyus.ThepricingsetbyourissuingbankpartnerisgenerallyconsistentwithOnDecks
pricing.Loanspurchasedfromourissuingbankpartnerareoriginatedonourplatformasapprovedbytheissuingpartnerand
underwrittenusingtheissuingbankpartnersunderwritingcriteria.Weareawareofsuchcriteriawhenwerecommendloanstothe
issuingbankpartner,andtheunderwritingcriteriausedbytheissuingbankpartneraresubstantiallysimilartothecriteriausedfor
loansoriginatedonourplatform.
Stage4:ApprovalandFunding
Beforeweapprovealoan,ourplatformautomaticallycheckstheidentityoftheprospectivecustomerforcompliancewith
KnowYourCustomer,OFACterroristwatchlistandPoliticallyExposedPersonsregulations.Oncethisstepandtheotherapproval
stepshavebeensatisfactorilycompleted,theloanapplicationisapproved.Followingapprovalofaloanapplication,wemakealoan
agreementavailableonlinefortheprospectivecustomersreviewandapproval.Wegenerallyfilealienagainstalloftheassetsofa
business.Uponexecutionoftheloanagreementbythesmallbusinessandexecutionofapersonalguaranteebythesmallbusiness
owner,weadvanceloanproceedseitherbywiretransferorthroughanACHpaymentdirectlytothesamebusinessbankaccount
analyzedtounderwritetheloan.Inaccordancewithapplicableloanpaymentschedules,wegenerallybegindebitingthecustomers
businessbankaccountforloanrepaymentsonthefollowingbusinessday.
Stage5:ServicingandCollections
Weutilizeanautomatedprocessforcollectingscheduledloanpaymentsfromourcustomers.Eachcustomerauthorizesusto
debittheirbusinessbankaccountbyACHforthetransferofscheduledloanpayments.Thebusinesssoperatingaccountusedto
underwritethebusinessloanisrequiredtobethedesignatedbankaccountusedfortheACHdebitprocess.Uponloanorigination,
weestablishthepaymentscheduletobeeithereachbusinessdayorweeklywithpaymentoccurringonasetbusinessday.
Weusetheloanservicingplatformtomonitorandtrackpaymentactivity.Withbuiltinpaymenttrackingfunctionalityand
automatedmissedpaymentnotifications,theloanservicingplatformallowsustomonitorperformanceofoutstandingloansonareal
timebasis.Weserviceallloansonourplatformregardlessoffundingsource.Wehaveacommittedbackupservicerinplacethathas
theabilitytotakeoverandserviceourloanportfoliointheeventweareunabletodosoonourplatform.Thebackupservicer
receivesregularinformationregardingourloanportfoliosoitcanquicklyrampuptoperformbackupservicingifneeded.Todate,we
havenothadtoactivatebackupservicingcapabilities.
Wehavedevelopedastrategytooptimizethecollectionsprocessfordelinquentloans.Uponbecomingonedaydelinquent,a
loanentersourcollectionsprocess.Ourcollectionsprocessisdividedintodistinctstagesbasedonthedelinquencyseverityofthe
applicableloan,whichdictatesthelevelofcollectionstepstaken.Generally,loansprogressthroughthecollectioncyclebasedupon
thenumberofdayspastduebutcanbeacceleratedbasedonspecificcircumstances.Incertaincircumstances,delinquentcustomers
mayenteraworkoutprogramdesignedbythecollectionsteamtobeatemporarymodificationofthedelinquentbusinessspayment
schedule.Wehaveaninternalcollectionsteamandwealsousecertainthirdpartyserviceprovidersforthesamepurpose.Forthenine
monthsendedSeptember30,2014,feespaidtotheseserviceproviderswerelessthan$30,000.Wearecurrentlysellingthemajority
ofourchargedoffloanstoestablishedandreputablethirdpartycollectionagencies.Theseagenciespurchasechargedoffloansin
exchangeforafeecalculatedbasedonthepercentageoftheunpaidloanbalanceandseektocollectpaymentonsuchloansafterthey
havebeenpurchased.

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OurSubsidiaries
Wecurrentlyhavefiveactivesubsidiaries,eachofwhichiswhollyownedbyOnDeckCapital,Inc.Thesesubsidiariesperform
thefollowingfunctions:

OnDeckAssetCompany,LLC.Thisspecialpurposevehicleistheborrowerunderacurrentassetbackedrevolvingdebt
facility.

OnDeckAssetPool,LLC.Thisspecialpurposevehicleistheborrowerunderacurrentassetbackedrevolvingdebtfacility.

SmallBusinessAssetFund2009LLC.Thisspecialpurposevehicleistheborrowerunderacurrentassetbackedrevolving
debtfacility.

OnDeckAccountReceivablesTrust20131LLC.Thisspecialpurposevehicleistheborrowerunderacurrentassetbacked
revolvingdebtfacility.

OnDeckAssetSecuritizationTrustLLC.Thisspecialpurposevehicleistheissuerunderourcurrentassetbacked
securitizationfacility.

SeethesectionstitledManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsLiquidity
andCapitalResourcesandDescriptionofIndebtednessformoreinformationregardingthesefivesubsidiaries.
OurRiskManagement
Ourmanagementteamhasoperatedthebusinessthroughbothstrongandweakeconomicenvironmentsandhasdeveloped
significantriskmanagementexperienceandprotocols.Accordingly,weemployarigorous,comprehensiveandprogrammatic
approachtoriskmanagementthatisingrainedinourbusiness.Theobjectivesofourriskmanagementprogramareto:

managetherisksofthecompany,includingdevelopingandmaintainingsystemsandinternalcontrolstoidentify,approve,
measure,monitor,reportandpreventrisks

fosterastrongriskcentricmindsetacrossthecompanyand

controlandplanforcreditrisktakingconsistentwithexpectations.

Weaccomplishtheseriskmanagementobjectivesbothstructurally,throughproductandplatformfeatures,aswellasby
employingateamofriskmanagementprofessionalsfocusedoncreditandportfoliorisksandbroaderenterpriserisks.
Thestructuralprotectionsinherentinourproductsandtechnologyplatformenableustoproviderealtimeriskmonitoringand
management.Fromanunderwritingperspective,wemakecreditdecisionsbasedonrealtimeperformancedataaboutoursmall
businesscustomers.WebelievethatthedataandanalyticspoweringtheOnDeckScorecanpredictthecreditworthinessofasmall
businessbetterthanmodelsthatrelysolelyonthepersonalcreditscoreofthesmallbusinessowner.Ouranalysissuggeststhatthe
currentiterationofourproprietarycreditscoringmodelhasbecome85%moreaccurateatpredictingbadcreditriskinsmall
businessesacrossarangeofcreditriskprofilesthanpersonalcreditscoresalone.
Inaddition,becauseourproductsgenerallyrequireautomatedpaybackeachbusinessdayandallowforongoingdata
collection,weobtainearlywarningindicatorsthatprovideahighdegreeofvisibilitynotjustonindividualloans,butalsomacro
portfoliotrends.Insightsgleanedfromsuchrealtimeperformancedataenableustobeagileandadaptquicklytochanging
conditions.Furthermore,theloansweoriginatearegenerallyshortterminnature.Thisrapidamortizationandrecoveryofamounts
loanedlimitsouroveralllossexposure.

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Organizationally,wehaveariskmanagementcommittee,comprisedofmembersofourboardofdirectors,thatmeetsregularlyto
examinecreditrisksandenterpriserisksofthecompany.Wealsohaveseveralsubcommitteesofourriskmanagementcommitteethat
arecomprisedofmembersofourmanagementteamthatmonitorcreditrisks,enterpriserisksandotherrisksofthecompany.
Inaddition,wehaveteamsofnonmanagementemployeeswithinthecompanythatmonitortheseandotherrisks.Ourcredit
riskteamisresponsibleforportfoliomanagement,ALLLforecasting,creditmodelvalidationandunderwritingperformance.This
teamengagesinnumerousriskmanagementactivities,includingreportingonperformancetrends,monitoringofportfolio
concentrationsandstability,performingeconomicstresstestsonourportfolio,randomlyauditingunderwritingprocessesandloan
decisionsandconductingpeerbenchmarkingandexogenousriskassessments.
Ourenterpriseriskteamfocusesonthefollowingadditionalrisks:

ensuringourITsystems,securityprotocols,andbusinesscontinuityplansarewellestablished,reviewedandtested

establishingandtestinginternalcontrolswithrespecttofinancialreportingand

regularlyreviewingtheregulatoryenvironmenttoensurecompliancewithexistinglawsandanticipatefutureregulatory
changesthatmayimpactus.

Inaddition,ourmanagementteamcloselymonitorsourcompetitivelandscapeinordertoassessanycompetitivethreats.
Finally,fromacapitalavailabilityperspective,weemployadiverseandscalablefundingstrategythatallowsustoaccessdebt
facilities,thesecuritizationmarketsandinstitutionalcapitalthroughourOnDeckMarketplace,reducingourdependenceonanyone
sourceofcapital.
OurInformationTechnologyandSecurity
Ournetworkisconfiguredwithmultiplelayersofsecuritytoisolateourdatabasesfromunauthorizedaccess.Weuse
sophisticatedsecurityprotocolsforcommunicationamongapplicationsandweencryptprivateinformation,suchasanapplicants
SocialSecuritynumber.AllofourpublicandprivateAPIsandwebsitesuseSecureSocketsLayer.
OursystemsinfrastructureisdeployedonaprivatecloudhostedincolocatedredundantdatacentersinNewJerseyand
Colorado.Webelievethatwehaveenoughphysicalcapacitytosupportouroperationsfortheforeseeablefuture.Wehavemultiple
layersofredundancytoensurereliabilityofnetworkserviceandhavea99.99%uptime.Wealsohaveaworkingdataredundancy
modelwithcomprehensivebackupsofourdatabasesandsoftwaretakennightly.
OurIntellectualProperty
Weprotectourintellectualpropertythroughacombinationoftrademarks,tradedress,domainnames,copyrights,tradesecrets
andpatents,aswellascontractualprovisionsandrestrictionsonaccesstoourproprietarytechnology.
WehavefiveprovisionalpatentapplicationspendingintheUnitedStatesthatseektoprotectproprietarytechniquesrelevantto
ourproductsandservices.Weintendtopursueadditionalpatentprotectiontotheextentwebelieveitwillbebeneficial.
WecurrentlyhavesixpatentapplicationspendingbeforetheUnitedStatesPatentandTrademarkOffice(fiveprovisionaland
onenonprovisional)thatseektoprotectproprietarytechniquesrelevanttoourproductsandservices.Thepatentapplicationsrelate
tohowloansprogressthroughourautomatedplatform,verificationofborroweridentification,frauddetectionandtheuseand
verificationofcertaindatainourproprietaryOnDeckScore.Apending

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patentdoesnotprovideanymeaningfulintellectualpropertyprotectionunlessthepatentisultimatelyissued.Weintendtopursue
additionalpatentprotectiontotheextentwebelieveitwillbebeneficial.
WehaveregisteredtrademarksintheUnitedStatesandCanadaforOnDeck,OnDeckScore,OnDeckMarketplace,the
OnDecklogoandmanyothertrademarks.WealsohavefiledothertrademarkapplicationsintheUnitedStatesandcertainother
jurisdictionsandwillpursueadditionaltrademarkregistrationstotheextentwebelieveitwillbebeneficial.
WearetheregisteredholderofavarietyofdomesticandinternationaldomainnamesthatincludeOnDeck.comandsimilar
namesaswellasbusinessloans.com.
Inadditiontotheprotectionprovidedbyourintellectualpropertyrights,weenterintoconfidentialityandintellectualproperty
rightsagreementswithouremployees,consultants,contractorsandbusinesspartners.Ouremployeesandcontractorsarealsosubject
toinventionassignmentprovisions.
OurEmployees
AsofSeptember30,2014,wehad369fulltimeemployees,including94intechnology,160insales,74inservicingand41in
generalandadministrativefunctions.AsofSeptember30,2014,wehad227employeesinourNewYorkoffice,74employeesinour
Denveroffice,64employeesinourArlington,Virginiaofficeand4employeesinremotelocations.
Weareproudofourculture,whichisanchoredbyfourkeyvalues:

Ingenuity

Wecreatenewsolutionstooldproblems.Weimaginewhatspossibleandseekoutinnovationandtechnologyto
reinventsmallbusinessfinancinganddelightourcustomers.

Passion

Wethinkbigandactboldly.Wecareintenselyabouteachother,ourcompany,andthesmallbusinessesweserve.

Openness

Wearecollaborativeandaccessible.Weknowthatthebestoutcomescomewhenweworktogether.

Wefocusonresults.Wearecommittedtomakingeverydaycountandconstantlystrivetoimproveourbusiness.We
worktomakeadifferencetosmallbusinesses,theircustomersandouremployees.

Impact

Weconsiderourrelationshipwithouremployeestobegoodandwehavenothadanyworkstoppages.Additionally,noneof
ouremployeesarerepresentedbyalaborunionorcoveredbyacollectivebargainingagreement.
GovernmentRegulation
Weareaffectedbylawsandregulationsthatapplytobusinessesingeneral,aswellastocommerciallending.Thisincludesa
rangeoflaws,regulationsandstandardsthataddressinformationsecurity,dataprotection,privacy,licensingandinterestrates,among
otherthings.However,becauseweareonlyengagedincommerciallendinganddonotmakeanyconsumerloansortakedeposits,we
aresubjecttofewerregulationsthanbusinessesinvolvedinthoseactivities.
StateLendingRegulations
InterestRateRegulations
Althoughthefederalgovernmentdoesnotregulatethemaximuminterestratesthatmaybechargedoncommercialloan
transactions,somestateshaveenactedcommercialratelawsspecifyingthemaximumlegal

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interestrateatwhichloanscanbemadeinthestate.WeonlyoriginatecommercialloansanddosounderVirginialaw.Virginiadoes
nothaveratelimitationsoncommercialloansorlicensingrequirementsforcommerciallenders.Ourunderwriting,servicing,
operationsandcollectionsteamsareheadquarteredinArlington,Virginia,andthatiswherethecommercialloancontactsaremade.
AllloansoriginateddirectlybyusprovidethattheyaretobegovernedbyVirginialaw.Withrespecttoloanswhereweworkwitha
partnerorissuingbank,thepartnerbankmayutilizethelawofthejurisdictionapplicabletothebankinconnectionwithits
commercialloans.
LicensingRequirements
Wearenotcurrentlyrequiredtohavelicensestooperateourcommercialloanprogram.Whilesomestateshavelicensing
requirementsinconnectionwithcommerciallending,Virginiadoesnot.OurloansprovidethattheyaretobegovernedbyVirginia
law,andasaresultwearenotrequiredtobelicensed.
FederalLendingRegulations
Weareacommerciallenderandassuchtherearefederallawsandregulationsthataffectour,andotherlenderslending
operations.Theselawsinclude,amongothers,portionsoftheDoddFrankAct,AntiMoneyLaunderingrequirements(BankSecrecy
ActandUSAPATRIOTAct),EqualCreditOpportunityAct,FairCreditReportingAct,PrivacyRegulations(RighttoFinancial
PrivacyAct),TelephoneConsumerProtectionAct,andrequirementsrelatingtounfair,deceptive,orabusiveactsorpractices.
Competition
Thesmallbusinesslendingmarketiscompetitiveandfragmented.Weexpectcompetitiontocontinuetoincreaseinthefuture.
Webelievetheprincipalfactorsthatgenerallydetermineacompanyscompetitiveadvantageinourmarketincludethefollowing:

easeofprocesstoapplyforaloan

brandrecognitionandtrust

loanfeatures,includingrate,termandpaybackmethod

loanproductfitforbusinesspurpose

transparentdescriptionofkeyterms

effectivenessofcustomeracquisitionand

customerexperience.

Ourprincipalcompetitorsincludetraditionalbanks,legacymerchantcashadvanceproviders,andnewer,technologyenabled
lenders.
Facilities
OurcorporateheadquartersarelocatedinNewYork,NewYork,whereweleaseapproximately35,000squarefeetofoffice
spacepursuanttoaleaseexpiringin2023.Wealsoleaseapproximately11,000squarefeetofofficespaceinArlington,Virginiafor
ourunderwriting,servicing,collectionsandoperationsheadquartersunderaleasethatexpiresin2018andanapproximately12,500
squarefootsalesofficeinDenver,ColoradounderaleasethatexpiresinMarch2019.
LegalProceedings
Fromtimetotime,wemaybesubjecttolegalproceedingsandclaimsintheordinarycourseofbusiness,suchasproceedingsto
collectondelinquentloans.Wearenotcurrentlysubjecttoanymateriallegalproceedings.

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MANAGEMENT
ExecutiveOfficers,KeyEmployeesandDirectors
Thefollowingtablesetsforththenames,agesandpositionsofourexecutiveofficers,keyemployeesanddirectorsasof
September30,2014:

Name

ExecutiveOfficers
NoahBreslow(4)
JamesHobson
HowardKatzenberg
CoryKampfer

Age Position

39
38
36
37

ChiefExecutiveOfficerandChairman
ChiefOperatingOfficer
ChiefFinancialOfficer
GeneralCounsel

KeyEmployees
AndreaGellert
ZhengyuanLu
PamelaRice
PaulRosen
KrishnaVenkatraman

45
42
52
47
51

SeniorVicePresidentofMarketing
SeniorVicePresidentofCapitalMarkets
SeniorVicePresidentofTechnology
SeniorVicePresidentofSales
SeniorVicePresidentofAnalytics

NonEmployeeDirectors
JamesD.RobinsonIII(2)
DavidHartwig(1)(3)
J.SanfordMiller(2)(3)
JaneJ.Thompson(1)(4)
RonaldF.Verni(2)(3)
NeilE.Wolfson(1)(4)

78
41
65
63
66
50

LeadIndependentDirector
Director
Director
Director
Director
Director

(1)
(2)
(3)
(4)

Memberoftheauditcommittee
Memberofthecompensationcommittee
Memberofthecorporategovernanceandnominatingcommittee
Memberoftheriskmanagementcommittee

ExecutiveOfficers
NoahBreslowhasservedasourChiefExecutiveOfficerandChairmanofourboardofdirectorssinceJune2012andasour
ChiefOperatingOfficerfromOctober2011toJune2012,ourChiefProductOfficerfromOctober2009toSeptember2011,ourSenior
VicePresident,ProductsandTechnologyfromMarch2008toSeptember2009,andourVicePresident,ProductsandTechnology
fromJune2007toFebruary2008.Priortojoiningus,Mr.BreslowwasVicePresidentofMarketingandProductManagementfor
TacitNetworks,Inc.,aproviderofwideareanetworkoptimizationsolutions,fromDecember2003throughJanuary2007.
Mr.BreslowholdsanS.B.inComputerScienceandEngineeringfromtheMassachusettsInstituteofTechnologyandanM.B.A.with
distinctionfromHarvardBusinessSchool.
WebelieveMr.Breslowisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhissubstantialoperationaland
businessstrategyexpertisegainedfromservingasourChiefExecutiveOfficerandbecauseofhisextensiveexperienceinthe
technologyindustry.
JamesHobsonhasservedasourChiefOperatingOfficersinceJune2012andasourSeniorVicePresident,Strategic
PartnershipsandPlatformSolutionsfromJuly2011toJune2012.Priortojoiningus,Mr.HobsonwaswithIqor,Inc.,aglobal
businessprocessoutsourcingcompany,fromNovember2008toJuly2011,whereheservedinvariousexecutivepositions,most
recentlyasSeniorVicePresident,TechnologyOperations.Mr.HobsonholdsaB.A.inEconomicsfromHamiltonCollegeandan
M.B.A.withhighdistinctionfromHarvardBusinessSchool.

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HowardKatzenberghasservedasourChiefFinancialOfficersinceJune2012andhasledourfinancedepartmentsince2009.
FromMarch2008toOctober2009,heservedinvariousotherfinancialandstrategicrolesfortheCompany.Priortojoiningus,
Mr.KatzenbergwasaconsultantforSwiftFinancialCorporation,asmallbusinesslendingfirm,fromDecember2006toJanuary
2008.Inaddition,Mr.KatzenbergworkedatAmericanExpressCompany,whereheworkedinOPEN,itssmallbusinessdivision,as
wellasthecompanysventurecapitalgroupfrom2000to2004.Mr.KatzenbergholdsaB.S.inBusinessfromCornellUniversity
DysonSchoolofAppliedEconomicsandManagementandanM.B.A.fromtheWhartonSchooloftheUniversityofPennsylvania.
CoryKampferhasservedasourGeneralCounselsinceNovember2011.Priortojoiningus,Mr.Kampferwasanassociateat
Paul,Weiss,Rifkind,Wharton&GarrisonLLPfromFebruary2007toNovember2011.Mr.KampferholdsaB.B.A.inInternational
BusinessfromtheUniversityofGeorgia,wherehegraduatedFirstinClass,anM.B.A.fromDukesFuquaSchoolofBusinessanda
J.D.fromtheDukeUniversitySchoolofLaw.
KeyEmployees
AndreaGellerthasservedasourSeniorVicePresidentofMarketingsinceNovember2012.Priortojoiningus,Ms.Gellertwas
VicePresidentofClientServicesandOperationsatGroupCommerceInc.,anecommerceplatformforpublishers,fromSeptember
2011toOctober2012.FromJuly2008toSeptember2011,Ms.GellertservedasVicePresident,CustomerExperienceandRetention,
OPENatAmericanExpressCompany,amultinationalfinancialservicescompany.Ms.GellertholdsanA.B.inHistoryand
LiteraturefromHarvardCollege,magnacumlaude,andanM.B.A.fromtheKelloggGraduateSchoolofManagementat
NorthwesternUniversity.
ZhengyuanLuhasservedasourSeniorVicePresidentofCapitalMarketssinceApril2013.Priortojoiningus,Mr.Luwasthe
ManagingDirectorofCapitalMarketsatRayemarkInvestmentManagementfromFebruary2009toSeptember2012whenitwas
acquiredbyGleacher&CompanywhereheservedasManagingDirectorofAssetFinanceBankinguntilMarch2013.From2007to
2009,hewastheManagingDirectorandheadofStructuredProductsatKeefe,Bruyette&Woods.Mr.LuholdsaB.S.inEconomics
andComputerSciencefromMiddleburyCollege,andwaselectedPhiBetaKappa.
PamelaRicehasservedasourSeniorVicePresidentofTechnologysinceMarch2014.Priortojoiningus,Ms.Ricewasanearly
seniortechnologistandledcreditproductdevelopmentatBillMeLater,Inc.fromJuly2005untilitwasacquiredbyPayPal,Inc.,a
subsidiaryofeBay,Inc.inOctober2008.SheledCreditUnderwritingincludingGlobalCreditTechnologyatPayPal,Inc.,from
October2008toFebruary2014.Ms.RiceholdsaB.A.fromtheUniversityofHawaii,anM.S.inInformationSystemsfromJohns
HopkinsUniversityandanExecutiveM.B.A.fromLoyolaUniversity.
PaulRosenhasservedasourSeniorVicePresidentofSalessinceMay2011.Priortojoiningus,Mr.RosenwasVicePresident
ofSalesforOvationPayrollServices,apayrolloutsourcingcompany,fromMarch2003toMay2011.Mr.RosenholdsaB.S.in
MarketingfromIllinoisStateUniversityandanM.B.A.fromtheUniversityofChicago.
KrishnaVenkatramanhasservedasourSeniorVicePresidentofAnalyticssinceOctober2013.Priortojoiningus,
Mr.VenkatramanwasChiefScientistatCalmsea,Inc.,aproviderofsocialcustomeranalyticstodigitalmarketers,fromOctober2012
toOctober2013.FromNovember2008toSeptember2012,Mr.VenkatramanwasDirector,AdvancedDataSciences,atIntuitInc.,a
financialandtaxpreparationsoftwarecompany.Mr.VenkatramanholdsaBachelorofEngineeringfromtheCollegeofEngineering,
Pune,India,anM.S.inOperationsResearchfromtheUniversityofTexasatAustinandaPh.D.inIndustrialEngineeringfrom
StanfordUniversity.
BoardofDirectors
JamesD.RobinsonIIIisourleadindependentdirectorandhasservedasamemberofourboardofdirectorssinceDecember
2007.Mr.RobinsonhasbeenaGeneralPartnerofRREVentures,aventurecapitalfirmhe

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cofounded,andourlargeststockholder,sinceAugust1994.HealsoservesasPresidentofJ.D.Robinson,Inc.,astrategicadvisory
firm.Mr.RobinsonservedasnonexecutiveChairmanoftheBoardofBristolMyersSquibbCompanyfromJune2005toMay2008.
PriortojoiningBristolMyersSquibb,Mr.RobinsonservedasChairmanandChiefExecutiveOfficerofAmericanExpressCompany
formorethansixteenyears.HecurrentlyservesasadirectoroftheCocaColaCompany,amultinationalbeveragecompany.
Mr.RobinsonholdsaB.S.inIndustrialManagementfromGeorgiaInstituteofTechnologyandanM.B.A.fromHarvardBusiness
School.
WebelieveMr.Robinsonisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhissubstantialpubliccompany
leadershipandcorporategovernanceexperience,highleveloffinancialliteracy,anddistinguishedcareerinthebanking,financeand
venturecapitalindustries,includingover20yearsofexperienceatAmericanExpressCompany.
DavidHartwighasservedasamemberofourboardofdirectorssinceDecember2010.SinceJanuary2011,Mr.Hartwighas
beenaManagingDirectorofSapphireVentures(f/k/aSAPVentures),aventurecapitalfirmhejoinedinNovember2006.
Mr.HartwigholdsaB.S.E.inOperationsResearchwithhonorsfromPrincetonUniversityandanM.B.A.fromtheUniversityof
California,Berkeley.
WebelieveMr.Hartwigisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhissignificantcorporatefinance
andbusinessexpertisegainedfromhisexperienceintheventurecapitalindustry,includinghistimespentservingontheboardsof
directorsofvariousprivatetechnologycompanies.
J.SanfordMillerhasservedasamemberofourboardofdirectorssinceFebruary2013.SinceApril2006,Mr.Millerhasbeena
GeneralPartnerofInstitutionalVenturePartners,orIVP,aventurecapitalfirm.PriortojoiningIVP,Mr.MillerwasaSeniorPartner
with3i,aventurecapitalfirm,fromJuly2001toApril2006.Earlierinhiscareer,Mr.Millerwasatechnologyinvestmentbanker,
managementconsultantandcorporatelawyer.Mr.MillerpreviouslyservedasamemberoftheboardofdirectorsforVonage
Holdings,Corp.,aproviderofbroadbandphoneservices,andFleetMaticsGroupPLC,aproviderofGPStrackingapplications,and
currentlyservesasamemberoftheboardofdirectorsofCare.com,Inc.,anonlinemarketplaceforcareproviders.Mr.Millerholdsa
B.A.inSpeechandDramafromtheUniversityofVirginiaandanM.B.A.andJ.D.fromStanfordUniversity.
WebelieveMr.Millerisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhisextensivecorporategovernance,
corporatefinanceandbusinessdevelopmentexpertisegainedfromhisdistinguishedcareerintheventurecapitalandtechnology
industriesandfromhisexperienceservingontheboardsofseveralpubliccompanies.
JaneJ.ThompsonhasservedasamemberofourboardofdirectorssinceAugust2014.Ms.ThompsonhasbeentheChief
ExecutiveOfficerofJaneJ.ThompsonFinancialServicesLLC,amanagementconsultingfirmthatshefounded,sinceJuly2011.Ms.
ThompsonservedasPresident,FinancialServices,ofWalMartStores,Inc.,fromMay2002toJune2011.Previously,sheledtheSears
Credit,SearsHomeServicesandSearsOnlinegroupswithinSears,Roebuck&Company,andwasapartnerwithMcKinsey&
Company,Inc.advisingconsumercompanies.ShecurrentlyservesasadirectorofTheFreshMarket,Inc.,aspecialtyfoodretailer,
NavientCorporation,aloanmanagement,servicingandassetrecoverycompany,andVeriFoneSystems,Inc.,aproviderofelectronic
paymentsolutions.ShehasalsoservedasanadvisortotheConsumerFinancialProtectionBureausinceSeptember2012.Ms.
ThompsonholdsaB.B.A.inMarketingfromtheUniversityofCincinnatiandanM.B.A.fromHarvardBusinessSchool.
WebelieveMs.Thompsonisqualifiedtoserveasamemberofourboardofdirectorsbecauseofherexperienceinmassmarket
consumerfinancialservicesandover30yearsinseniorexecutiveandmanagementpositionswithlarge,publiclytradedcompanies,
combinedwithadditionalleadershiprolesservingasadvisortoregulatoryandnotforprofitagencies.Thisexperience,aswellasMs.
Thompsonsserviceasadirectorofpubliccompanies,enableshertobringexpertiseintheareasofoperationandfinance,financial
servicesandconsumerinsights.

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RonaldF.VernihasservedasamemberofourboardofdirectorssinceMay2012.Mr.Vernihasmentoredstartupcompaniesand
workedwithhightechnologyincubatorentitiessinceJuly2008.HepreviouslyservedasChiefExecutiveOfficerofCorrigo,Inc.,a
softwareasaservice,orSaaS,company,fromJanuary2008toJune2008.FromSeptember1999toOctober2007,Mr.Verniwas
PresidentandChiefExecutiveOfficerofSageSoftware,Inc.,amanagementandsoftwareservicescompany,andamemberofthe
boardofdirectorsoftheSageGroup,plc.Mr.VernicurrentlyservesontheboardofdirectorsofCranewareplc.Mr.VerniholdsaB.S.
inEngineeringandManagementfromClarksonUniversity.
WebelieveMr.Verniisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhispubliccompanyleadershipand
corporategovernanceexperienceandhisbusinessstrategyexpertisegainedfromhissubstantialexperienceinthetechnology
industry.
NeilE.WolfsonhasservedasamemberofourboardofdirectorssinceApril2011.SinceJanuary2009,Mr.Wolfsonhasbeen
PresidentofSFCapitalGroup,LLC,aninvestmentfirm.FromJuly2004toDecember2008,Mr.WolfsonservedasChiefInvestment
OfficerandPresidentofWilmingtonTrustInvestmentManagement,aninvestmentmanagementfirm.Earlierinhiscareer,
Mr.WolfsonwasapartneratKPMGLLP,anaudit,taxandadvisoryservicesfirm,andtheChiefInvestmentOfficeroftheAnalytical
InvestmentStrategiesGroupandManagingDirectorofthePRIMEAssetConsultingGroupatKidder,PeabodyandCo.,asecurities
firm.Mr.WolfsonisacharteredfinancialanalystandholdsaB.S.inManagementandanM.B.A.inFinancefromNewYork
University.
WebelieveMr.Wolfsonisqualifiedtoserveasamemberofourboardofdirectorsbecauseofhisextensivecorporatefinance
experiencegainedfromhistimeintheinvestmentmanagementindustry.
BoardComposition
Ourbusinessandaffairsaremanagedunderthedirectionofourboardofdirectors.Pursuanttoourcurrentcertificateof
incorporationandamendedandrestatedvotingagreement,ourcurrentdirectorswereelectedasfollows:

J.SanfordMillerwaselectedasthedesigneenominatedbyholdersofamajorityofsharesofourSeriesDconvertible
preferredstockownedbycertainpartiestoouramendedandrestatedvotingagreement

DavidHartwigwaselectedasoneofthedesigneesoftheholdersofourSeriesCconvertiblepreferredstock

NeilWolfsonwaselectedasoneofthedesigneesoftheholdersofourSeriesCconvertiblepreferredstock

JamesD.RobinsonIIIwaselectedasthedesigneeoftheholdersofourSeriesBconvertiblepreferredstock

JaneJ.ThompsonwaselectedasthedesigneeoftheholdersofourSeriesAconvertiblepreferredstock

NoahBreslowwaselectedasthedesigneereservedforthepersonservingasourChiefExecutiveOfficerand

RonaldF.Verniwaselectedasoneofthedesigneesoftheholdersofourconvertiblepreferredstockandcommonstock.

Ouramendedandrestatedvotingagreementwillterminateandtheprovisionsofourcurrentcertificateofincorporationby
whichourdirectorswereelectedwillbeamendedandrestatedinconnectionwiththisoffering.Thenumberofdirectorswillbefixed
byourboardofdirectors,subjecttothetermsofouramendedandrestatedcertificateofincorporationandamendedandrestated
bylawsthatwillbecomeeffectiveimmediatelypriortothecompletionofthisoffering.Uponthecompletionofthisoffering,our
boardofdirectorswillconsistofsevendirectors,sixofwhomwillqualifyasindependentundertheNewYorkStockExchange
listingstandards.
Inaccordancewithouramendedandrestatedcertificateofincorporationandouramendedandrestatedbylaws,immediately
afterthecompletionofthisofferingourboardofdirectorswillbedividedintothreeclasses

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withstaggeredthreeyearterms.Onlyoneclassofdirectorswillbeelectedateachannualmeetingofourstockholders,withtheother
classescontinuingfortheremainderoftheirrespectivethreeyearterms.Ourdirectorswillbedividedamongthethreeclassesas
follows:

theClassIdirectorswillbeDavidHartwigandNeilWolfson,andtheirtermswillexpireattheannualmeetingof
stockholderstobeheldin2015

theClassIIdirectorswillbeJ.SanfordMillerandJamesD.RobinsonIII,andtheirtermswillexpireattheannualmeeting
ofstockholderstobeheldin2016and

theClassIIIdirectorswillbeNoahBreslow,JaneJ.ThompsonandRonaldVerni,andtheirtermswillexpireattheannual
meetingofstockholderstobeheldin2017.

Thedivisionofourboardofdirectorsintothreeclasseswithstaggeredthreeyeartermsmaydelayorpreventachangeofour
managementorachangeofcontrol.UnderDelawarelaw,ourdirectorsmayberemovedforcausebytheaffirmativevoteofthe
holdersofamajorityofourvotingstock.
Anyincreaseordecreaseinthenumberofdirectorswillbedistributedamongthethreeclassessothat,asnearlyaspossible,
eachclasswillconsistofonethirdofthedirectors.
Thisclassificationofourboardofdirectorsmayhavetheeffectofdelayingorpreventingchangesincontrolofourcompany.
DirectorIndependence
Ourboardofdirectorshasundertakenareviewoftheindependenceofeachdirector.Basedoninformationprovidedbyeach
directorconcerninghisorherbackground,employmentandaffiliations,ourboardofdirectorsdeterminedthatMs.Thompsonand
Messrs.Robinson,Hartwig,Miller,VerniandWolfsondonothavearelationshipthatwouldinterferewiththeexerciseof
independentjudgmentincarryingouttheresponsibilitiesofadirectorandthateachofthesedirectorsisindependentasthattermis
definedundertheapplicablerulesandregulationsoftheSECandthelistingrequirementsandrulesoftheNewYorkStock
Exchange.Inmakingthesedeterminations,ourboardofdirectorsconsideredthecurrentandpriorrelationshipsthateachnon
employeedirectorhaswithourcompanyandallotherfactsandcircumstancesourboardofdirectorsdeemedrelevantindetermining
theirindependence,includingthebeneficialownershipofourcapitalstockbyeachnonemployeedirector,andthetransactions
involvingthemdescribedinthesectiontitledCertainRelationshipsandRelatedPartyandOtherTransactions.
BoardCommittees
Ourboardofdirectorscurrentlyhasanauditcommittee,acompensationcommittee,acorporategovernanceandnominating
committeeandariskmanagementcommittee.Thecompositionandresponsibilitiesofeachofthecommitteesofourboardof
directorsisdescribedbelow.Memberswillserveonthesecommitteesuntiltheirresignationoruntilotherwisedeterminedbyour
boardofdirectors.
AuditCommittee
Ourauditcommittee,establishedinFebruary2008,iscomprisedofNeilE.Wolfson,DavidHartwigandJaneJ.Thompson.
Mr.Wolfsonservesasourauditcommitteechairperson.NeilE.Wolfson,DavidHartwigandJaneJ.Thompsonmeettherequirements
forindependenceofauditcommitteemembersundercurrentNewYorkStockExchangelistingstandardsandSECrulesand
regulations.Eachmemberofourauditcommitteemeetsthefinancialliteracyrequirementsofthecurrentlistingstandards.Weexpect
tosatisfythememberindependencerequirementsfortheauditcommitteepriortotheendofthetransitionperiodprovidedunder
currentNewYorkStockExchangelistingstandardsandSECrulesandregulationsforcompaniescompletingtheirinitialpublic

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offering.Inaddition,ourboardofdirectorshasdeterminedthatMr.Wolfsonisanauditcommitteefinancialexpertwithinthe
meaningofItem407(d)ofRegulationSKundertheSecuritiesActof1933,asamended,ortheSecuritiesAct.Theresponsibilitiesof
ourauditcommitteeinclude,amongotherthings:

selectingandhiringtheindependentregisteredpublicaccountingfirmtoauditourfinancialstatements

helpingtoensuretheindependenceandperformanceoftheindependentregisteredpublicaccountingfirm

approvingauditandnonauditservicesandfees

reviewingfinancialstatementsanddiscussingwithmanagementandtheindependentregisteredpublicaccountingfirmour
annualauditedandquarterlyfinancialstatements,theresultsoftheindependentauditandthequarterlyreviews,andthe
reportsandcertificationsregardinginternalcontrolsoverfinancialreportinganddisclosurecontrols

preparingtheauditcommitteereportthattheSECrequirestobeincludedinourannualproxystatement

reviewingreportsandcommunicationsfromtheindependentregisteredpublicaccountingfirm

reviewingtheadequacyandeffectivenessofourinternalcontrolsanddisclosurecontrolsandprocedures

overseeingourinternalauditfunction

reviewingrelatedpartytransactionsand

establishingandoverseeingproceduresforthereceipt,retentionandtreatmentofaccountingrelatedcomplaintsandthe
confidentialsubmissionbyouremployeesofconcernsregardingquestionableaccountingorauditingmatters.

Ourauditcommitteewilloperateunderawrittencharter,tobeeffectivepriortothecompletionofthisoffering,thatsatisfiesthe
applicablerulesoftheSECandthelistingstandardsoftheNewYorkStockExchange.Weintendtocomplywithfuturerequirements
totheextenttheybecomeapplicabletous.
CompensationCommittee
Ourcompensationcommittee,establishedinFebruary2008,iscomprisedofJamesD.RobinsonIII,J.SanfordMillerand
RonaldF.Verni.Mr.Robinsonservesasourcompensationcommitteechairperson.Thecompositionofourcompensationcommittee
meetstherequirementsforindependenceundercurrentlistingstandardsoftheNewYorkStockExchangeandSECrulesand
regulations.Eachmemberofthecompensationcommitteeisalsoanonemployeedirector,asdefinedpursuanttoRule16b3
promulgatedundertheExchangeAct,andanoutsidedirector,asdefinedpursuanttoSection162(m)oftheInternalRevenueCode,as
amended,ortheCode.Thepurposeofourcompensationcommitteeistooverseeourcompensationpolicies,plansandbenefit
programsandtodischargetheresponsibilitiesofourboardofdirectorsrelatingtocompensationofourexecutiveofficersand
employees.Theresponsibilitiesofourcompensationcommitteeinclude,amongotherthings:

overseeingouroverallcompensationphilosophyandcompensationpolicies,plansandbenefitprograms

reviewingandapprovingforourexecutiveofficers:theannualbasesalary,annualincentivebonus(includingthespecific
goalsandamounts),equitycompensation,employmentagreements,severanceagreements,changeincontrolarrangements,
andanyotherbenefits,compensationorarrangements

totheextentdeterminedappropriatebythecompensationcommittee,reviewing,approvingand/ormaking
recommendationstoourboardofdirectorswithrespecttoemployeecompensationandoverseeingequitycompensationfor
ourserviceproviders

preparingthecompensationcommitteereportthattheSECrequirestobeincludedinourannualproxystatementand

administeringourequitycompensationplans.

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Ourcompensationcommitteewilloperateunderawrittencharter,tobeeffectivepriortothecompletionofthisoffering,that
satisfiestheapplicablerulesoftheSECandthelistingstandardsoftheNewYorkStockExchange.Weintendtocomplywithfuture
requirementstotheextenttheybecomeapplicabletous.
CorporateGovernanceandNominatingCommittee
Ourcorporategovernanceandnominatingcommittee,establishedinSeptember2014,iscomprisedofJ.SanfordMiller,David
HartwigandRonaldF.Verni.Mr.Millerservesasourcorporategovernanceandnominatingcommitteechairperson.Thecomposition
ofourcorporategovernanceandnominatingcommitteemeetstherequirementsforindependenceundercurrentNewYorkStock
ExchangelistingstandardsandSECrulesandregulations.Theresponsibilitiesofourcorporategovernanceandnominating
committeeinclude,amongotherthings:

identifying,evaluatingandselecting,ormakingrecommendationstoourboardofdirectorsregarding,nomineesfor
electiontoourboardofdirectorsanditscommittees

consideringandmakingrecommendationstoourboardofdirectorsregardingthecompositionofourboardofdirectorsand
itscommittees

reviewingdevelopmentsincorporategovernancepractices

evaluatingtheadequacyofourcorporategovernancepracticesandreporting

developingandmakingrecommendationstoourboardofdirectorsregardingourcorporategovernanceguidelines

reviewingthesuccessionplanningforeachofourexecutiveofficers

evaluatingtheperformanceofourboardofdirectorsandofindividualdirectorsand

reviewingandmakingrecommendationstoourboardofdirectorsregardingdirectorcompensation.

Ourcorporategovernanceandnominatingcommitteewilloperateunderawrittencharter,tobeeffectivepriortothecompletion
ofthisoffering,thatsatisfiestheapplicablerulesoftheSECandthelistingstandardsoftheNewYorkStockExchange.Weintendto
complywithfuturerequirementstotheextenttheybecomeapplicabletous.
RiskManagementCommittee
Ourriskmanagementcommittee,establishedinSeptember2014,iscomprisedofNoahBreslow,JaneJ.ThompsonandNeilE.
Wolfson.Mr.Breslowservesasourriskmanagementcommitteechairperson.Theresponsibilitiesofourriskmanagementcommittee
include,amongotherthings:

overseeingourriskgovernanceframeworkandreviewingourpoliciesandpracticesonriskassessmentandrisk
management

reviewingmanagementsimplementationofriskpoliciesandprocedurestoassesstheireffectiveness

reviewingourriskappetiteandrisktolerance,methodsofriskmeasurement,risklimits,andtheguidelinesformonitoring
andmitigatingsuchrisks

reviewingwithmanagementthecategoriesofriskweface,includingriskconcentrationsandriskinterrelationships,
likelihoodofoccurrence,andpotentialimpact

evaluatingreportsregardingourrisks,ourmanagementfunction,andtheresultsofriskmanagementreviewsand
assessmentsand

reviewinganddiscussingwithmanagementourrisks,ourmanagementfunctionanditseffectiveness,andcoordinating
withmanagementsubcommitteesregardingoversightofcertaincategoriesofriskdeterminedbytheriskmanagement
committee.

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Ourriskmanagementcommitteewilloperateunderawrittencharterthatwillbeeffectivepriortothecompletionofthis
offering.
CodeofBusinessConductandEthics
Wehaveadoptedacodeofbusinessconductandethicsthatisapplicabletoallofouremployees,officersanddirectors,
includingourChiefExecutiveOfficer,ChiefFinancialOfficerandotherexecutiveandseniorfinancialofficers.TheCodeofBusiness
ConductandEthicswillbeavailableonourwebsiteatwww.ondeck.com.Weexpectthatanyamendmentstothecode,orany
waiversofitsrequirements,willbedisclosedonourwebsite.
CompensationCommitteeInterlocksandInsiderParticipation
DuringtheyearendedDecember31,2013,onememberofourcompensationcommittee,Mr.Breslow,ourChiefExecutive
Officer,wasanemployee.Nocurrentmemberofourcompensationcommitteehaseverbeenanexecutiveofficeroremployeeofours.
Noneofourexecutiveofficerscurrentlyserve,orhaveservedduringthelastcompletedyear,onthecompensationcommitteeor
boardofdirectorsofanyotherentitythathasoneormoreexecutiveofficersservingasamemberofourboardofdirectorsor
compensationcommittee.
NonEmployeeDirectorCompensation
IntheyearendedDecember31,2013,wedidnotpayanyfeesto,makeanyequityawardsornonequityawardstoorpayany
othercompensationtothenonemployeemembersofourboardofdirectors.DuringtheyearendedDecember31,2013,onedirector,
Mr.Breslow,ourChiefExecutiveOfficer,wasanemployee.Mr.BreslowscompensationisdiscussedinthesectiontitledExecutive
Compensation.
Ourboardofdirectorshasgrantedequityawardsfromtimetotimetotwoofournonemployeedirectorsascompensationfor
theirserviceasdirectors.OnJune13,2012,wegrantedMr.Vernianoptiontopurchase75,000sharesofourcommonstockatan
exercisepriceof$0.85pershare.OnefourthofthesharessubjecttotheoptionvestedonMay13,2013andonefortyeighthofthe
sharesvestinequalmonthlyinstallmentsthereafter.IfMr.Verniisterminatedfromhispositionasadirectorinconnectionwitha
changeofcontrol,thesharessubjecttotheoptionwillfullyvest.
OnAugust15,2014,wegrantedMs.Thompsonanoptiontopurchase30,000sharesofourcommonstockatanexerciseprice
of$21.32pershareinconnectionwithherappointmentasadirector.Theoptionwillvestin48equalmonthlyinstallments.If
Ms.Thompsonisterminatedfromherpositionasadirectorinconnectionwithachangeincontrol,thesharessubjecttotheoption
willfullyvest.Inaddition,Ms.Thompsonwillreceiveanannualcashretainerof$40,000forherserviceasadirector,tobepaid
quarterly.
OutsideDirectorCompensationPolicy
InOctober2014,ourboardofdirectorsapprovedourOutsideDirectorCompensationPolicy.Membersofourboardofdirectors
whoarenotemployeesareeligibleforawardsundertheOutsideDirectorCompensationPolicy.TheOutsideDirectorCompensation
Policyiseffectiveasoftheeffectivedateoftheregistrationstatementofwhichthisprospectusformsapart.
UndertheOutsideDirectorCompensationPolicy,outsidedirectorswillreceivecompensationintheformofequityandcash,as
describedbelow:
CashCompensation
Eachyear,eachoutsidedirectorwillreceiveacashretainerof$30,000forservingontheboardofdirectors.

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Thechairpersonsandnonchairmembersoftheboardsfourstandingcommitteeswillbeentitledtothefollowingcashretainers
eachyear(paidquarterly):

BoardCommittee

AuditCommittee
CompensationCommittee
RiskManagementCommittee
NominatingandGovernanceCommittee

Chairperson
Retainer

Non
ChairMember
Retainer

17,000
10,000
10,000
6,000

7,500
5,000
5,000
2,500

EquityCompensation
Uponjoiningtheboard,eachnewlyelectedoutsidedirectorwillreceiveanequityawardofeitherstockoptionsorrestricted
stockunitswithagrantdatefairvalueof$330,000.Thisawardwillvestgenerallyoverafouryearperiod,subjecttocontinued
servicethrougheachvestingdate.
Onthedateofeachannualmeetingofourstockholdersbeginningwithour2015annualmeeting,eachoutsidedirectorwill
receiveanequityawardofeitherstockoptionsorrestrictedstockunitswithagrantdatefairvalueof$150,000.Thisawardwillfully
vestupontheearlierofthe12monthanniversaryofthegrantdateorthenextannualmeeting,ineachcase,subjecttocontinued
servicethroughthevestingdate.
Notwithstandingthevestingschedulesdescribedabove,thevestingofeachequityawardwillaccelerateinfulluponachange
incontrol.

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EXECUTIVECOMPENSATION
Ournamedexecutiveofficersfor2013,whichconsistofourprincipalexecutiveofficerandthenexttwomosthighly
compensatedexecutiveofficers,are:

NoahBreslow,ourChiefExecutiveOfficer

JamesHobson,ourChiefOperatingOfficerand

HowardKatzenberg,ourChiefFinancialOfficer.

SummaryCompensationTable
Thefollowingtableprovidesinformationregardingthecompensationofournamedexecutiveofficersduringtheyearended
December31,2013.

NameandPrincipalPosition

NoahBreslow
ChiefExecutiveOfficer
JamesHobson
ChiefOperatingOfficer
HowardKatzenberg
ChiefFinancialOfficer

Year

Salary

Bonus

NonEquity
Option
IncentivePlan
Awards(1) Compensation(2)

2013 $265,000(4) $
$406,885 $

2013 273,125(5)
42,915

2013 233,336(7) 65,000(8) 237,885

AllOther
Compensation(3)

144,000 $

197,080(6)

94,139

Total

44 $815,929

44 513,164

44 630,404

(1) TheamountsintheOptionAwardscolumnreflecttheaggregategrantdatefairvalueofoptionawardsgrantedduring2013
computedinaccordancewithFASBASCTopic718.Theassumptionsthatweusedtocalculatetheseamountsarediscussedin
Note2toourfinancialstatementsincludedattheendofthisprospectus.AsrequiredbySECrules,theamountsshownexclude
theimpactofestimatedforfeituresrelatedtoservicebasedvestingconditions.
(2) Thereportedamountsrepresentpaymentsearnedunderthe2013AnnualIncentivePlanasdiscussedunderthesectionbelow
titled2013AnnualIncentivePlan.
(3) Thereportedamountsrepresentamountspaidonbehalfofthenamedexecutiveofficersforbasiclifeinsurance.
(4) Mr.Breslowsannualsalarywasincreasedto$300,000effectiveAugust2013.
(5) Mr.Hobsonsannualsalarywasincreasedto$275,000effectiveFebruary2013.
(6) Thereportedamountincludes$83,786earnedunderMr.Hobsonscommissionarrangementasdiscussedunderthesectiontitled
ExecutiveEmploymentArrangementsJamesHobson.
(7) Mr.Katzenbergsannualsalarywasincreasedto$250,000effectiveSeptember2013.
(8) Mr.Katzenbergreceivedadiscretionaryspotbonusforcertainachievementsduring2013.
ExecutiveEmploymentArrangements
NoahBreslow
WeenteredintoaconfirmatoryofferletterwithNoahBreslow,ourChiefExecutiveOfficer.Theofferletterhasnospecificterm
andprovidesthatMr.Breslowisanatwillemployee.Mr.Breslowsannualbasesalarywas$300,000fromAugust2013until
September2014,duringwhichtimehewaseligibleforannualincentivepaymentsatatargetlevelof$180,000.Effective
September1,2014,Mr.Breslowsannualbasesalarywasincreasedto$315,000,andheiseligibleforannualincentivepaymentsata
targetlevelof$236,250.Inaddition,weenteredintoaseveranceandchangeincontrolagreementwithMr.Breslow.

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JamesHobson
WeenteredintoaconfirmatoryofferletterwithJamesHobson,ourChiefOperatingOfficer.Theofferletterhasnospecificterm
andprovidesthatMr.Hobsonisanatwillemployee.Mr.Hobsonsannualbasesalarywas$275,000fromFebruary2013until
September2014duringwhichtimehewaseligibleforannualincentivepaymentsatatargetlevelof$123,750.Effective
September1,2014,Mr.Hobsonsannualbasesalarywasincreasedto$300,000,andheiseligibleforannualincentivepaymentsata
targetlevelof$150,000.Inaddition,weenteredintoaseveranceandchangeincontrolagreementwithMr.Hobson.
Mr.Hobsonhadanindividualcommissionarrangementforaportionof2013.Pursuanttohisindividualcommission
arrangement,Mr.Hobsonreceivedapaymentof$83,786,whichwasequaltoacertainpercentageofnetrevenueofloansoriginated
throughourplatformchannelin2013.ThiscommissionamountisincludedintheNonEquityIncentivePlanCompensation
columnoftheSummaryCompensationTable.ThiscommissionarrangementceasedinAugust2013.
HowardKatzenberg
WeenteredintoaconfirmatoryofferletterwithHowardKatzenberg,ourChiefFinancialOfficer.Theofferletterhasnospecific
termandprovidesthatMr.Katzenbergisanatwillemployee.Mr.Katzenbergsannualbasesalarywas$250,000fromSeptember
2013untilSeptember2014,duringwhichtimehewaseligibleforannualincentivepaymentsatatargetlevelof$100,000.Effective
September1,2014,Mr.Katzenbergsannualbasesalarywasincreasedto$275,000,andheiseligibleforannualincentivepayments
atatargetlevelof$137,500.Inaddition,weenteredintoaseveranceandchangeincontrolagreementwithMr.Katzenberg.
2013AnnualIncentivePlan
For2013,ournamedexecutiveofficersreceivednonequityincentiveplancompensationunderour2013AnnualIncentivePlan
basedonachievementagainstcompanyandpersonalobjectives.PayoutsweremadebiannuallyinAugust2013andFebruary2014
basedonperformancefortwosemiannualperiods.Theamountofthepayoutstoournamedexecutiveofficerswassolelymeasured
basedoncompanyperformanceasournamedexecutiveofficersweredeemedtoachieveamedianpersonalperformancegrade.Each
namedexecutiveofficerwascappedatannualpaymentsof120%ofhistargetamount.Thecompanyobjectivesfor2013were
financialmetrics(includingtotalunits,newunits,originationvolume,operatingincomeandrevenue)andkeycompanygoals
(includinggrowthandexpansionmilestones).Forthefirsthalfof2013,eachnamedexecutiveofficerreceivednonequityincentive
plancompensationequalto100%ofhissemiannualtarget.Forthesecondhalfof2013,eachnamedexecutiveofficerreceivednon
equityincentiveplancompensationequalto120%ofhissemiannualtarget.Theaggregateamountofnonequityincentiveplan
compensationpaidtoeachnamedexecutiveofficerfor2013issetforthintheNonEquityIncentivePlanCompensationcolumnof
theSummaryCompensationTable.Aparticipantmustgenerallybeemployedatthetimeanawardispaidinordertoreceivea
payment.

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OutstandingEquityAwardsatFiscalYearEnd
Thefollowingtablepresentscertaininformationconcerningequityawardsheldbyournamedexecutiveofficersattheendof
thefiscalyearendedDecember31,2013.

Name

NoahBreslow

JamesHobson
HowardKatzenberg

Numberof
Securities
Underlying
Unexercised
Options
(#)
Exercisable

09/09/2008(1)
02/12/2010(2)
10/06/2011(2)
06/26/2012(2)
08/01/2013(2)
07/11/2011(2)
06/26/2012(2)
09/01/2013(2)
11/16/2009(1)
02/12/2010(2)
12/08/2011(2)
10/25/2013(2)

207,996
62,291
110,500
175,182

67,250
21,897

1,250

Grant
Date

OptionAwards
Numberof
Securities
Underlying
Unexercised
Options
(#)
Unexercisable

2,709
93,500
291,970
475,000
80,750
36,497
50,000

2,500
65,000
75,000

Option
Exercise
Price
($)

0.53
0.53
0.75
0.85
1.36
0.75
0.85
1.36
0.53
0.53
0.75
1.36

Option
Expiration
Date

09/09/2018
02/12/2020
10/06/2021
06/26/2022
08/01/2023
07/11/2021
06/26/2022
09/01/2023
11/16/2019
02/12/2020
12/08/2021
10/25/2023

(1) Sharessubjecttotheoptionarefullyvestedandexercisable.
(2) Onefourthofthesharessubjecttotheoptionvestedontheoneyearanniversaryofthegrantdateandonefortyeighthofthe
sharesvestmonthlythereafter,subjecttocontinuedservicetous.
PotentialPaymentsuponTerminationorChangeInControl
ChangeinControlandSeveranceAgreements
InOctober2014,ourcompensationcommitteeapprovedchangeincontrolandseveranceagreements,orchangeincontrol
agreements,forournamedexecutiveofficers,whichrequireustomakespecificpaymentsandbenefitsinconnectionwiththe
terminationoftheiremploymentundercertaincircumstances.Thesechangeincontrolagreementssupersededanyotheragreementor
arrangementrelatingtoseverancebenefitswiththesenamedexecutiveofficersoranytermsoftheiroptionagreementsrelatedto
vestingaccelerationorothersimilarseverancerelatedterms.Thedescriptionsthatfollowdescribesuchpaymentsandbenefitsthat
maybeowedbyustoeachofournamedexecutiveofficersuponthenamedexecutiveofficersterminationundercertain
circumstances.
Thechangeincontrolagreementsremainineffectforaninitialtermofthreeyears.Attheendoftheinitialterm,eachagreement
willautomaticallyrenewforanadditionaloneyearperiodunlesseitherpartyprovidesnoticeofnonrenewalwithin90dayspriorto
thedateofautomaticrenewal.Thechangeincontrolagreementsalsoacknowledgethateachexecutiveofficerisanatwillemployee,
whoseemploymentcanbeterminatedatanytime.
Inordertoreceivetheseverancebenefitsdescribedbelow,eachnamedexecutiveofficerisobligatedtoexecuteareleaseof
claimsagainstus,providedsuchreleaseofclaimsbecomeseffectiveandirrevocablenolaterthan60daysfollowingsuchnamed
executiveofficersterminationdate,andtocontinuetocomplywiththetermsofapplicableproprietaryagreementsandotherpost
employmentrestrictivecovenants.
Intheeventofaterminationofemploymentwithoutcause(asgenerallydefinedbelow)outsideofthechangeincontrol
period(asgenerallydefinedbelow),anamedexecutiveofficerwillreceivethefollowing:

continuedpaymentsofbasesalaryfor6months(or12monthsforourChiefExecutiveOfficer)
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paymentofthetargetbonusfortheyearoftermination,proratedbasedontimeserved

paidCOBRAbenefitsfor6months(or12monthsforourChiefExecutiveOfficer)and

forourChiefExecutiveOfficeronly,acceleratedvestingof50%ofourChiefExecutiveOfficersthenunvestedstock
options.

Intheeventofaterminationofemploymentwithoutcauseoraresignationforgoodreason(asgenerallydefinedbelow)
duringthechangeofcontrolperiod,anamedexecutiveofficerwillreceivethefollowing:

alumpsumpaymentof12monthsofbasesalary

alumpsumpaymentequalto100%ofthetargetbonus

paidCOBRAbenefitsfor12monthsand

100%accelerationofequityawards.

IntheeventanypaymenttooneofournamedexecutiveofficersissubjecttotheexcisetaximposedbySection4999ofthe
InternalRevenueCode(asaresultofapaymentbeingclassifiedasaparachutepaymentunderSection280GoftheInternal
RevenueCode),theexecutiveofficerwillbeentitledtoreceivesuchpaymentaswouldentitlehimtoreceivethegreatestaftertax
benefitofeitherthefullpaymentoralesserpaymentwhichwouldresultinnoportionofsuchseverancebenefitsbeingsubjectto
excisetax.
Forthepurposeoftheseveranceagreements,causemeansgenerallytheoccurrenceofanyofthefollowing:

anactofdishonestybyexecutiveinconnectionwithexecutivesresponsibilitiesasanemployee

theexecutivesconvictionof,orentryofapleaofguiltyornolocontendereto,afelonyoranycrimeinvolvingfraudor
embezzlement

theexecutivesgrossmisconduct

theunauthorizeduseordisclosurebytheexecutiveofourproprietaryinformationortradesecretsoranyotherpartyto
whomtheexecutiveowesanobligationofnondisclosureasaresultoftheexecutivesrelationshipwithus

theexecutiveswillfulbreachofanyobligationsunderanywrittenagreementorcovenantwithus

theexecutivesfailuretocooperatewithaninvestigationbyagovernmentalauthorityor

theexecutivescontinuedfailuretoperformhisdutiesafternoticeandacureperiod.

Forthepurposeofthechangeincontrolagreements,goodreasonmeansgenerallyanexecutivesvoluntarytermination
followingtheexpirationofanycureperiodfollowingtheoccurrenceofoneormoreofthefollowingwithouttheexecutives
consent:

amaterialreductionoftheexecutivesduties,authoritiesorresponsibilities

amaterialreductionoftheexecutivesbasesalaryor

amaterialchangeinthegeographiclocationofexecutivesprimaryworkfacilityorlocation.

Forthepurposeofthechangeincontrolagreements,changeincontrolperiodmeansgenerallytheperiodbeginningthree
monthspriorto,andending12monthsfollowing,achangeincontrol.
EmployeeBenefitandStockPlans
2014EquityIncentivePlan
Priortothisoffering,ourboardofdirectorsintendstoadopt,andweexpectourstockholderswillapprove,a2014Equity
IncentivePlan,or2014Plan.Our2014Planwillprovideforthegrantofincentivestockoptions,

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withinthemeaningofSection422oftheInternalRevenueCode,toouremployeesandanyparentandsubsidiarycorporations
employees,andforthegrantofnonstatutorystockoptions,restrictedstock,restrictedstockunits,stockappreciationrights,
performanceunitsandperformancesharestoouremployees,directorsandconsultantsandourparentandsubsidiarycorporations
employeesandconsultants.
AuthorizedShares.Themaximumaggregatenumberofsharesthatmaybeissuedunderthe2014Planis(i)sharesof
ourcommonstockplus(ii)sharesreturnedthatwouldotherwisereturntoourAmendedandRestated2007StockIncentivePlan,after
theeffectivenessofthe2014Plan,astheresultoftheexpirationorterminationofawards(providedthatthemaximumnumberof
sharesthatmaybeaddedtothe2014Planpursuantto(ii)isshares).Inaddition,thenumberofsharesavailableforissuanceunder
the2014Planwillalsoincludeanannualincreaseonthefirstdayofeachfiscalyearbeginninginfiscal2016andending
immediatelyfollowingfiscal2020,equaltotheleastof:

sharesofourcommonstock

4%oftheoutstandingsharesofourcommonstockasofthelastdayofourimmediatelyprecedingfiscalyear,whichis
referredtoasthethresholdpercentage

apercentageequaltothethresholdpercentage,plusthedifferencebetweenthethresholdpercentageandthepercentage
addedtothe2014Planforeachpriorfiscalyearor

suchotheramountasourboardofdirectorsmaydetermine.

Ifanawardexpiresorbecomesunexercisablewithouthavingbeenexercisedinfull,issurrenderedpursuanttoanexchange
program,or,withrespecttorestrictedstock,restrictedstockunits,performanceunitsorperformanceshares,isforfeitedtoor
repurchasedduetothefailuretovest,theunpurchasedshares(orforawardsotherthanstockoptionsorstockappreciationrights,the
forfeitedorrepurchasedshares)willbecomeavailableforfuturegrantorsaleunderthe2014Plan.Withrespecttostockappreciation
rights,thenetsharesissuedwillceasetobeavailableunderthe2014Planandallremainingshareswillremainavailableforfuture
grantorsaleunderthe2014Plan.Sharesusedtopaytheexercisepriceofanawardorsatisfythetaxwithholdingobligationsrelated
toanawardwillceasetobeavailableunderthe2014Plan.Totheextentanawardispaidoutincashratherthanshares,suchcash
paymentwillnotresultinreducingthenumberofsharesavailableforissuanceunderthe2014Plan.
PlanAdministration.Thecompensationcommitteeofourboardofdirectorswilladministerour2014Plan.Inthecaseofawards
intendedtoqualifyasperformancebasedcompensationwithinthemeaningofSection162(m)oftheInternalRevenueCode,the
compensationcommitteewillconsistoftwoormoreoutsidedirectorswithinthemeaningofSection162(m).Inaddition,ifwe
determineitisdesirabletoqualifytransactionsunderthe2014PlanasexemptunderRule16b3oftheSecuritiesExchangeActof
1934,asamended(Rule16b3),suchtransactionswillbestructuredtosatisfytherequirementsforexemptionunderRule16b3.
Subjecttotheprovisionsofour2014Plan,theadministratorhasthepowertoadministertheplan,includingbutnotlimitedto,the
powertointerpretthetermsofthe2014Planandawardsgrantedunderit,tocreate,amendandrevokerulesrelatingtothe2014Plan,
includingcreatingsubplans,andtodeterminethetermsoftheawards,includingtheexerciseprice,thenumberofsharessubjectto
eachsuchaward,theexercisabilityoftheawards,andtheformofconsideration,ifany,payableuponexercise.Theadministratoralso
hastheauthoritytoamendexistingawardstoreduceorincreasetheirexerciseprice,toallowparticipantstheopportunitytotransfer
outstandingawardstoafinancialinstitutionorotherpersonorentityselectedbytheadministrator,andtoinstituteanexchange
programbywhichoutstandingawardsmaybesurrenderedinexchangeforawardsofthesametypewhichmayhaveahigherorlower
exercisepriceordifferentterms,awardsofadifferenttypeand/orcash.
StockOptions.Stockoptionsmaybegrantedunderour2014Plan.Theexercisepriceofoptionsgrantedunderour2014Plan
mustatleastbeequaltothefairmarketvalueofourcommonstockonthedateofgrant.Thetermofanincentivestockoptionmay
notexceed10years,exceptthatwithrespecttoanyparticipantwhoowns

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morethan10%ofthevotingpowerofallclassesofouroutstandingstock,thetermmustnotexceedfiveyearsandtheexerciseprice
mustequalatleast110%ofthefairmarketvalueonthegrantdate.Theadministratorwilldeterminethemethodsofpaymentofthe
exercisepriceofanoption,whichmayincludecash,sharesorotherpropertyacceptabletotheadministrator,aswellasothertypesof
considerationpermittedbyapplicablelaw.Aftertheterminationofserviceofanemployee,directororconsultant,heorshemay
exercisehisorheroptionfortheperiodoftimestatedinhisorheroptionagreement.Generally,ifterminationisduetodeathor
disability,theoptionwillremainexercisablefor12months.Inallothercases,theoptionwillgenerallyremainexercisableforthree
monthsfollowingtheterminationofservice.However,innoeventmayanoptionbeexercisedaftertheexpirationofitsterm.Subject
totheprovisionsofour2014Plan,theadministratordeterminestheothertermsofoptions.
StockAppreciationRights.Stockappreciationrightsmaybegrantedunderour2014Plan.Stockappreciationrightsallowthe
recipienttoreceivetheappreciationinthefairmarketvalueofourcommonstockbetweentheexercisedateandthedateofgrant.
Stockappreciationrightsmaynothaveatermexceeding10years.Aftertheterminationofserviceofanemployee,directoror
consultant,heorshemayexercisehisorherstockappreciationrightfortheperiodoftimestatedinhisorherawardagreement.
However,innoeventmayastockappreciationrightbeexercisedlaterthantheexpirationofitsterm.Subjecttotheprovisionsofour
2014Plan,theadministratordeterminestheothertermsofstockappreciationrights,includingwhensuchrightsvestandbecome
exercisableandwhethertopayanyincreasedappreciationincashorwithsharesofourcommonstock,oracombinationthereof,
exceptthatthepershareexercisepriceforthesharestobeissuedpursuanttotheexerciseofastockappreciationrightwillbenoless
than100%ofthefairmarketvaluepershareonthedateofgrant.
RestrictedStock.Restrictedstockmaybegrantedunderour2014Plan.Restrictedstockawardsaregrantsofsharesofour
commonstockthatvestinaccordancewithtermsandconditionsestablishedbytheadministrator.Theadministratorwilldetermine
thenumberofsharesofrestrictedstockgrantedtoanyemployee,directororconsultantand,subjecttotheprovisionsofour2014
Plan,willdeterminethetermsandconditionsofsuchawards.Theadministratormayimposewhateverconditionstovestingit
determinestobeappropriate(forexample,theadministratormaysetrestrictionsbasedontheachievementofspecificperformance
goalsand/orcontinuedservicetous)provided,however,thattheadministrator,initssolediscretion,mayacceleratethetimeat
whichanyrestrictionswilllapseorberemoved.Recipientsofrestrictedstockawardsgenerallywillhavevotinganddividendrights
withrespecttosuchsharesupongrantwithoutregardtovesting,unlesstheadministratorprovidesotherwise.Sharesofrestricted
stockthatdonotvestaresubjecttoourrightofrepurchaseorforfeiture.
RestrictedStockUnits.Restrictedstockunitsmaybegrantedunderour2014Plan.Restrictedstockunitsarebookkeeping
entriesrepresentinganamountequaltothefairmarketvalueofoneshareofourcommonstock.Subjecttotheprovisionsofour2014
Plan,theadministratordeterminesthetermsandconditionsofrestrictedstockunits,includingthevestingcriteria(whichmayinclude
achievementofspecifiedperformancecriteriaand/orcontinuedservicetous)andtheformandtimingofpaymentprovided,
however,theadministrator,initssolediscretion,mayacceleratethetimeatwhichanyrestrictionswilllapseorberemoved.The
administratordetermines,initssolediscretion,whetheranawardwillbesettledinstock,cashoracombinationofboth.
PerformanceUnitsandPerformanceShares.Performanceunitsandperformancesharesmaybegrantedunderour2014Plan.
Performanceunitsandperformancesharesareawardsthatwillresultinapaymenttoaparticipantonlyifperformancegoals
establishedbytheadministratorareachievedandanyotherapplicablevestingprovisionsaresatisfied.Theadministratorwill
establishorganizationalorindividualperformancegoalsorothervestingcriteriainitsdiscretion,which,dependingontheextentto
whichtheyaremet,willdeterminethenumberand/orthevalueofperformanceunitsandperformancesharestobepaidoutto
participants.Afterthegrantofaperformanceunitorperformanceshare,theadministrator,initssolediscretion,mayreduceorwaive
anyperformancecriteriaorothervestingprovisionsforsuchperformanceunitsorperformanceshares.Performanceunitsshallhavean
initialdollarvalueestablishedbytheadministratorpriortothegrantdate.

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Performancesharesshallhaveaninitialvalueequaltothefairmarketvalueofourcommonstockonthegrantdate.Theadministrator,
initssolediscretion,maypayearnedperformanceunitsorperformancesharesintheformofcash,insharesorinsomecombination
thereof.
OutsideDirectors.Our2014Planprovidesthatallnonemployeedirectorswillbeeligibletoreceivealltypesofawards(except
forincentivestockoptions)underour2014Plan.Inconnectionwithourinitialpublicoffering,weintendtoadoptaformalpolicy
pursuanttowhichournonemployeedirectorswillbeeligibletoreceiveequityawardsunderthe2014Plan.Our2014Planprovides
thatinanygivenyear,anonemployeedirectorwillnotreceive(i)cashsettledawardshavingagrantdatefairvaluegreaterthan
$1,000,000,increasedto$2,000,000inconnectionwithhisorherinitialserviceand(ii)stocksettledawardshavingagrantdatefair
valuegreaterthan$1,000,000,increasedto$2,000,000inconnectionwithhisorherinitialservice,ineachcase,asdeterminedunder
generallyacceptedaccountingprocedures.
NonTransferabilityofAwards.Unlesstheadministratorprovidesotherwise,our2014Plangenerallydoesnotallowforthe
transferofawardsandonlytherecipientofanawardmayexerciseanawardduringhisorherlifetime.
CertainAdjustments.Intheeventofcertainchangesinourcapitalization,topreventdiminutionorenlargementofthebenefits
orpotentialbenefitsavailableunderthe2014Plan,theadministratorwilladjustthenumberandclassofsharesthatmaybedelivered
underthe2014Planand/orthenumber,class,andpriceofsharescoveredbyeachoutstandingaward,andthenumericalsharelimits
setforthinthe2014Plan.Intheeventofourproposedliquidationordissolution,theadministratorwillnotifyparticipantsassoonas
practicableandallawardswillterminateimmediatelypriortotheconsummationofsuchproposedtransaction.
MergerorChangeinControl.Our2014Planprovidesthatintheeventofamergerorchangeincontrol,asdefinedunderthe
2014Plan,eachoutstandingawardwillbetreatedastheadministratordetermines,exceptthatifasuccessorcorporationoritsparent
orsubsidiarydoesnotassumeorsubstituteanequivalentawardforanyoutstandingaward,thensuchawardwillfullyvest,all
restrictionsonsuchawardwilllapse,allperformancegoalsorothervestingcriteriaapplicabletosuchawardwillbedeemed
achievedat100%oftargetlevelsandsuchawardwillbecomefullyexercisable,ifapplicable,foraspecifiedperiodpriortothe
transaction.Theawardwillthenterminateupontheexpirationofthespecifiedperiodoftime.Iftheserviceofanoutsidedirectoris
terminatedonorfollowingachangeofcontrol,otherthanpursuanttoavoluntaryresignation,hisorheroptions,restrictedstock
unitsandstockappreciationrights,ifany,willvestfullyandbecomeimmediatelyexercisable,allrestrictionsonhisorherrestricted
stockwilllapse,andallperformancegoalsorothervestingrequirementsforhisorherperformancesharesandunitswillbedeemed
achievedat100%oftargetlevels,andallothertermsandconditionsmet.
Amendment,Termination.Theadministratorhastheauthoritytoamend,suspendorterminatethe2014Planprovidedsuch
actiondoesnotimpairtheexistingrightsofanyparticipant.Our2014Planwillautomaticallyterminatein2024,unlessweterminate
itsooner.
2014EmployeeStockPurchasePlan
Priortothisoffering,ourboardofdirectorsintendstoadopt,andweexpectourstockholderswillapprove,a2014Employee
StockPurchasePlan,orESPP.TheESPPwillbecomeeffectiveupontheeffectivenessofthisregistrationstatement.
AuthorizedShares.AtotalofsharesofourcommonstockwillbeavailableforsaleunderourESPP.Inaddition,our
ESPPprovidesforannualincreasesinthenumberofsharesavailableforissuanceundertheESPPonthefirstdayofeachfiscalyear
beginninginfiscal2015,equaltothelesserof:

1%oftheoutstandingsharesofourcommonstockonthefirstdayofsuchfiscalyear
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sharesofourcommonstockor

suchotheramountasmaybedeterminedbyourboardofdirectors.

PlanAdministration.OurcompensationcommitteewilladministertheESPP.Theadministratorhasauthoritytoadministerthe
plan,includingbutnotlimitedto,fullandexclusiveauthoritytointerpretthetermsoftheESPP,determiningeligibilitytoparticipate
subjecttotheconditionsofourESPPasdescribedbelow,andtoestablishproceduresforplanadministrationnecessaryforthe
administrationofthePlan,includingcreatingsubplans.
Eligibility.Generally,allofouremployeesareeligibletoparticipateiftheyareemployedbyus,oranyparticipatingsubsidiary,
foratleast20hoursperweekandmorethanfivemonthsinanycalendaryear.However,anemployeemaynotbegrantedanoptionto
purchasestockundertheESPPifsuchemployee:

immediatelyafterthegrantwouldownstockrepresenting5%ormoreofthetotalcombinedvotingpowerorvalueofall
classesofourcapitalstockor

holdsrightstopurchasestockunderallofouremployeestockpurchaseplansthataccrueataratethatexceeds$25,000
worthofourstockforeachcalendaryearinwhichtheoptionisoutstanding.

OfferingPeriods.OurESPPisintendedtoqualifyunderSection423oftheCode,andprovidesforsixmonthofferingperiods.
TheofferingperiodsgenerallystartonthefirsttradingdayonorafterMarch15thandSeptember15thofeachyear,exceptthatthe
firstofferingperiodcommencedonthefirsttradingdayfollowingtheeffectivedateoftheregistrationstatementinconnectionwith
thisoffering.Theadministratormay,initsdiscretion,modifythetermsoffutureofferingperiods.
PayrollDeductions.OurESPPpermitsparticipantstopurchasecommonstockthroughpayrolldeductionsofupto15%oftheir
eligiblecompensation,whichincludesaparticipantsbasestraighttimegrossearningsandcommissions.Aparticipantmaypurchase
amaximumof5,000sharesduringanofferingperiod.
ExerciseofOption.Amountsdeductedandaccumulatedbytheparticipantareusedtopurchasesharesofourcommonstockat
theendofeachsixmonthofferingperiod.Thepurchasepriceoftheshareswillbe85%ofthelowerofthefairmarketvalueofour
commonstockonthefirsttradingdayofeachofferingperiodorontheexercisedate.Participantsmayendtheirparticipationatany
timeduringanofferingperiod,andwillbepaidtheiraccruedpayrolldeductionsthathavenotyetbeenusedtopurchasesharesof
commonstock.Participationendsautomaticallyuponterminationofemploymentwithus.
NonTransferability.AparticipantmaynottransferrightsgrantedundertheESPPotherthanbywill,thelawsofdescentand
distribution,orasotherwiseprovidedundertheESPP.
MergerorChangeinControl.Intheeventofamerger,changeincontroloranothercorporateevent(asdefinedinour2007
Plan),theadministratorinitssolediscretionmayprovidethat:(i)awardsbeassumedinthecorporateevent(ii)awardsbeaccelerated
inthecorporateevent,(iii)awardsbeterminatedinconnectionwiththecorporateeventinexchangeforacashpaymentor
(iv)awardsbereplacedwithacashincentiveprogrampayableonthesamevestingscheduleastheaward.
Amendment,Termination.OurESPPwillautomaticallyterminatein2034,unlessweterminateitsooner.Theadministratorhas
theauthoritytoamend,suspendorterminateourESPP,exceptthat,subjecttocertainexceptionsdescribedintheESPP,nosuch
actionmayadverselyaffectanyoutstandingrightstopurchasestockunderourESPP.
AmendedandRestated2007StockIncentivePlan
OurboardofdirectorsandourstockholdersadoptedourAmendedandRestated2007StockIncentivePlan,or2007Plan,in
December2007.Our2007PlanwasmostrecentlyamendedandrestatedinOctober2014.

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AuthorizedShares.Our2007Planwillbeterminatedinconnectionwithourinitialpublicoffering,andaccordingly,noshares
willbeavailableforissuanceunderthisplan.Our2007Plancontinuestogovernoutstandingawardsgrantedthereunder.Our2007
Planprovidedforthegrantofincentivestockoptions,nonqualifiedstockoptionsandrestrictedstock.AsofSeptember30,2014,
optionstopurchase4,985,401sharesofourcommonstockremainedoutstandingunderour2007Plan.
PlanAdministration.Thecompensationcommitteeadministersthe2007Plan.Subjecttotheprovisionsofour2007Plan,the
administratorhasthefullauthorityanddiscretiontotakeanyactionsitdeemsnecessaryoradvisablefortheadministrationofthe
2007Plan.Alldecisions,interpretationsandotheractionsoftheadministratorwillbefinal,conclusiveandbindingonall
participants.
Options.Stockoptionswereavailableforgrantunderour2007Plan.Theexercisepricepershareofalloptionsisdeterminedby
theadministrator.Thetermofanoptionmaynotexceed10years.Theadministratorwilldeterminethemethodsofpaymentofthe
exercisepriceofanoption,whichmayincludecashorcashequivalentsorotherconsiderationacceptabletotheadministratorinits
discretion.Aftertheterminationofserviceofanemployee,director,orconsultant,theparticipantmaygenerallyexercisehisorher
options,totheextentvestedasofsuchdateoftermination,forgenerally90daysaftertermination.Ifterminationisduetodeathor
disability,theoptionwillgenerallyremainexercisable,totheextentvestedasofsuchdateoftermination,foratleast12months.
However,innoeventmayanoptionbeexercisedlaterthantheexpirationofitsterm.Ifterminationisasaresultofcause(asdefined
inour2007Plan),thenanoptionimmediatelyexpires.
RestrictedStockandOtherStockBasedAwards.Restrictedstockandotherstockbasedawardswereavailableforgrantunder
our2007Plan.Restrictedstockawardsaregrantsofsharesofourcommonstockthataresubjecttovariousrestrictions,including
restrictionsontransferabilityandforfeitureprovisions.Theadministratoralsoreservedtherighttograntotherstockbasedawardsin
itsdiscretion.Todate,wehavenotgrantedanyrestrictedstockorotherstockbasedawardsunderthe2007Plan.
CompetitiveActivities.Ifanawardholderengagesinanycompetitiveactivity(asdefinedinour2007Plan)duringhisorher
termofserviceorduringthe6monthperiodthereafter,thentheadministratorinitssolediscretionmay(i)requireawardstobe
forfeitedandreturnedtouswithoutadditionalconsideration,(ii)requiresharesacquiredonvestingorexercisewithinthe12month
periodpriortothedateofsuchcompetitiveactivitybeforfeitedandreturnedtouswithoutadditionalconsiderationand(iii)require
repaymentofanyprofitfromthesaleofshareswithinthe12monthperiodpriortothedateofsuchcompetitiveactivity.
Adjustments.Intheeventofcertainchangesinourcapitalization,thenumberofsharescoveredbyoutstandingawards,andthe
exercisepriceofoutstandingawardswillbeproportionatelyadjusted.
Merger,ChangeinControlorotherCorporateEvent.Intheeventofamerger,changeincontroloranothercorporateevent(as
definedinour2007Plan),theadministratorinitssolediscretionmayprovidethat:(i)awardsbeassumedinthecorporateevent
(ii)awardsbeacceleratedinthecorporateevent,(iii)awardsbeterminatedinconnectionwiththecorporateeventinexchangefora
cashpaymentor(iv)awardsbereplacedwithacashincentiveprogrampayableonthesamevestingscheduleastheaward.
BonusPlan
WeadoptedanEmployeeBonusPlan,orBonusPlan.OurBonusPlanwillallowourcompensationcommitteetoprovidecash
incentiveawardstoselectedemployees,includingournamedexecutiveofficers,baseduponperformancegoalsestablishedbyour
compensationcommittee.
UnderourBonusPlan,ourcompensationcommitteewilldeterminetheperformancegoalsapplicabletoanyaward.The
performancegoalsmayincludesomeorallofthefollowing:attainmentofresearchanddevelopmentmilestones,billings,bookings,
businessdivestituresandacquisitions,cashflow,cashposition,contractawardsor

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backlog,customerrelatedmeasures,customerretentionratesfromanacquiredcompany,businessunitordivision,earnings(which
mayincludeearningsbeforeinterest,taxes,depreciationandamortization,earningsbeforetaxesandnetearnings),earningspershare,
employeeengagement,employeeretention,employeemobility,expenses,geographicexpansion,grossmargin,growthinstockholder
valuerelativetothemovingaverageoftheS&P500Indexoranotherindex,hiringtargets,internalrateofreturn,inventoryturns,
inventorylevels,marketshare,milestoneachievements,netbillings,netincome,netprofit,netrevenuemargin,netsales,new
productdevelopment,newproductinventionorinnovation,numberofcustomers,operatingcashflow,operatingexpenses,operating
income,operatingmargin,originationvolume,overheadorotherexpensereduction,portfolioconversionrate,productdefect
measures,productdevelopment,productreleasetimelines,productivity,profit,returnonassets,returnoncapital,returnonequity,
returnoninvestment,returnonsales,revenue,revenuegrowth,salesresults,salesgrowth,stockprice,timetomarket,total
stockholderreturn,unitssold(totalandnew),workingcapital,andindividualobjectivessuchasMBOs,peerreviewsorother
subjectiveorobjectivecriteria.PerformancegoalsthatincludeourfinancialresultsmaybedeterminedinaccordancewithGAAPor
suchfinancialresultsmayconsistofnonGAAPfinancialmeasures,andanyactualresultsmaybeadjustedbyourcompensation
committeeforonetimeitemsorunbudgetedorunexpecteditemswhendeterminingwhethertheperformancegoalshavebeenmet.
Thegoalsmaybeonthebasisofanyfactorsourcompensationcommitteedeterminesrelevantandmaybeadjustedonanindividual,
divisional,businessunitorcompanywidebasis.Theperformancegoalsmaydifferfromparticipanttoparticipantandfromawardto
award.
Ourcompensationcommitteemay,initssolediscretionandatanytime,increase,reduceoreliminateaparticipantsactual
award,and/orincrease,reduceoreliminatetheamountallocatedtothebonuspoolforaparticularperformanceperiod.Theactual
awardmaybebelow,atoraboveaparticipantstargetaward,inourcompensationcommitteesdiscretion.Ourcompensation
committeemaydeterminetheamountofanyreductiononthebasisofsuchfactorsasitdeemsrelevant,anditisnotrequiredto
establishanyallocationorweightingwithrespecttothefactorsitconsiders.
Actualawardswillbepaidgenerallyincashonlyaftertheyareearned,whichusuallyrequirescontinuedemploymentthrough
thedateabonusispaid.
Ourcompensationcommitteehastheauthoritytoamend,alter,suspendorterminateourBonusPlanprovidedsuchactiondoes
notimpairtheexistingrightsofanyparticipantwithrespecttoanyearnedbonus.
401(k)Plan
WemaintainataxqualifiedretirementplanthatprovideseligibleU.S.employeeswithanopportunitytosaveforretirementon
ataxadvantagedbasis.EligibleemployeesareabletodefereligiblecompensationsubjecttoapplicableannualInternalRevenue
Codelimits.Webeganmakingdiscretionarycontributionstothe401(k)planinJuly2014.Employeespretaxcontributionsare
allocatedtoeachparticipantsindividualaccountandaretheninvestedinselectedinvestmentalternativesaccordingtothe
participantsdirections.Eligibleemployeesareimmediatelyandfullyvestedintheircontributions.The401(k)planisintendedtobe
qualifiedunderSection401(a)oftheCodewiththe401(k)plansrelatedtrustintendedtobetaxexemptunderSection501(a)ofthe
Code.Asataxqualifiedretirementplan,contributionstothe401(k)planandearningsonthosecontributionsarenottaxabletothe
employeesuntildistributedfromthe401(k)plan.
LimitationonLiabilityandIndemnificationMatters
Ouramendedandrestatedcertificateofincorporationandamendedandrestatedbylawsprovidethatwewillindemnifyour
directorsandofficers,andmayindemnifyouremployeesandotheragents,tothefullestextentpermittedbyDelawarelaw.Delaware
lawprohibitsouramendedandrestatedcertificateofincorporationfromlimitingtheliabilityofourdirectorsforthefollowing:

anybreachofthedirectorsdutyofloyaltytousortoourstockholders

actsoromissionsnotingoodfaithorthatinvolveintentionalmisconductoraknowingviolationoflaw

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unlawfulpaymentofdividendsorunlawfulstockrepurchasesorredemptionsand

anytransactionfromwhichthedirectorderivedanimproperpersonalbenefit.

IfDelawarelawisamendedtoauthorizecorporateactionfurthereliminatingorlimitingthepersonalliabilityofadirector,then
theliabilityofourdirectorswillbeeliminatedorlimitedtothefullestextentpermittedbyDelawarelaw,assoamended.Our
amendedandrestatedcertificateofincorporationdoesnoteliminateadirectorsdutyofcareand,inappropriatecircumstances,
equitableremedies,suchasinjunctiveorotherformsofnonmonetaryrelief,remainavailableunderDelawarelaw.Thisprovision
alsodoesnotaffectadirectorsresponsibilitiesunderanyotherlaws,suchasthefederalsecuritieslawsorotherstateorfederallaws.
Underouramendedandrestatedbylaws,weareempoweredtopurchaseinsuranceonbehalfofanypersonwhomwearerequiredor
permittedtoindemnify.
Inadditiontotheindemnificationrequiredinouramendedandrestatedcertificateofincorporationandamendedandrestated
bylaws,wehaveenteredintoanindemnificationagreementwitheachmemberofourboardofdirectorsandeachofourofficers.
Theseagreementsprovidefortheindemnificationofourdirectors,officersandsomeemployeesforcertainexpensesandliabilities
incurredinconnectionwithanyaction,suit,proceedingoralternativedisputeresolutionmechanism,orhearing,inquiryor
investigationthatmayleadtotheforegoing,towhichtheyareaparty,orarethreatenedtobemadeaparty,byreasonofthefactthat
theyareorwereadirector,officer,employee,agentorfiduciaryofourcompany,oranyofoursubsidiaries,byreasonofanyactionor
inactionbythemwhileservingasanofficer,director,agentorfiduciary,orbyreasonofthefactthattheywereservingatourrequest
asadirector,officer,employee,agentorfiduciaryofanotherentity.Inthecaseofanactionorproceedingbyorintherightofour
companyoranyofoursubsidiaries,noindemnificationwillbeprovidedforanyclaimwhereacourtdeterminesthattheindemnified
partyisprohibitedfromreceivingindemnification.Webelievethatthesecharterandbylawprovisionsandindemnification
agreementsarenecessarytoattractandretainqualifiedpersonsasdirectorsandofficers.
Thelimitationofliabilityandindemnificationprovisionsinouramendedandrestatedcertificateofincorporationandamended
andrestatedbylawsmaydiscouragestockholdersfrombringingalawsuitagainstdirectorsforbreachoftheirfiduciaryduties.They
mayalsoreducethelikelihoodofderivativelitigationagainstdirectorsandofficers,eventhoughanaction,ifsuccessful,might
benefitusandourstockholders.Moreover,astockholdersinvestmentmaybeharmedtotheextentwepaythecostsofsettlementand
damageawardsagainstdirectorsandofficerspursuanttotheseindemnificationprovisions.Insofarasindemnificationforliabilities
arisingundertheSecuritiesActmaybepermittedtoourdirectors,officersandcontrollingpersonspursuanttotheforegoing
provisions,orotherwise,wehavebeenadvisedthat,intheopinionoftheSEC,suchindemnificationisagainstpublicpolicyas
expressedintheSecuritiesAct,andis,therefore,unenforceable.Thereisnopendinglitigationorproceedingnaminganyofour
directorsorofficersastowhichindemnificationisbeingsought,norareweawareofanypendingorthreatenedlitigationthatmay
resultinclaimsforindemnificationbyanydirectororofficer.

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CERTAINRELATIONSHIPSANDRELATEDPARTYANDOTHERTRANSACTIONS
Inadditiontothedirectorandexecutiveofficercompensationarrangementsandindemnificationarrangementsdiscussedabove
inthesectionstitledManagementandExecutiveCompensationandtheregistrationrightsdescribedinthesectiontitled
DescriptionofCapitalStockRegistrationRights,thefollowingisadescriptionofeachtransactionsinceJanuary1,2011and
eachcurrentlyproposedtransactioninwhich:

wehavebeenoraretobeaparticipant

theamountinvolvedexceededorexceeds$120,000and

anyofourdirectors,executiveofficersorholdersofmorethan5%ofourcapitalstock,oranyimmediatefamilymemberof
orpersonsharingthehouseholdwithanyoftheseindividuals,hadorwillhaveadirectorindirectmaterialinterest.

PrivatePlacements
SeriesCPreferredStockFinancing
InDecember2010,andinasubsequentclosinginApril2011,wesoldanaggregateof4,867,769sharesofSeriesCpreferred
stockatapersharepurchasepriceof$4.20pursuanttoastockpurchaseagreement.Thebasisforsuchpurchasepricewasdetermined
byarmslengthnegotiationbetweenusandthepurchasers.PurchasersoftheSeriesCpreferredstockincludeamemberofourboard
ofdirectorsandventurecapitalfundsthathold5%ormoreofourcapitalstockandwererepresentedonourboardofdirectors.The
followingtablesummarizespurchasesofSeriesCpreferredstockbysuchinvestors:

NameofStockholder

FirstRoundCapital(1)
RREVenturesIV,L.P.(3)
SAPVenturesFundIHoldings,LLC(5)(6)
VillageVentures(7)
NeilE.Wolfson(9)

Numberof
SeriesC
Shares

Total
Purchase
Price

221,994
516,044
1,309,524
765,900
23,810

$ 932,371(2)
2,167,383(4)
5,500,000
3,216,774(8)
100,002

(1) AffiliatesofFirstRoundCapitalholdingoursecuritieswhosesharesareaggregatedforpurposesofreportingshareownership
informationincludeFirstRoundCapital2007AnnexFundLPandFirstRoundCapital2007AnnexQFundLP.
(2) Includes$501,305ofprincipalandinterestfromconvertiblenotesthatconvertedintosharesofourSeriesCpreferredstock.The
effectivepricepershareforsuchstockholderwas$4.08basedupon$905,525.00,theaggregateinvestmentofcashandthe
originalprincipalamountofsuchconvertiblenotes.
(3) JamesD.RobinsonIII,amemberofourboardofdirectors,isamanagingmemberofRREVenturesGPIV,LLC.
(4) Includes$667,382ofprincipalandinterestfromconvertiblenotesthatconvertedintosharesofourSeriesCpreferredstock.The
effectivepricepershareforsuchstockholderwas$4.13basedupon$2,131,642.00,theaggregateinvestmentofcashandthe
originalprincipalamountofsuchconvertiblenotes.
(5) DavidHartwig,amemberofourboardofdirectors,isamanagingmemberofSAPVenturesGPE(I),L.L.C.
(6) SAPVenturesiscurrentlyintheprocessofchangingitsnametoSapphireVentures.Accordingly,referencestoSapphire
VenturesforcertainfundsandSAPVenturesforotherfundsrefertoentitiesundercommoncontrol.
(7) AffiliatesofVillageVenturesholdingoursecuritieswhosesharesareaggregatedforpurposesofreportingshareownership
informationincludeVillageVenturesFundII,L.P.,VillageVenturesFundIIA,L.P.and

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VillageVenturesFundIIB,L.P.MatthewHarris,aformermemberofourboardofdirectors,isaffiliatedwithVillageVentures.
Mr.HarrisresignedfromourboardofdirectorsinAugust2014.
(8) Includes$1,716,774ofprincipalandinterestfromconvertiblenotesthatconvertedintosharesofourSeriesCpreferredstock.
Theeffectivepricepershareforsuchstockholderwas$4.09basedupon$3,131,642.60,theaggregateinvestmentofcashand
theoriginalprincipalamountofsuchconvertiblenotes.
(9) NeilE.Wolfsonisamemberofourboardofdirectors.

SeriesC1PreferredStockFinancing
InJanuary2012,wesoldanaggregateof850,556sharesofSeriesC1preferredstockatapersharepurchasepriceof$5.53.The
basisforsuchpurchasepricewasdeterminedbyarmslengthnegotiationbetweenusandthepurchasers.PurchasersoftheSeriesC1
preferredstockincludeventurecapitalfundsthathold5%ormoreofourcapitalstockandwererepresentedonourboardofdirectors.
ThefollowingtablesummarizespurchasesofSeriesC1preferredstockbysuchinvestors:

NameofStockholder

SAPVenturesFundIHoldings,LLC(1)(2)
RREVenturesIV,L.P.(3)

Numberof
SeriesC1
Shares

Total
Purchase
Price

723,878
126,678

$4,000,005
699,997

(1) DavidHartwig,amemberofourboardofdirectors,isamanagingmemberofSAPVenturesGPE(I),L.L.C.
(2) SAPVenturesiscurrentlyintheprocessofchangingitsnametoSapphireVentures.Accordingly,referencestoSapphire
VenturesforcertainfundsandSAPVenturesforotherfundsrefertoentitiesundercommoncontrol.
(3) JamesD.RobinsonIII,amemberofourboardofdirectors,isamanagingmemberofRREVenturesGPIV,LLC.
BridgeFinancing
InDecember2012,weissuedconvertibleseniorunsecurednoteswithanannualinterestrateof6.0%toinvestorsinan
aggregateprincipalamountof$8,000,000.InFebruary2013,theseconvertibleseniorunsecurednotesandtheaccruedinterest
thereonconvertedintoanaggregateof1,077,035sharesofourSeriesDpreferredstockinconnectionwithourSeriesDpreferred
stockfinancing.Purchasersoftheconvertibleseniorunsecurednotesincludeventurecapitalfundsthathold5%ormoreofour
capitalstockandwererepresentedonourboardofdirectors.Thefollowingtablesetsforththeprincipalamountoftheconvertible
seniorunsecurednotespurchasedbysuchinvestors,thenumberofsharesofSeriesDpreferredstockintowhicheachsuchconvertible
seniorunsecurednoteconverted:

NameofStockholder

SAPVenturesFundIHoldings,LLC(1)(2)
RREVenturesIV,L.P.(3)

Aggregate
Principal
Amountof
Promissory
Notes

Numberof
Sharesof
SeriesD
Preferred
StockIssued
Upon
Conversion

$4,500,000
3,500,000

605,832
471,203

(1) DavidHartwig,amemberofourboardofdirectors,isamanagingmemberofSAPVenturesGPE(I),L.L.C.
(2) SAPVenturesiscurrentlyintheprocessofchangingitsnametoSapphireVentures.Accordingly,referencestoSapphire
VenturesforcertainfundsandSAPVenturesforotherfundsrefertoentitiesundercommoncontrol.
(3) JamesD.RobinsonIII,amemberofourboardofdirectors,isamanagingmemberofRREVenturesGPIV,LLC.

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SeriesDPreferredStockFinancing
InFebruary2013,andatanadditionalclosinginApril2013,wesoldanaggregateof7,233,878sharesofSeriesDpreferred
stockatapersharepurchasepriceof$8.32.Thebasisforsuchpurchasepricewasdeterminedbyarmslengthnegotiationbetweenus
andthepurchasers.PurchasersoftheSeriesDpreferredstockincludeventurecapitalfundsthathold5%ormoreofourcapitalstock
andwererepresentedonourboardofdirectors.ThefollowingtablesummarizespurchasesofSeriesDpreferredstockbysuch
investors:

NameofStockholder

InstitutionalVenturePartners(1)
GoogleVentures2013,L.P.
SAPVenturesFundIHoldings,LLC(2)(3)
RREVenturesIV,L.P.(5)
FirstRoundCapital(7)

Numberof
SeriesD
Shares

3,847,194
1,562,922
605,832
471,203
240,449

Total
Purchase
Price

$31,999,998
12,999,994
5,039,159(4)
3,919,349(6)
1,999,995

(1) AffiliatesofInstitutionalVenturePartnersholdingoursecuritieswhosesharesareaggregatedforpurposesofreportingshare
ownershipinformationincludeInstitutionalVenturePartnersXIII,L.P.andInstitutionalVenturePartnersXIV,L.P.J.Sanford
Miller,amemberofourboardofdirectors,isamanagingdirectorofInstitutionalVenturePartnersXIII,L.P.
(2) DavidHartwig,amemberofourboardofdirectors,isamanagingmemberofSAPVenturesGPE(I),L.L.C.
(3) SAPVenturesiscurrentlyintheprocessofchangingitsnametoSapphireVentures.Accordingly,referencestoSapphire
VenturesforcertainfundsandSAPVenturesforotherfundsrefertoentitiesundercommoncontrol.
(4) Includes$5,039,159ofprincipalandinterestfromaconvertiblenotethatconvertedintosharesofourSeriesDpreferredstockat
adiscountof10%tothepriceofourSeriesDpreferredstock.Theeffectivepricepershareforsuchstockholderwas$7.43based
upon$4,500,000,theoriginalprincipalamountofsuchconvertiblenote.
(5) JamesD.RobinsonIII,amemberofourboardofdirectors,isamanagingmemberofRREVenturesGPIV,LLC.
(6) Includes$3,919,349ofprincipalandinterestfromaconvertiblenotethatconvertedintosharesofourSeriesDpreferredstockat
adiscountof10%tothepriceofourSeriesDpreferredstock.Theeffectivepricepershareforsuchstockholderwas$7.43based
upon$3,500,000,theoriginalprincipalamountofsuchconvertiblenote.
(7) AffiliatesofFirstRoundCapitalholdingoursecuritieswhosesharesareaggregatedforpurposesofreportingshareownership
informationincludeFirstRoundCapital2007AnnexFundLPandFirstRoundCapital2007AnnexQFundLP.
SeriesEPreferredStockFinancing
InFebruary2014,wesoldanaggregateof2,617,273sharesofSeriesEpreferredstockatapersharepurchasepriceof$29.42.
Thebasisforsuchpurchasepricewasdeterminedbyarmslengthnegotiationbetweenusandthepurchasers.PurchasersoftheSeries
Epreferredstockincludeventurecapitalfundsthathold5%ormoreofourcapitalstockandwererepresentedonourboardof
directors.ThefollowingtablesummarizespurchasesofSeriesEpreferredstockbysuchinvestors:

NameofStockholder

TigerGlobalPrivateInvestmentPartnersVII,L.P.(1)
InstitutionalVenturePartners(2)
SAPVenturesFundIHoldings,LLC(3)(4)
GoogleVentures2013,L.P.
FirstRoundCapital(5)
RREVenturesIV,L.P.(6)

Numberof
SeriesE
Shares

1,699,525
203,944
203,943
135,962
84,977
25,493

Total
Purchase
Price

(1) SharesheldbyGriffinSchroeder,anaffiliateofTigerGlobalPrivateInvestmentPartnersVII,L.P.(TigerGlobal),areaggregated
withsharespurchasedbyTigerGlobalforpurposesofreportingshareownershipinformation.

127

$50,000,026
6,000,032
6,000,003
4,000,002
2,500,023

750,004

TableofContents

(2) AffiliatesofInstitutionalVenturePartnersholdingoursecuritieswhosesharesareaggregatedforpurposesofreportingshare
ownershipinformationincludeInstitutionalVenturePartnersXIII,L.P.andInstitutionalVenturePartnersXIV,L.P.J.Sanford
Miller,amemberofourboardofdirectors,isamanagingdirectorofInstitutionalVenturePartnersXIII,L.P.
(3) DavidHartwig,amemberofourboardofdirectors,isamanagingmemberofSAPVenturesGPE(I),L.L.C.
(4) SAPVenturesiscurrentlyintheprocessofchangingitsnametoSapphireVentures.Accordingly,referencestoSapphire
VenturesforcertainfundsandSAPVenturesforotherfundsrefertoentitiesundercommoncontrol.
(5) AffiliatesofFirstRoundCapitalholdingoursecuritieswhosesharesareaggregatedforpurposesofreportingshareownership
informationincludeFirstRoundCapital2007AnnexFundLPandFirstRoundCapital2007AnnexQFundLP.
(6) JamesD.RobinsonIII,amemberofourboardofdirectors,isamanagingmemberofRREVenturesGPIV,LLC.
StockRepurchases
InMay2011,weredeemed400,000sharesofcommonstockfromMitchJacobs,ourfounderandaformerofficeranddirectorof
ours,atapricepershareof$2.793,foranaggregateredemptionpriceof$1,117,200.InApril2013,werepurchased504,256sharesof
commonstockfromMr.Jacobsatapricepershareof$7.78,foranaggregaterepurchasepriceof$3,921,667.
InApril2013,werepurchased35,000sharesofcommonstockfromJorgeSun,aformerofficerofours,atapricepershareof
$7.78,foranaggregaterepurchasepriceof$272,200.
InMay2013,werepurchased56,000and52,000sharesofcommonstockfor$7.78persharefromJamesHobson,ourChief
OperatingOfficer,andHowardKatzenberg,ourChiefFinancialOfficer,respectively.Wepaidaggregaterepurchasepricesof
$435,517and$404,409toMr.HobsonandMr.Katzenberg,respectively,inconnectionwiththesetransactions.
InMay2013,wepaidBradleyKime,aformerofficerofours,$1,012,071inexchangeforhisagreementtocanceloptionsto
purchase139,652sharesofcommonstock.
InvestorsRightsAgreement
InMarch2014,weenteredintoanamendedandrestatedinvestorsrightsagreementwiththeholdersofourpreferredstockand
keyholdersofourcommonstock,includingNeilWolfson,adirectorofours,andentitiesaffiliatedwithFirstRoundCapital,Google
Ventures2013,L.P.,InstitutionalVenturePartners,RREVenturesIV,L.P.,SAPVenturesFundIHoldings,LLC,TigerGlobalPrivate
InvestmentPartnersVII,L.P.,andentitiesaffiliatedwithVillageVentures,whicheachhold5%ormoreofourcapitalstockandwith
whichcertainofourdirectorsareaffiliated.Suchagreementprovides,amongotherthings,thattheholdersofourpreferredstockhave
therighttodemandthatwefilearegistrationstatementorrequestthattheirsharesbecoveredbyaregistrationstatementthatweare
otherwisefiling.Foramoredetaileddescriptionoftheseregistrationrights,seethesectiontitledDescriptionofCapitalStock
RegistrationRights.
PoliciesandProceduresforTransactionswithRelatedPersons
Followingthecompletionofthisoffering,ourauditcommitteewillhavetheprimaryresponsibilityforreviewingand
approvingordisapprovingrelatedpartytransactions,whicharetransactionsbetweenusandrelatedpersonsinwhichtheaggregate
amountinvolvedexceedsormaybeexpectedtoexceed$120,000andinwhicharelatedpersonhasorwillhaveadirectorindirect
materialinterest.Forpurposesofthispolicy,arelatedpersonwillbedefinedasadirector,executiveofficer,nomineefordirector,or
greaterthan5%beneficialownerofourcommonstock,ineachcasesincethebeginningofthemostrecentlycompletedyear,and
theirimmediatefamilymembers.Ourauditcommitteecharterprovidesthattheauditcommitteeshallreviewandapproveor
disapproveanyrelatedpartytransactions.

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PRINCIPALSTOCKHOLDERS
ThefollowingtablesetsforthinformationregardingbeneficialownershipofourcommonstockasofSeptember30,2014,as
adjustedtoreflectthesharesofcommonstocktobeissuedandsoldbyusinthisoffering,by:

eachpersonorgroupofaffiliatedpersonsknownbyustobethebeneficialownerofmorethan5%ofourcommonstock

eachofournamedexecutiveofficers

eachofourdirectorsand

allofourexecutiveofficersanddirectorsasagroup.

WehavedeterminedbeneficialownershipinaccordancewiththerulesoftheSECandtheinformationisnotnecessarily
indicativeofbeneficialownershipforanyotherpurpose.Unlessotherwiseindicatedbelow,toourknowledge,thepersonsand
entitiesnamedinthetablehavesolevotingandsoleinvestmentpowerwithrespecttoallsharesthattheybeneficiallyown,subject
tocommunitypropertylawswhereapplicable.Incomputingthenumberofsharesofourcommonstockbeneficiallyownedbya
personandthepercentageownershipofthatperson,wedeemedoutstandingsharesofourcommonstocksubjecttooptionsor
warrantsheldbythatpersonthatarecurrentlyexercisableorexercisablewithin60daysofSeptember30,2014.Wedidnotdeem
thesesharesoutstanding,however,forthepurposeofcomputingthepercentageownershipofanyotherperson.
Wehavebasedpercentageownershipofourcommonstockpriortothisofferingon28,080,318sharesofourcommonstock
outstandingasofSeptember30,2014,whichincludes23,725,822sharesofcommonstockresultingfromtheautomaticconversionof
alloutstandingsharesofourredeemableconvertiblepreferredstockuponthecompletionofthisoffering,asifthisconversionhad
occurredasofSeptember30,2014.Percentageownershipofourcommonstockafterthisofferingassumesthesalebyusof
sharesofcommonstockinthisoffering.
Unlessotherwiseindicated,theaddressofeachbeneficialownerlistedonthetablebelowisc/oOnDeckCapital,Inc.,1400
Broadway,25thFloor,NewYork,NewYork10018.

NameofBeneficialOwner

5%Stockholders:
RREVenturesIV,L.P.(1)
EntitiesaffiliatedwithInstitutionalVenturePartners(2)
EntitiesaffiliatedwithVillageVentures(3)
SAPVenturesFundIHoldings,LLC(4)
EntitiesaffiliatedwithFirstRoundCapital(5)
GoogleVentures2013L.P.(6)
TigerGlobalPrivateInvestmentPartnersVII,L.P.(7)
NamedExecutiveOfficersandDirectors:
NoahBreslow(8)
JamesHobson(9)
HowardKatzenberg(10)
DavidHartwig(11)
J.SanfordMiller(12)
JamesD.RobinsonIII(13)
JaneJ.Thompson(14)
RonaldF.Verni(15)
NeilE.Wolfson(16)
Allcurrentexecutiveofficersanddirectorsasagroup
(10persons)(17)

SharesBeneficiallyOwned
PriortotheOffering

Shares

Percentage

129

4,313,698
4,051,138
3,037,069
2,843,177
1,846,452
1,768,476
1,691,027

700,920
150,862
184,457
2,843,177
4,051,138
4,313,698
1,875
46,875
57,824

12,414,055

15.4
14.4
10.8
10.1
6.5
6.3
6.0

2.4
*
*
10.1
14.4
15.4
*
*
*

42.9

SharesBeneficiallyOwned
AftertheOffering
Shares
Percentage

TableofContents

*
Representsbeneficialownershipoflessthan1%.
(1) Consistsof4,313,698sharesheldofrecordbyRREVenturesIV,L.P.(RRELP).RREVenturesGPIV,LLC(RREGP),isthe
generalpartnerofRRELP.JamesD.RobinsonIVandStuartJ.Ellman,asthemanagingmembersofRREGP,sharevotingand
dispositivepowerwithrespecttothesharesheldbyRRELP.Theaddressforeachoftheseentitiesisc/oRREVentures,130East
59thStreet,17thFloor,NewYork,NewYork10022.
(2) Consistsof(i)2,025,569sharesheldofrecordbyInstitutionalVenturePartnersXIII,L.P.(IVPXIII)and(ii)2,025,569shares
heldofrecordbyInstitutionalVenturePartnersXIV,L.P.(IVPXIV).InstitutionalVentureManagementXIIILLC(IVMXIII)is
thegeneralpartnerofIVPXIIIandInstitutionalVentureManagementXIVLLC(IVMXIV)isthegeneralpartnerofIVPXIV.
ToddC.Chaffee,NormanA.Fogelsong,StephenJ.Harrick,J.SanfordMillerandDennisB.Phelps,asthemanagingdirectorsof
IVMXIII,sharevotinganddispositivepowerwithrespecttothesharesheldbyIVPXIII.Messrs.Chaffee,Fogelsong,Harrick,
Miller,PhelpsandJulesA.Maltz,asthemanagingdirectorsofIVPXIV,sharevotinganddispositivepowerwithrespecttothe
sharesheldbyIVPXIV.Theaddressforeachoftheseentitiesisc/oInstitutionalVenturePartners,3000SandHillRoad,Suite
250,MenloPark,California94025.
(3) Consistsof(i)2,583,106sharesheldofrecordbyVillageVenturesFundII,L.P.(VVFII)(ii)35,423sharesheldofrecordby
VillageVenturesFundIIA,L.P.(VVFIIA)and(iii)418,540sharesheldofrecordbyVillageVenturesFundIIB,L.P.(VVFII
B).VillageVenturesCapitalPartnersII,LLC(VVCP)isthegeneralpartnerofVVFII,VVFIIAandVVFIIB.VillageVentures
CapitalManagement,LLC(VVCM)isthemanagerofVVCP.MatthewC.HarrisandWilliamBoS.Peabody,astheClassA
membersofVVCM,sharevotinganddispositivepowerwithrespecttothesharesheldbyVVFII,VVFIIAandVVFIIB.
VillageVentures,Inc.,acorporationcontrolledbyMessrs.HarrisandPeabody,istheadvisortoVVCM.Theaddressforeachof
theseentitiesisc/oVillageVentures,Inc.,OneBankStreet,2ndFloor,Williamstown,Massachusetts01267.
(4) Consistsof2,843,177sharesheldofrecordbySAPVenturesFundIHoldings,LLC(SAPHoldings).SapphireVenturesFundI,
L.P.(f/k/aSAPVenturesFundI,L.P.)(SapphireVenturesLP)isthesolememberofSAPHoldingsandSAPVenturesGPE(I),
L.L.C.(SAPGPE)isthegeneralpartnerofSapphireLP.NinoMarakovic,RichardDouglasHiggins,JayendraDas,David
Hartwig,andAndreasWeiskam,asthemanagingmembersofSAPGPE,sharevotinganddispositivepowerwithrespecttothe
sharesheldbySAPHoldings.Theaddressforeachoftheseentitiesisc/oSapphireVentures,3408HillviewAvenue,PaloAlto,
California94304.SAPVenturesiscurrentlyintheprocessofchangingitsnametoSapphireVentures.Accordingly,referencesto
SapphireVenturesforcertainfundsandSAPVenturesforotherfundsrefertoentitiesundercommoncontrol.
(5) Consistsof(i)494,511sharesheldofrecordbyFirstRoundCapital2006AnnexFundLP(FRC2006Annex)(ii)531,430
sharesheldofrecordbyFirstRoundCapital2006LP(FRC2006)(iii)328,451sharesheldofrecordbyFirstRoundCapital
2007AnnexFundLP(FRC2007Annex)(iv)218,969sharesheldofrecordbyFirstRoundCapital2007AnnexFundQLP
(FRC2007AnnexQ)(v)163,855sharesissuableupontheexerciseofwarrantsheldbyFRC2007Annexthatareimmediately
exercisableatanexercisepriceof$0.65pershareand(vi)109,236sharesissuableupontheexerciseofwarrantsheldbyFRC
2007Annexthatareimmediatelyexercisableatanexercisepriceof$0.65pershare.FirstRoundManagement2006LLC(FRC
2006GP)isthegeneralpartnerofFRC2006AnnexandFRC2006.JoshKopelmanisthesolemanagingmemberofFRC2006
GPandhassharedvotinganddispositivepowerwithrespecttothesharesheldbyFRC2006AnnexandFRC2006.FirstRound
Management2007LLC(FRC2007GP)isthegeneralpartnerofFRC2007AnnexandFRC2007AnnexQ.Mr.Kopelmanis
thesolemanagingmemberofFRC2007GPandhassharedvotinganddispositivepowerwithrespecttothesharesheldbyFRC
2007Annexand2007AnnexQ.Theaddressforeachoftheseentitiesisc/oFirstRoundCapital,4040LocustStreet,
Philadelphia,Pennsylvania19104.
(6) Consistsof1,768,476sharesheldofrecordbyGoogleVentures2013,L.P.(GV2013LP).Votinganddispositivepowerwith
respecttosharesheldbyGV2013LPresidewiththeGoogleVenturesInvestmentCommittee.Theaddressforeachofthese
entitiesisc/oGoogleVentures,1600AmphitheatreParkway,MountainView,California94043.

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(7) Consistsof1,691,027sharesheldofrecordbyTigerGlobalPrivateInvestmentPartnersVII,L.P.(PIPVII).PIPVIIisultimately
controlledbyChaseColeman,LeeFixelandScottSchleifer.TheaddressforPIPVIIisc/oTigerGlobalManagement,LLC,9
West57thStreet,NewYork,NewYork10019.
(8) Consistsof(i)63,000sharesheldofrecordbyMr.Breslowand(ii)637,920sharessubjecttooptionsexercisablewithin60days
ofSeptember30,2014.
(9) Consistsof150,862sharessubjecttooptionsexercisablewithin60daysofSeptember30,2014.
(10) Consistsof(i)139,770sharesheldofrecordbyMr.Katzenbergand(ii)44,687sharessubjecttooptionsexercisablewithin60
daysofSeptember30,2014.
(11) Consistsoftheshareslistedinfootnote(4)above,whichareheldofrecordbySAPHoldings.
(12) Consistsoftheshareslistedinfootnote(2)above,whichareheldofrecordbyentitiesaffiliatedwithInstitutionalVenture
Partners.
(13) Consistsoftheshareslistedinfootnote(1)above,whichareheldofrecordbyRRELP.
(14) Consistsof1,875sharessubjecttooptionsexercisablewithin60daysofSeptember30,2014.
(15) Consistsof(i)22,500sharesheldofrecordbyMr.Verniand(ii)24,375sharessubjecttooptionsexercisablewithin60daysof
September30,2014.
(16) Consistsof57,824sharesheldofrecordbyMr.Wolfson.
(17) Consistsof(i)11,549,543sharesbeneficiallyownedbyourofficersanddirectorsand(ii)864,512sharessubjecttooptions
exercisablewithin60daysofSeptember30,2014.

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DESCRIPTIONOFINDEBTEDNESS
Wehaveavailabletousseveralfundingalternativestosupportthemaintenanceandgrowthofourbusiness.Thefollowingisa
summaryofthematerialtermsthatarecontainedinourcurrentlyexistingdebtfacilities.Thisdescriptiondoesnotpurporttobe
completeandisqualifiedinitsentiretybyreferencetotheprovisionsofourcurrentlyexistingdebtfacilities.
AssetBackedSecuritizationFacility
InMay2014,weaccessedtheassetbackedsecuritizationmarketusingOnDeckAssetSecuritizationTrustLLC,orODAST,a
whollyownedspecialpurposevehicle,whichissuedourinauguralseriesofFixedRateAssetBackedNotesina$175millionrated
transactionor,theSeries20141Notes,toover15thirdpartyinstitutionalinvestors.TheSeries20141Noteswereissuedpursuantto
abusinessBaseIndentureandSeries20141IndentureSupplement,eachdatedMay8,2014,byandbetweenODASTandDeutsche
BankTrustCompanyAmericas,asindenturetrustee.TheSeries20141Noteswereissuedintwoclasses:ClassA,ratedBBB(sf)by
DBRS,Inc.,intheinitialprincipalamountof$156.7millionandClassB,ratedBB(sf)byDBRS,Inc.,intheinitialprincipalamount
of$18.3million.TheSeries20141Notesaresecuredbyandpayablefromcollectionsonarevolvingpoolofsmallbusinessloans,
whicharegeneratedbyusinourordinarycourseofbusiness,andtransferredfromustoODAST.AtthetimeofissuanceoftheSeries
20141Notes,theportfolioofloansheldbyODASTandpledgedtosecuretheSeries20141Noteswasapproximately$183.2
million.TheClassAnotesandClassBnotesbearinterestat3.15%and5.68%,respectively,andprovideuswithablendedcostof
capitalfixedat3.41%.Subjecttothesatisfactionofcertainconditions,wesellsmallbusinessloansthathavesatisfiedallapplicable
eligibilitycriteriatoODAST,andODASTinturnissuestothirdpartyinvestorsoneormoreseriesofassetbackedsecuritiesthatare
collateralizedbyarevolvingpoolofloanssoldtoODAST.TheproceedsfromtheissuancearedistributedtousthroughODASTs
purchaseoftheloansfromus.Eligibilitycriteriamayinclude,amongothers,thattheapplicableloanisdenominatedinU.S.dollars,
thattheborrowerundersuchloanhadacertainOnDeckScoreatthetimeofunderwriting,thatsuchloanwasoriginatedin
accordancewithourunderwritingpoliciesandthatsuchloanisalegal,validandbindingobligationoftheobligor.Thecollateral
poolsarealsosubjecttocertainconcentrationlimitsthat,ifexceeded,willrequireODASTtoaddormaintainadditionalcollateralor,
ifnotcured,anamortizationeventwilloccur.Concentrationlimitationsmayinclude,amongothers,geographic,industry,timein
business,outstandingprincipalbalance,originaltermandOnDeckScoreconcentrationlimits.
TheSeries20141Notescontainatwoyearrevolvingperiodafterwhichprincipalontheassetbackedsecuritieswillbepaid
sequentiallytotheClassAandClassBNotesmonthlyfromcollectionsontheloans.ThefinalmaturitydateoftheSeries20141
NotesisinMay2018.MonthlypaymentsofinterestontheSeries20141NotesbeganonJune17,2014.Theoutstandingprincipal
balanceoftheSeries20141NotesasofSeptember30,2014was$175million.Additionalseriesofassetbackedsecuritiesare
expectedtobeissuedthroughODASTinthefuture.ForadiscussionofcovenantsandeventsofdefaultfortheSeries20141Notes
andODAST,pleaseseethesectionbelowtitledCovenantsandEventsofDefaultforDebtFacilities.Theloansandotherassets
transferredbyustoODASTareownedbyODAST,arepledgedtosecurethepaymentofnotesissuedbyODAST,areassetsof
ODASTandarenotavailabletosatisfyanyofourobligationsoravailabletoourcreditors.
LendersunderourassetbackedsecuritizationfacilitydonothavedirectrecoursetoOnDeckCapital,Inc.
AssetBackedRevolvingDebtFacilities
Wealsoobtainfundingthroughassetbackedrevolvingdebtfacilities.Withrespecttoeachsuchfacility,thelenderscommitto
makeloanstooneofourwhollyownedsubsidiaries,theproceedsofwhichareusedtofinancethesubsidiaryspurchaseofsmall
businessloansfromusinabankruptcyremotetransaction.Therevolvingpoolofsmallbusinessloanspurchasedbythesubsidiary
servesascollateralfortheloansmadetothesubsidiaryborrowerunderthedebtfacility.Thesubsidiariesrepaytheborrowingsfrom
collectionsreceivedontheloans.

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Theapplicablesubsidiarycanvoluntarilyrepayandreborrowprincipalamountsundertheserevolvingdebtfacilitiessubjectto
satisfactionofborrowingconditions,includingborrowingbaserequirements.Inorderforourloanstobeeligibleforpurchasebythe
subsidiariesunderthesefacilities,theymustmeetallapplicableeligibilitycriteria.Eligibilitycriteriamayinclude,amongothers,that
theapplicableloanisdenominatedinU.S.dollars,thattheborrowerundersuchloanhadacertainOnDeckScoreatthetimeof
underwriting,thatsuchloanwasoriginatedinaccordancewithourunderwritingpoliciesandthatsuchloanisalegal,validand
bindingobligationoftheobligor.Thesubsidiarycollateralpoolsaresubjecttocertainconcentrationlimitsthat,whenexceeded,will
requiretheapplicablesubsidiaryborrowertoaddormaintainadditionalcollateralor,ifnotcured,aneventofdefaultwilloccur.
Concentrationlimitationsmayinclude,amongothers,geographic,industry,timeinbusiness,outstandingprincipalbalance,original
termandOnDeckScoreconcentrationlimits.Wecurrentlyutilizefoursuchassetbackedrevolvingdebtfacilitystructuresthrough
fourseparatesubsidiaries:

OnDeckAccountReceivablesTrust20131LLC,orODART,whichenteredintoadebtagreementinAugust2013with
DeutscheBankAG,NewYorkBranchasadministrativeagentandthelenderspartythereto,whichwasamendedin
November2013,April2014andJuly2014andsubsequentlyamendedandrestatedinitsentiretyonSeptember15,2014

OnDeckAssetCompany,LLC,orODAC,whichenteredintoadebtagreementinOctober2013withODBLIV,LLC,as
administrativeagent,andthelenderspartythereto,whichwasamendedinNovember2013,January2014,April2014and
July2014andsubsequentlyamendedandrestatedinitsentiretyonOctober17,2014

SmallBusinessAssetFund2009LLC,orSBAF,whichenteredintoadebtagreementinMarch2011withDeutscheBank
TrustCompanyAmericas,ascollateralagent,andthelenderspartythereto,whichwasamendedinJanuary2014and

OnDeckAssetPool,LLC,orODAP,whichenteredintoadebtagreementinAugust2014withJefferiesMortgage
Funding,LLC,asadministrativeagent,andthelenderspartythereto.

Thefollowingtablesummarizescertainaspectsofsuchfacilities:

SubsidiaryName

FacilitySize

BorrowingBaseAdvanceRate

ODART

SBAF

ODAP

$167.6million

$50million

Variable

$75million

95%(ClassB)or85%(ClassA)

95%(providedthat
a91%advancerate
willapplytocertain
loansundercertain
circumstances)

91%

90%

InterestRate

ODAC

ClassA=Costoffunds+3.00%
ClassB=LIBOR(minimumof
1%)+7.25%

LIBOR+8.25%

Rangefrom LIBOR(minimum
7.0%to13.0%
of1%)+4%
8.6%weighted
averageinterest

rate

CommitmentTerminationDate

September15,2016

October23,2015 March21,2015

August15,2015

FacilityTerminationDate

September15,2016

October23,2015

Ongoing

August15,2016

OutstandingAmountasof
September30,2014

$84.6million

$28.3million

$18.8million

$40.5million

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Weexpecttouseadditionalassetbackeddebtfacilitiesinthefuture.AsofSeptember30,2014,wewereincompliancewithall
financialcovenantsrequiredperthedebtagreements,asamended.ForadiscussionofcovenantsandeventsofdefaultforODART,
ODAC,SBAFandODAP,pleaseseethesectionbelowtitledCovenantsandEventsofDefaultforDebtFacilities.Theloansand
otherassetstransferredbyustothesubsidiariesareownedbytherespectivesubsidiaries,arepledgedtosecurethepaymentofthe
obligationsincurredbysuchsubsidiaries,areassetsofsubsidiariesandarenotavailabletosatisfyanyofOnDeckCapital,Inc.s
obligations.LendersunderourassetbackedrevolvingdebtfacilitiesdonothavedirectrecoursetoOnDeckCapital,Inc.
CorporateDebt
OnAugust7,2013,weenteredintoarevolvingdebtfacilitywithSquare1Bank,whichwasamendedinNovember2013,
December2013andJanuary2014andamendedandrestatedinNovember2014,ortheSquare1CreditAgreement,pursuantto
whichwemayborrowupto$20million(subjecttosatisfactionofcustomaryborrowingconditionsandborrowingbase
requirements).BorrowingsundertheSquare1CreditAgreementbearinterestatafloatingratewhichisbasedupontheprimerate
plusaspreadof1.25%perannum,withafloorof4.5%perannum.TheSquare1CreditAgreementprovidesforacommitment
terminationdateofOctober30,2015.Therewere$3millionofborrowingsoutstandingunderthisagreementasofSeptember30,
2014.ForadiscussionofcovenantsandeventsofdefaultundertheSquare1CreditAgreement,pleaseseethesectionbelowtitled
CovenantsandEventsofDefaultforDebtFacilities.
CovenantsandEventsofDefaultforDebtFacilities
Ourabilitytoutilizeeachofourdebtfacilitiesasdescribedhereinissubjecttocompliancewithvariouscovenantsandother
specifiedrequirements.Thefailuretocomplywithsuchrequirementsmayresultineventsofdefault,theacceleratedrepaymentof
amountsowedundertheapplicablefacility,oftenreferredtoasanearlyamortizationevent,and/ortheterminationofthefacility.
Therearenoeventsofdefaultoramortizationeventscurrentlyexistingunderanyofourdebtfacilities.
Suchrequirementsinclude:

FinancialCovenants.Financialcovenantsmayinclude,amongothers,requirementswithrespecttominimumtangiblenet
worth,maximumleverageratio,minimumconsolidatedliquidity,minimumunrestrictedcash,minimuminterestcoverage
ratioandminimumoperatingcashflow.

PortfolioPerformanceCovenants.Portfolioperformancecovenantsmayinclude,amongothers,requirementsthatthepool
notexceedcertainstatedstaticpooldefaultratiosanddelinquencyratesandthattheloanyieldandtheexcessspreadon
thepoolnotbelessthanstatedminimumlevels.Excessspreadisgenerallytheamountbywhichincomereceivedbythe
borrowerundertherespectivefacilityduringacollectionperiod(primarilyinterestcollectionsandfees)exceedsitsfees
andexpensesduringsuchcollectionperiod(includinginterestexpense,servicingfeesandchargedoffreceivables).

OtherEvents.Othereventsmayinclude,amongothers,changeofcontrolevents,certaininsolvencyrelatedevents,events
constitutingaservicerdefault,aninabilitytoengageareplacementbackupservicerfollowingterminationofthecurrent
backupservicer,seniormanagementchanges,theoccurrenceofaneventofdefaultoraccelerationunderotherfacilities,the
inabilityorfailureofustotransferloanstotheSPVsasrequired,failuretomakerequiredpaymentsordeposits,ERISA
relatedevents,eventsrelatedtotheentryofanorderdecreeingdissolutionthatremainsundischarged,eventsrelatedtothe
entryorfilingofjudgments,attachmentsorcertaintaxliensthatremainundischarged,andeventsrelatedtobreachesof
terms,representations,warrantiesoraffirmativeandrestrictivecovenants.Restrictivecovenantsmay,amongotherthings,
imposelimitationsorrestrictionsonourabilitytopaydividends,redeemourstock,makepaymentsinordertoretireor
obtainthesurrenderofwarrantsoroptions,ortheabilityoftherespectiveborrowersthereundertoincuradditional

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indebtedness,paydividends,makeinvestments,engageintransactionswithaffiliates,sellassets,consolidateormerge,
makechangesinthenatureofthebusiness,andcreateliens.

Inthecaseofthesubsidiaryfacilities,followinganeventofdefaultoranearlyamortizationevent,collectionsonthecollateral
areappliedtorepayprincipalratherthanbeingavailableonarevolvingbasistofundtheoriginationactivitiesofourbusiness.Inthe
caseofallourfacilities,ifaneventofdefaultoccurs,thelendersunderourfacilitieswillnolongerprovidefundingunderthe
facilitiesandwillbeentitledtotakevariousactions,includingtheaccelerationofamountsdueunderourfacilitiesandallactions
permittedtobetakenbyasecuredcreditor,ifwewereunabletoobtaincovenantrelieforobtainawaiverfromthelendersforspecific
noncompliancematters.
Whilethelendersunderourcorporatefacilityhavedirectrecoursetousastheborrowerthereunder,lendersunderoursubsidiary
facilitiesdonothavedirectrecoursetous.
Moreover,wecurrentlyactasservicerwithrespecttothesmallbusinessloansheldbythesubsidiaries.Ifwedefaultinour
servicingobligationsorfailtomeetcertainfinancialcovenants,anearlyamortizationeventoreventofdefaultcouldoccurand/orwe
couldbereplacedbyourbackupserviceroranotherreplacementservicer.
EarlyTerminationFees
EarlyterminationfeesmaybepayableundertheODARTandODACfacilitiesintheeventofaterminationorotherpermanent
reductionsoftherevolvingcommitmentspriortoMay16,2016andOctober23,2015,respectively.

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DESCRIPTIONOFCAPITALSTOCK
General
Thefollowingdescriptionsummarizesthemostimportanttermsofourcapitalstock,astheyareexpectedtobeineffectupon
thecompletionofthisoffering.Weexpecttoadoptanamendedandrestatedcertificateofincorporationandamendedandrestated
bylawsinconnectionwiththecompletionofthisoffering,andthisdescriptionsummarizestheprovisionsthatareexpectedtobe
includedinsuchdocuments.Thissummarydoesnotpurporttobecompleteandisqualifiedinitsentiretybytheprovisionsofour
amendedandrestatedcertificateofincorporationandamendedandrestatedbylaws,copiesofwhichhavebeenfiledasexhibitstothe
registrationstatementofwhichthisprospectusisapart.Foracompletedescriptionofourcapitalstock,youshouldrefertoour
amendedandrestatedcertificateofincorporation,amendedandrestatedbylawsandamendedandrestatedinvestorrightsagreement,
thatareorwillbeincludedasexhibitstotheregistrationstatementofwhichthisprospectusformsapart,andtotheapplicable
provisionsofDelawarelaw.Immediatelyfollowingthecompletionofthisoffering,ourauthorizedcapitalstockwillconsist
ofsharesofcommonstock,$0.01parvaluepershare,andsharesofundesignatedpreferredstock,$0.01par
valuepershare.
Assumingtheautomaticconversionofalloutstandingsharesofourredeemableconvertiblepreferredstockintoanaggregateof
23,725,822sharesofourcommonstock,whichwilloccuruponthecompletionofthisoffering,asofSeptember30,2014,therewere
28,080,318sharesofourcommonstockoutstandingonanasconvertedbasis,heldbyapproximately123stockholdersofrecord.Our
boardofdirectorsisauthorized,withoutstockholderapproval,toissueadditionalsharesofourcapitalstock.
CommonStock
DividendRights
Subjecttopreferencesthatmaybeapplicabletoanythenoutstandingpreferredstock,holdersofourcommonstockareentitled
toreceivedividends,ifany,asmaybedeclaredfromtimetotimebyourboardofdirectorsoutoflegallyavailablefunds.Wehave
neverdeclaredorpaidcashdividendsonanyofourcapitalstockandcurrentlydonotanticipatepayinganycashdividendsafterthis
offeringorintheforeseeablefuture.
VotingRights
Eachholderofourcommonstockisentitledtoonevoteforeachshareonallmatterssubmittedtoavoteofthestockholders,
includingtheelectionofdirectors.Ourstockholdersdonothavecumulativevotingrightsintheelectionofdirectors.Accordingly,
holdersofamajorityofthevotingsharesareabletoelectallofthedirectors.
RighttoReceiveLiquidationDistributions
Intheeventofourliquidation,dissolutionorwindingup,holdersofourcommonstockwillbeentitledtoshareratablyinthe
netassetslegallyavailablefordistributiontostockholdersafterthepaymentofallofourdebtsandotherliabilitiesandthe
satisfactionofanyliquidationpreferencegrantedtotheholdersofanythenoutstandingsharesofpreferredstock.
RightsandPreferences
Holdersofourcommonstockhavenopreemptive,conversion,subscriptionorotherrights,andtherearenoredemptionor
sinkingfundprovisionsapplicabletoourcommonstock.Therights,preferencesandprivilegesoftheholdersofourcommonstock
aresubjecttoandmaybeadverselyaffectedby,therightsoftheholdersofsharesofanyseriesofourpreferredstockthatwemay
designateinthefuture.

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PreferredStock
Immediatelyafterthecompletionofthisoffering,ourboardofdirectorswillhavetheauthority,withoutfurtheractionbyour
stockholders,toissueuptosharesofpreferredstockinoneormoreseriesandtofixtherights,preferences,privilegesand
restrictionsthereof.Theserights,preferencesandprivilegescouldincludedividendrights,conversionrights,votingrights,termsof
redemption,liquidationpreferences,sinkingfundtermsandthenumberofsharesconstitutinganyseriesorthedesignationofsuch
series,anyorallofwhichmaybegreaterthantherightsofcommonstock.Theissuanceofpreferredstockbyuscouldadversely
affectthevotingpowerofholdersofcommonstockandthelikelihoodthatsuchholderswillreceivedividendpaymentsand
paymentsuponliquidation.Inaddition,theissuanceofpreferredstockcouldhavetheeffectofdelaying,deferringorpreventinga
changeofcontrolorothercorporateaction.Uponthecompletionofthisoffering,nosharesofpreferredstockwillbeoutstanding,
andwehavenopresentplantoissueanysharesofpreferredstock.
Warrants
AsofSeptember30,2014,warrantstopurchase1,653,763sharesofcommonstockataweightedaverageexercisepriceof
$14.44wereoutstanding.
AsofSeptember30,2014,onewarranttopurchase137,500sharesofSeriesC1preferredstockatanexercisepriceof$5.5258
wasoutstanding.Upontheclosingofthisoffering,thiswarrantwillbecomeexercisableforthesamenumberofsharesofcommon
stock.
AsofSeptember30,2014,warrantstopurchase15,000sharesofSeriesEpreferredstockatanexercisepriceof$29.42were
outstanding.Upontheclosingofthisoffering,thesewarrantswillbecomeexercisableforthesamenumberofsharesofcommon
stock.
Allofthesewarrantshaveanetexerciseprovisionunderwhichitsholdermay,inlieuofpaymentoftheexercisepriceincash,
surrenderthewarrantandreceiveanetamountofsharesbasedonthefairmarketvalueofourpreferredstockatthetimeofexerciseof
thewarrantafterdeductionoftheaggregateexerciseprice.Eachwarrantcontainsprovisionsfortheadjustmentoftheexerciseprice
andthenumberofsharesissuableupontheexerciseofthewarrantintheeventofcertainstockdividends,stocksplits,
reorganizations,reclassificationsandconsolidations.Certainoftheholdersofthesharesissuableuponexerciseofourwarrantsare
entitledtoregistrationrightswithrespecttosuchsharesasdescribedingreaterdetailunderthesectionbelowtitledRegistration
Rights.
StockOptions
AsofSeptember30,2014,therewere4,985,401sharesofourcommonstockissuableuponexerciseofoutstandingstock
optionspursuanttoourAmendedandRestated2007StockIncentivePlanwithaweightedaverageexercisepriceof$7.51pershare.
RegistrationRights
Afterthecompletionofthisoffering,theholdersofanaggregateof28,431,830sharesofourcommonstock(includingshares
issuablepursuanttotheexerciseofwarrantstopurchasecommonstock),ortheirpermittedtransferees,areentitledtorightswith
respecttotheregistrationofsuchsharesundertheSecuritiesAct.Werefertothesesharesasregistrablesecurities.Theserightsare
providedunderthetermsofouramendedandrestatedinvestorsrightsagreementbetweenusandtheholdersofregistrablesecurities,
certainoutstandingwarrantsandsideletteragreementsandincludedemandregistrationrights,shortformregistrationrightsand
piggybackregistrationrights.
Alldemandregistrationrights,FormS3registrationrightsandpiggybackregistrationrightswillterminateupontheearliestto
occurof:(i)(A)thesale,lease,transfer,exclusivelicenseorotherdispositionofallor

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substantiallyallofourassetsor(B)theclosingofourmergerorconsolidationwithanotherentity(exceptamergerorconsolidation
inwhichtheholdersofourcapitalstockwouldcontinuetoholdatleastamajorityofthevotingpowerofourcapitalstockorthe
capitalstockofthesurvivingentityortheparentcompanyofthesurvivingentity)or(ii)withrespecttoanyholderofregistrable
securities,whensuchholdermaysellallsharesheldbyitincompliancewithRule144withinanythreemonthperiod,providedthat
allFormS3registrationrightsandpiggybackregistrationrightscontinueforthreeyearsfollowingthecompletionofthisoffering.
Wewillpaytheregistrationexpenses(otherthanunderwritingdiscountsandcommissions)inconnectionwiththeregistrations
describedbelow,includingthereasonablefeesanddisbursementsofonecounselforparticipatingholdersofregistrablesecurities.In
anunderwrittenoffering,theunderwritershavetherighttolimitthenumberofsharesregisteredbytheseholdersformarketing
reasons,subjecttocertainlimitations.Inconnectionwiththecompletionofthisoffering,eachholderofregistrablesecuritieshas
agreedorwillagreenottosellorotherwisedisposeofanysecuritieswithoutthepriorwrittenconsentoftheunderwritersforaperiod
of180daysafterthedateofthisprospectus,subjecttocertaintermsandconditions.SeethesectiontitledSharesEligibleforFuture
SaleLockUpAgreementsforadditionalinformation.
DemandRegistrationRights
Oneyearafterthecompletionofthisoffering,theholdersof40%ormoreofourregistrablesecuritiesmayrequestthatwe
registertheofferandsaleoftheirsharesiftheanticipatedaggregateofferingpriceofsuchshares,netofsellingexpenses,isatleast
$10million,orsuchshareswouldconstituteamajorityofthecommonstockissueduponconversionofcertainsharesofthepreferred
stockoutstandingimmediatelypriortothisoffering.Wearenotrequiredtoeffectsuchregistration(i)ifwehavealreadyeffected
morethantwodemandregistrations,(ii)iftheinitiatingholdersproposetodisposeofregistrablesecuritiesthatmaybeimmediately
registeredonFormS3or(iii)duringtheperiodbeginningwiththedate60dayspriortoourgoodfaithestimateofthedateoffiling
of,andending90daysfollowingtheeffectivenessofaregistrationstatementrelatingtotheinitialpublicofferingofoursecurities.In
addition,ifwedeterminethatitwouldbemateriallydetrimentaltousandourstockholderstoeffectademandregistration,wehave
therighttodefersuchregistration,notmorethanonceinany12monthperiod,foraperiodofuptosixmonths,providedthatwedo
notregisteranyofoursecuritiesorthoseofanyotherstockholderduringsuchsixmonthperiod,otherthanwithrespecttoa
registrationrelatedtoacompanystockplan,aregistrationrelatedtoatransactionunderRule145oftheSecuritiesActora
registrationinwhichtheonlycommonstockbeingregisterediscommonstockissuableuponconversionofdebtsecuritiesthatare
alsobeingregistered.
PiggybackRegistrationRights
IfweproposetoregistertheofferandsaleofanyofoursecuritiesundertheSecuritiesActinconnectionwiththepublicoffering
ofsuchsecurities,theholdersofourregistrablesecuritieswillbeentitledtocertainpiggybackregistrationrightsallowingsuch
holderstoincludetheirsharesinsuchregistration,subjecttocertainlimitations.Asaresult,wheneverweproposetofilea
registrationstatementundertheSecuritiesAct,otherthanwithrespecttoaregistrationrelatedtoacompanystockplan,aregistration
relatedtoatransactionunderRule145oftheSecuritiesActoraregistrationinwhichtheonlycommonstockbeingregisteredis
commonstockissuableuponconversionofdebtsecuritiesthatarealsobeingregistered,theholdersofthesesharesareentitledto
noticeoftheregistrationandhavetherighttoincludetheirsharesintheregistration.
FormS3RegistrationRights
TheholdersofourregistrablesecuritiesmaymakeawrittenrequestthatweregistertheofferandsaleoftheirsharesonFormS3
ifweareeligibletofilearegistrationstatementonFormS3solongasthesaleofsecuritiesregisteredpursuanttosuchrequestwould
resultinanaggregatepricetothepublic,netofsellingexpenses,ofatleast$2million.Wearenotrequiredtoeffectsuchregistration
(i)duringtheperiodbeginningwiththedate30dayspriortoourgoodfaithestimateofthedateoffilingof,andending90days
followingthe

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effectivenessofaregistrationstatementrelatingtoaregistrationinitiatedbyusor(ii)ifwehavealreadyeffectedmorethantwoForm
S3registrationsintheprior12months.Inaddition,ifwedeterminethatitwouldbemateriallydetrimentaltousandour
stockholderstoeffectaFormS3registration,wehavetherighttodefersuchregistration,notmorethanonceinany12monthperiod,
foraperiodofuptosixmonths,providedthatwedonotregisteranyofoursecuritiesorthoseofanyotherstockholderduringsuch
sixmonthperiod,otherthanwithrespecttoaregistrationrelatedtoacompanystockplan,aregistrationrelatedtoatransactionunder
Rule145oftheSecuritiesActoraregistrationinwhichtheonlycommonstockbeingregisterediscommonstockissuableupon
conversionofdebtsecuritiesthatarealsobeingregistered.
AntiTakeoverEffectsofDelawareLawandOurCertificateofIncorporationandBylaws
TheprovisionsofDelawarelaw,ouramendedandrestatedcertificateofincorporationandouramendedandrestatedbylaws
mayhavetheeffectofdelaying,deferringordiscouraginganotherpersonfromacquiringcontrolofourcompany.Theseprovisions,
whicharesummarizedbelow,mayhavetheeffectofdiscouragingtakeoverbids.Theyarealsodesigned,inpart,toencouragepersons
seekingtoacquirecontrolofustonegotiatefirstwithourboardofdirectors.Webelievethatthebenefitsofincreasedprotectionof
ourpotentialabilitytonegotiatewithanunfriendlyorunsolicitedacquireroutweighthedisadvantagesofdiscouragingaproposalto
acquireusbecausenegotiationoftheseproposalscouldresultinanimprovementoftheirterms.
DelawareLaw
WearegovernedbytheprovisionsofSection203oftheDelawareGeneralCorporationLaw.Ingeneral,Section203prohibitsa
publicDelawarecorporationfromengaginginabusinesscombinationwithaninterestedstockholderforaperiodofthreeyears
afterthedateofthetransactioninwhichthepersonbecameaninterestedstockholder,unlessthebusinesscombinationisapprovedin
aprescribedmanner.Abusinesscombinationincludesmergers,assetsalesorothertransactionsresultinginafinancialbenefitto
thestockholder.Aninterestedstockholderisapersonwho,togetherwithaffiliatesandassociates,owns,orwithinthreeyearsof
thedateonwhichitissoughttobedeterminedwhethersuchpersonisaninterestedstockholder,didown,15%ormoreofthe
corporationsoutstandingvotingstock.Theseprovisionsmayhavetheeffectofdelaying,deferringorpreventingachangeinour
control.
AmendedandRestatedCertificateofIncorporationandAmendedandRestatedBylawProvisions
Ouramendedandrestatedcertificateofincorporationandouramendedandrestatedbylawsincludeanumberofprovisionsthat
coulddeterhostiletakeoversordelayorpreventchangesincontrolofourmanagementteam,includingthefollowing:

BoardofDirectorsVacancies.Ouramendedandrestatedcertificateofincorporationandamendedandrestatedbylawswill
authorizeonlyourboardtofillvacantdirectorships,includingnewlycreatedseats.Inaddition,thenumberofdirectors
constitutingourboardwillbepermittedtobesetonlybyaresolutionadoptedbyourboard.Theseprovisionswould
preventastockholderfromincreasingthesizeofourboardandthengainingcontrolofourboardbyfillingtheresulting
vacancieswithitsownnominees.Thismakesitmoredifficulttochangethecompositionofourboardbutpromotes
continuityofmanagement.

ClassifiedBoard.Ouramendedandrestatedcertificateofincorporationandamendedandrestatedbylawswillprovidethat
ourboardisclassifiedintothreeclassesofdirectors.Athirdpartymaybediscouragedfrommakingatenderofferor
otherwiseattemptingtoobtaincontrolofusasitismoredifficultandtimeconsumingforstockholderstoreplacea
majorityofthedirectorsonaclassifiedboardofdirectors.SeethesectiontitledManagementBoardCompositionfor
additionalinformation.

StockholderActionSpecialMeetingofStockholders.Ouramendedandrestatedcertificateofincorporationwillprovide
thatourstockholdersmaynottakeactionbywrittenconsent,butmayonly

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takeactionatannualorspecialmeetingsofourstockholders.Asaresult,aholdercontrollingamajorityofourcapital
stockwouldnotbeabletoamendouramendedandrestatedbylawsorremovedirectorswithoutholdingameetingofour
stockholderscalledinaccordancewithouramendedandrestatedbylaws.Ouramendedandrestatedbylawswillfurther
providethatspecialmeetingsofourstockholdersmaybecalledonlybyamajorityofourboardofdirectors,thechairman
ofourboardofdirectors,ourChiefExecutiveOfficerorourpresident,thusprohibitingastockholderfromcallingaspecial
meeting.Theseprovisionsmightdelaytheabilityofourstockholderstoforceconsiderationofaproposalorfor
stockholderscontrollingamajorityofourcapitalstocktotakeanyaction,includingtheremovalofdirectors.

AdvanceNoticeRequirementsforStockholderProposalsandDirectorNominations.Ouramendedandrestatedbylaws
willprovideadvancenoticeproceduresforstockholdersseekingtobringbusinessbeforeourannualmeetingof
stockholdersortonominatecandidatesforelectionasdirectorsatourannualmeetingofstockholders.Ouramendedand
restatedbylawswillalsospecifycertainrequirementsregardingtheformandcontentofastockholdersnotice.These
provisionsmightprecludeourstockholdersfrombringingmattersbeforeourannualmeetingofstockholdersorfrom
makingnominationsfordirectorsatourannualmeetingofstockholdersiftheproperproceduresarenotfollowed.We
expectthattheseprovisionsmayalsodiscourageordeterapotentialacquirerfromconductingasolicitationofproxiesto
electtheacquirersownslateofdirectorsorotherwiseattemptingtoobtaincontrolofourcompany.

NoCumulativeVoting.TheDelawareGeneralCorporationLawprovidesthatstockholdersarenotentitledtotherightto
cumulatevotesintheelectionofdirectorsunlessacorporationscertificateofincorporationprovidesotherwise.Our
amendedandrestatedcertificateofincorporationandamendedandrestatedbylawswillnotprovideforcumulativevoting.

DirectorsRemovedOnlyforCause.Ouramendedandrestatedcertificateofincorporationwillprovidethatstockholders
mayremovedirectorsonlyforcause.

AmendmentofCharterProvisions.Anyamendmentoftheaboveprovisionsinouramendedandrestatedcertificateof
incorporationwouldrequireapprovalbyholdersofatleasttwothirdsofourthenoutstandingcommonstock.

IssuanceofUndesignatedPreferredStock.Ourboardofdirectorswillhavetheauthority,withoutfurtheractionbythe
stockholders,toissueuptosharesofundesignatedpreferredstockwithrightsandpreferences,includingvoting
rights,designatedfromtimetotimebyourboardofdirectors.Theexistenceofauthorizedbutunissuedsharesofpreferred
stockwouldenableourboardofdirectorstorendermoredifficultortodiscourageanattempttoobtaincontrolofusby
meansofamerger,tenderoffer,proxycontestorothermeans.

TransferAgentandRegistrar
Uponthecompletionofthisoffering,thetransferagentandregistrarforourcommonstockwillbeComputershareTrust
Company,N.A.Thetransferagentandregistrarsaddressis250RoyallStreet,Canton,Massachusetts02021.Oursharesofcommon
stockwillbeissuedinuncertificatedformonly,subjecttolimitedcircumstances.
MarketListing
WehaveappliedtolistourcommonstockontheNewYorkStockExchangeunderthesymbolONDK.

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SHARESELIGIBLEFORFUTURESALE
Priortothisoffering,therehasbeennopublicmarketforourcommonstock,andwecannotpredicttheeffect,ifany,thatmarket
salesofsharesofourcommonstockortheavailabilityofsharesofourcommonstockforsalewillhaveonthemarketpriceofour
commonstockprevailingfromtimetotime.Futuresalesofourcommonstockinthepublicmarket,ortheavailabilityofsuchshares
forsaleinthepublicmarket,couldadverselyaffectmarketpricesprevailingfromtimetotime.Asdescribedbelow,onlyalimited
numberofshareswillbeavailableforsaleshortlyafterthisofferingduetocontractualandlegalrestrictionsonresale.Nevertheless,
salesofourcommonstockinthepublicmarketaftersuchrestrictionslapse,ortheperceptionthatthosesalesmayoccur,could
adverselyaffecttheprevailingmarketpriceatsuchtimeandourabilitytoraiseequitycapitalinthefuture.
Followingthecompletionofthisoffering,andaftergivingeffecttotheautomaticconversionofalloutstandingsharesofour
redeemableconvertiblepreferredstockwhichwilloccuruponthecompletionofthisoffering,basedonthenumberofsharesofour
capitalstockoutstandingasofSeptember30,2014,wewillhaveatotalofsharesofourcommonstockoutstanding.Ofthese
outstandingshares,allofthesharesofcommonstocksoldinthisoffering,plusanysharessolduponexerciseoftheunderwriters
optiontopurchaseuptoanadditionalsharesofcommonstockfromusinthisoffering,willbefreelytradable,exceptthat
anysharespurchasedinthisofferingbyouraffiliates,asthattermisdefinedinRule144undertheSecuritiesAct,wouldonlybeable
tobesoldincompliancewiththeRule144limitationsdescribedbelow.
TheremainingoutstandingsharesofourcommonstockwillbedeemedrestrictedsecuritiesasdefinedinRule144.Restricted
securitiesmaybesoldinthepublicmarketonlyiftheyareregisteredoriftheyqualifyforanexemptionfromregistrationunderRule
144orRule701undertheSecuritiesAct,whichrulesaresummarizedbelow.Inaddition,holdersofallorsubstantiallyallofour
equitysecuritieshaveenteredintoorwillenterintolockupagreementswiththeunderwritersunderwhichtheyhaveagreed,subject
tospecificexceptions,nottosellanyofourstockforatleast180daysfollowingthedateofthisprospectus,asdescribedbelow.Asa
resultoftheseagreements,subjecttotheprovisionsofRule144orRule701,basedonanassumedofferingdateofSeptember30,
2014,shareswillbeavailableforsaleinthepublicmarketasfollows:

beginningonthedateofthisprospectus,thesharesofcommonstocksoldinthisofferingwillbeimmediately
availableforsaleinthepublicmarket

beginning181daysafterthedateofthisprospectus,additionalsharesofcommonstockwillbecomeeligiblefor
saleinthepublicmarket,ofwhichshareswillbeheldbyaffiliatesandsubjecttothevolumeandotherrestrictions
ofRule144,asdescribedbelowand

theremainderofthesharesofcommonstockwillbeeligibleforsaleinthepublicmarketfromtimetotimethereafter,
subjectinsomecasestothevolumeandotherrestrictionsofRule144,asdescribedbelow.

LockUpAgreements
We,ourofficersanddirectorsandholdersofsubstantiallyallofourcommonstockandsecuritiesconvertibleintoor
exchangeableforourcommonstock,haveagreedorwillagreethat,subjecttocertainexceptionsandundercertainconditions,fora
periodof180daysafterthedateofthisprospectus,weandtheywillnot,withoutthepriorwrittenconsentofMorganStanley&Co.
LLCandMerrillLynch,Pierce,Fenner&SmithIncorporated,disposeoforhedgeanysharesoranysecuritiesconvertibleintoor
exchangeableforsharesofourcapitalstock.MorganStanley&Co.LLCandMerrillLynch,Pierce,Fenner&SmithIncorporated
may,intheirdiscretion,releaseanyofthesecuritiessubjecttotheselockupagreementsatanytime.
Therestrictionsdescribedintheimmediatelyprecedingparagrapharesubjecttocertainexceptionsassetforthinthesection
titledUnderwriters.

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Rule10b51TradingPlans
Certainofouremployees,includingourexecutiveofficersand/ordirectorsmayenterintowrittentradingplansthatareintended
tocomplywithRule10b51undertheSecuritiesExchangeActof1934.Salesunderthesetradingplanswouldnotbepermitteduntil
theexpirationofthelockupagreementsdescribedabove.
Rule144
Ingeneral,underRule144ascurrentlyineffect,oncewehavebeensubjecttothepubliccompanyreportingrequirementsof
Section13orSection15(d)oftheExchangeActforatleast90days,apersonwhoisnotdeemedtohavebeenoneofouraffiliatesfor
purposesoftheSecuritiesActatanytimeduringthe90daysprecedingasaleandwhohasbeneficiallyownedthesharesproposedto
besoldforatleastsixmonths,includingtheholdingperiodofanypriorownerotherthanouraffiliates,isentitledtosellthoseshares
withoutcomplyingwiththemannerofsale,volumelimitationornoticeprovisionsofRule144,subjecttocompliancewiththe
publicinformationrequirementsofRule144.Ifsuchapersonhasbeneficiallyownedthesharesproposedtobesoldforatleastone
year,includingtheholdingperiodofanypriorownerotherthanouraffiliates,thenthatpersonwouldbeentitledtosellthoseshares
withoutcomplyingwithanyoftherequirementsofRule144.
Ingeneral,underRule144,ascurrentlyineffect,anduponexpirationofthelockupagreementsdescribedabove,ouraffiliates
orpersonssellingsharesonbehalfofouraffiliatesareentitledtosellwithinanythreemonthperiod,anumberofsharesthatdoesnot
exceedthegreaterof:

1%ofthenumberofsharesofourcommonstockthenoutstanding,whichwillequalapproximatelyshares
immediatelyafterthisofferingassumingnoexercisebytheunderwritersoftheiroptiontopurchaseuptoanadditional
sharesofcommonstockfromusinthisofferingor

theaverageweeklytradingvolumeofourcommonstockduringthefourcalendarweeksprecedingthefilingofanoticeon
Form144withrespecttothatsale

provided,ineachcase,thatwehavebeensubjecttotheExchangeActperiodicreportingrequirementsforatleast90daysbeforethe
sale.SalesunderRule144byouraffiliatesorpersonssellingsharesonbehalfofouraffiliatesarealsosubjecttocertainmannerof
saleprovisionsandnoticerequirementsandtotheavailabilityofcurrentpublicinformationaboutus.
Rule701
Rule701generallyallowsastockholderwhopurchasedsharesofourcommonstockpursuanttoawrittencompensatoryplanor
contractandwhoisnotdeemedtohavebeenanaffiliateofourcompanyduringtheimmediatelypreceding90daystosellthese
sharesinrelianceuponRule144,butwithoutbeingrequiredtocomplywiththepublicinformation,holdingperiod,volume
limitationornoticeprovisionsofRule144.Rule701alsopermitsaffiliatesofourcompanytoselltheirRule701sharesunderRule
144withoutcomplyingwiththeholdingperiodrequirementsofRule144.AllholdersofRule701shares,however,arerequiredby
thatruletowaituntil90daysafterthedateofthisprospectusbeforesellingthosesharespursuanttoRule701.
RegistrationRights
Onthedatebeginning180daysafterthedateofthisprospectus,theholdersof28,431,830sharesofourcommonstock
(includingsharesissuablepursuanttotheexerciseofwarrantstopurchasecommonstock),ortheirtransferees,willbeentitledto
variousrightswithrespecttotheregistrationofthesesharesundertheSecuritiesAct.RegistrationofthesesharesundertheSecurities
ActwouldresultinthesesharesbecomingfullytradablewithoutrestrictionundertheSecuritiesActimmediatelyuponthe
effectivenessoftheregistration,exceptforsharespurchasedbyaffiliates.SeethesectiontitledDescriptionofCapitalStock
RegistrationRightsforadditionalinformation.

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EquityIncentivePlans
Followingthecompletionofthisoffering,weintendtofilearegistrationstatementonFormS8undertheSecuritiesActto
registersharesofourcommonstockissuedorreservedforissuanceunderourAmendedandRestated2007StockIncentivePlan,our
2014EquityIncentivePlanandour2014EmployeeStockPurchasePlan.TheregistrationstatementonFormS8willbecome
effectiveimmediatelyuponfiling,andsharescoveredbysuchregistrationstatementwillthereuponbeeligibleforsaleinthepublic
markets,subjecttovestingrestrictions,thelockupagreementsdescribedaboveandRule144limitationsapplicabletoaffiliates.See
thesectiontitledExecutiveCompensationEmployeeBenefitandStockPlansforadditionalinformation.

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MATERIALU.S.FEDERALINCOMETAXCONSEQUENCESTO
NONU.S.HOLDERSOFOURCOMMONSTOCK
ThefollowingisasummaryofthematerialU.S.federalincometaxconsequencesoftheownershipanddispositionofour
commonstocktononU.S.holders(asdefinedbelow),butdoesnotpurporttobeacompleteanalysisofallthepotentialtax
considerationsrelatingthereto.ThissummaryisbasedupontheprovisionsoftheCode,Treasuryregulationspromulgatedthereunder,
administrativerulingsandjudicialdecisions,allasofthedatehereof.Theseauthoritiesmaybechangedorsubjecttodiffering
interpretations,possiblyretroactively,soastoresultinU.S.federalincometaxconsequencesdifferentfromthosesetforthbelow.We
havenotsoughtanyrulingfromtheInternalRevenueService,ortheIRS,withrespecttothestatementsmadeandtheconclusions
reachedinthefollowingsummary,andtherecanbenoassurancethattheIRSoracourtwillagreewithsuchstatementsand
conclusions.
ThissummaryalsodoesnotaddressthetaxconsiderationsarisingunderthelawsofanynonU.S.,stateorlocaljurisdictionor
underU.S.federalgiftandestatetaxlaws,excepttothelimitedextentsetforthbelow.Inaddition,thisdiscussiondoesnotaddress
taxconsiderationsapplicabletoaninvestorsparticularcircumstances,includingtheimpactofthetaxonnetinvestmentincome
imposedbySection1411oftheCode,ortoinvestorsthatmaybesubjecttospecialtaxrules,including,withoutlimitation:

banks,insurancecompaniesorotherfinancialinstitutions

personssubjecttothealternativeminimumtax

mutualfunds

taxexemptorganizations

controlledforeigncorporations,passiveforeigninvestmentcompaniesandcorporationsthataccumulateearningstoavoid
U.S.federalincometax

dealersinsecuritiesorcurrencies

tradersinsecuritiesthatelecttouseamarktomarketmethodofaccountingfortheirsecuritiesholdings

grantortrusts

personsthatown,oraredeemedtoown,morethan5%ofourcapitalstock(excepttotheextentspecificallysetforth
below)

certainformercitizensorlongtermresidentsoftheUnitedStates

personswhoholdourcommonstockasapositioninahedgingtransaction,straddle,conversiontransactionorother
riskreductiontransaction

personswhodonotholdourcommonstockasacapitalassetwithinthemeaningofSection1221oftheCodeand

personsdeemedtosellourcommonstockundertheconstructivesaleprovisionsoftheCode.

YouareurgedtoconsultyourtaxadvisorwithrespecttotheapplicationoftheU.S.federalincometaxlawstoyourparticular
situation,aswellasanytaxconsequencesofthepurchase,ownershipanddispositionofourcommonstockarisingundertheU.S.
federalestateorgifttaxrulesorunderthelawsofanystate,local,nonU.S.orothertaxingjurisdictionorunderanyapplicabletax
treaty.

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NonU.S.HolderDefined
Forpurposesofthisdiscussion,anonU.S.holder(otherthanapartnershiporotherentitytreatedassuchforU.S.federalincome
taxpurposes)isanybeneficialownerthat,forU.S.federalincometaxpurposes,isnotaU.S.person.ThetermU.S.personmeans:

anindividualcitizenorresidentoftheUnitedStates

acorporationorotherentitytaxableasacorporationcreatedororganizedintheUnitedStatesorunderthelawsofthe
UnitedStates,anystatethereof,ortheDistrictofColumbia

anestatewhoseincomeissubjecttoU.S.federalincometaxregardlessofitssourceor

atrust(x)whoseadministrationissubjecttotheprimarysupervisionofaU.S.courtandthathasoneormoreU.S.persons
whohavetheauthoritytocontrolallsubstantialdecisionsofthetrustor(y)thathasavalidelectionineffecttobetreated
asaU.S.person.

Ifapartnership(oranentitytreatedasapartnershipforU.S.federalincometaxpurposes)holdsourcommonstock,theU.S.
federalincometaxtreatmentofsuchpartnershipandapartnerinsuchpartnershipwillgenerallydependuponthestatusofthepartner
andtheactivitiesofthepartnership.Ifyouareapartnership,orapartnerofapartnership,holdingourcommonstock,youshould
consultyourtaxadvisorregardingthetaxconsequencestoyoufromthepartnershipspurchase,ownershipanddispositionofour
commonstock.
DistributionsonourCommonStock
AsdescribedinthesectiontitledDividendPolicy,wedonotanticipatemakinganydistributionsonourcommonstock
followingthecompletionofthisoffering.However,ifwedomakedistributionsonourcommonstock,thosepaymentswill
constitutedividendsforU.S.federalincometaxpurposestotheextentpaidfromourcurrentoraccumulatedearningsandprofits,as
determinedunderU.S.federalincometaxprinciples.Totheextentthosedistributionsexceedbothourcurrentandouraccumulated
earningsandprofits,theywillconstituteareturnofcapitalandwillfirstreduceyourbasisinourcommonstock,butnotbelowzero,
andthenwillbetreatedascapitalgainasdescribedbelowunderthesectiontitledGainonSaleorOtherDispositionsofour
CommonStock.
AnydividendpaidtoyougenerallywillbesubjecttoU.S.withholdingtaxeitheratarateof30%ofthegrossamountofthe
dividendorsuchlowerrateasmaybespecifiedbyanapplicableincometaxtreaty.Inordertoreceiveareducedtreatyrate,youmust
provideuswithanIRSFormW8BENorotherappropriateversionofIRSFormW8certifyingqualificationforthereducedrate.A
nonU.S.holderofsharesofourcommonstockeligibleforareducedrateofU.S.withholdingtaxpursuanttoanincometaxtreaty
mayobtainarefundofanyexcessamountswithheldbyfilinganappropriateclaimforrefundwiththeIRS.Ifyouholdourcommon
stockthroughafinancialinstitutionorotheragentactingonyourbehalf,youwillberequiredtoprovideappropriatedocumentation
totheagent,whichthenwillberequiredtoprovidecertificationtousorourpayingagent,eitherdirectlyorthroughother
intermediaries.
DividendsreceivedbyyouthatareeffectivelyconnectedwithyourconductofaU.S.tradeorbusiness(and,ifanincometax
treatyapplies,suchdividendsareattributabletoapermanentestablishmentmaintainedbyyouintheUnitedStates)areincludiblein
yourgrossincomeinthetaxableyearreceived,andareexemptfromsuchwithholdingtax.Inordertoobtainthisexemption,you
mustprovideuswithanIRSFormW8ECIorotherapplicableIRSFormW8properlycertifyingsuchexemption.Sucheffectively
connecteddividends,althoughnotsubjecttowithholdingtax,aretaxedatthesamegraduatedratesapplicabletoU.S.persons,netof
certaindeductionsandcredits.Inaddition,ifyouareacorporatenonU.S.holder,dividendsyoureceivethatareeffectively
connectedwithyourconductofaU.S.tradeorbusinessmayalsobesubjecttoabranchprofitstaxatarateof30%orsuchlowerrate
asmaybespecifiedbyanapplicableincometaxtreaty.AnonU.S.holdershouldconsultitstaxadvisorregardingitspossible
entitlementtobenefitsunderanincometaxtreaty.

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GainonSaleorOtherDispositionsofOurCommonStock
YougenerallywillnotberequiredtopayU.S.federalincometaxonanygainrealizeduponthesaleorothertaxabledisposition
ofourcommonstockunless:

thegainiseffectivelyconnectedwithyourconductofaU.S.tradeorbusiness(and,ifanincometaxtreatyapplies,thegain
isattributabletoapermanentestablishmentmaintainedbyyouintheUnitedStates)

youareanindividualwhoispresentintheUnitedStatesforaperiodorperiodsaggregating183daysormoreduringthe
calendaryearinwhichthesaleordispositionoccursandcertainotherconditionsaremetor

ourcommonstockconstitutesaU.S.realpropertyinterestbyreasonofourstatusasaUnitedStatesrealpropertyholding
corporation,orUSRPHC,forU.S.federalincometaxpurposes.

WebelievethatwearenotcurrentlyandwillnotbecomeaUSRPHC.However,becausethedeterminationofwhetherwearea
USRPHCdependsonthefairmarketvalueofourU.S.realpropertyrelativetothefairmarketvalueofourotherbusinessassets,there
canbenoassurancethatwewillnotbecomeaUSRPHCinthefuture.EvenifwebecomeaUSRPHC,however,aslongasour
commonstockisregularlytradedonanestablishedsecuritiesmarket,yourcommonstockwillbetreatedasU.S.realproperty
interestsonlyifyouactuallyorconstructivelyholdmorethan5%ofsuchregularlytradedcommonstockatanytimeduringthe
shorterofthefiveyearperiodprecedingyourdispositionof,oryourholdingperiodfor,ourcommonstock.
IfyouareanonU.S.holderdescribedinthefirstbulletabove,youwillberequiredtopaytaxonthenetgainderivedfromthe
saleatregulargraduatedU.S.federalincometaxrates,andacorporatenonU.S.holderdescribedinthefirstbulletabovealsomaybe
subjecttothebranchprofitstaxata30%rate,orsuchlowerrateasmaybespecifiedbyanapplicableincometaxtreaty.
IfyouareanindividualnonU.S.holderdescribedinthesecondbulletabove,youwillberequiredtopayaflat30%tax(orsuch
lowerratespecifiedbyanapplicableincometaxtreaty)onthegainderivedfromthesale,whichtaxmaybeoffsetbyU.S.source
capitallosses,eventhoughyouarenotconsideredaresidentoftheUnitedStates,providedyouhavetimelyfiledU.S.federalincome
taxreturnswithrespecttosuchlosses.Prospectiveinvestorsareencouragedtoconsultwiththeirtaxadvisorsregardingthepossible
implicationsoftheserulesontheirinvestmentinourcommonstock.
FederalEstateTax
OurcommonstockbeneficiallyownedbyanindividualwhoisnotacitizenorresidentoftheUnitedStates(asdefinedforU.S.
federalestatetaxpurposes)atthetimeofhisorherdeathwillgenerallybeincludableinthedecedentsgrossestateforU.S.federal
estatetaxpurposes,unlessanapplicableestatetaxtreatyprovidesotherwise.
BackupWithholdingandInformationReporting
Generally,wemustreportannuallytotheIRStheamountofdividendspaidtoyou,yournameandaddress,andtheamountof
taxwithheld,ifany.Asimilarreportwillbesenttoyou.Pursuanttoapplicableincometaxtreatiesorotheragreements,theIRSmay
makethesereportsavailabletotaxauthoritiesinyourcountryofresidenceorestablishment.
Paymentsofdividendsorofproceedsonthedispositionofstockmadetoyoumaybesubjecttoinformationreportingand
backupwithholdingatacurrentrateof28%unlessyouestablishanexemption,forexample,byproperlycertifyingyournonU.S.
statusonaFormW8BENoranotherappropriateversionofIRSFormW8.

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Notwithstandingtheforegoing,backupwithholdingandinformationreportingmayapplyifeitherweorourpayingagenthasactual
knowledge,orreasontoknow,thatyouareaU.S.person.
Backupwithholdingisnotanadditionaltaxrather,theU.S.incometaxliabilityofpersonssubjecttobackupwithholdingwill
bereducedbytheamountoftaxwithheld.Ifwithholdingresultsinanoverpaymentoftaxes,arefundorcreditmaygenerallybe
obtainedfromtheIRS,providedthattherequiredinformationisfurnishedtotheIRSinatimelymanner
CommonStockHeldbyorthroughForeignEntities
Sections14711474oftheCodeandtheTreasuryregulationsissuedthereundergenerallyimposeaU.S.federalwithholdingtax
of30%ondividends,andthegrossproceedsofadispositionofourcommonstock,paidtoaforeignfinancialinstitution(as
definedundertheserules),unlesssuchinstitutionentersintoanagreementwiththeU.S.governmenttowithholdoncertainpayments
andtocollectandprovidetotheU.S.taxauthoritiessubstantialinformationregardingtheU.S.accountholdersofsuchinstitution
(whichincludescertainequityanddebtholdersofsuchinstitution,aswellascertainaccountholdersthatareforeignentitieswith
U.S.owners),unlesssuchinstitutionotherwisequalifiesforanexemptionundertheserules.AU.S.federalwithholdingtaxof30%
alsogenerallyappliestodividendsandthegrossproceedsofadispositionofourcommonstockpaidtoanonfinancialforeignentity
unlesssuchentityprovidesthewithholdingagentwithacertificationthatitdoesnothaveanysubstantialUnitedStatesowners(as
definedundertheserules)orfurnishesidentifyinginformationregardingeachsubstantialUnitedStatesowner,unlesssuchentity
otherwisequalifiesforanexemptionundertheserules.Thewithholdingobligationsundertheseruleswithrespecttothegross
proceedsofasaleorotherdispositionofourcommonstockwillnotbeginuntilJanuary1,2017.Undercertaincircumstances,anon
U.S.holdermightbeeligibleforrefundsorcreditsofsuchtaxes.AnintergovernmentalagreementbetweentheUnitedStatesandan
applicableforeigncountrymaymodifytherequirementsdescribedinthisparagraph.Thus,ifyouholdourcommonstockthrougha
foreignfinancialinstitutionorforeignentity,alloraportionofanypaymentsmadetoyouwithrespecttoourcommonstockmaybe
subjectto30%withholding.Prospectiveinvestorsareencouragedtoconsultwiththeirtaxadvisorsregardingthepossible
implicationsoftheserulesontheirinvestmentinourcommonstock.
TheprecedingdiscussionofU.S.federaltaxconsiderationsisforgeneralinformationonly.Itisnottaxadvice.Eachprospective
investorshouldconsultitstaxadvisorregardingtheparticularU.S.federal,stateandlocalandnonU.S.taxconsequencesof
purchasing,holdinganddisposingofourcommonstock,includingtheconsequencesofanyproposedchangeinapplicablelaws.

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UNDERWRITERS
Underthetermsandsubjecttotheconditionsinanunderwritingagreementdatedthedateofthisprospectus,theunderwriters
namedbelow,forwhomMorganStanley&Co.LLCandMerrillLynch,Pierce,Fenner&SmithIncorporatedareactingas
representatives,haveseverallyagreedtopurchase,andwehaveagreedtoselltothem,severally,thenumberofsharesindicated
below:

Underwriters

MorganStanley&Co.LLC
MerrillLynch,Pierce,Fenner&Smith
Incorporated
J.P.MorganSecuritiesLLC
DeutscheBankSecuritiesInc.
JefferiesLLC
RaymondJames&Associates,Inc.
Stifel,Nicolaus&Company,Incorporated
Needham&Company,LLC
Total:

Numberof
Shares

Theunderwritersandtherepresentativesarecollectivelyreferredtoastheunderwritersandtherepresentatives,
respectively.Theunderwritersareofferingthesharesofcommonstocksubjecttotheiracceptanceofthesharesfromusandsubjectto
priorsale.Theunderwritingagreementprovidesthattheobligationsoftheseveralunderwriterstopayforandacceptdeliveryofthe
sharesofcommonstockofferedbythisprospectusaresubjecttotheapprovalofcertainlegalmattersbytheircounselandtocertain
otherconditions.Theunderwritersareobligatedtotakeandpayforallofthesharesofcommonstockofferedbythisprospectusif
anysuchsharesaretaken.However,theunderwritersarenotrequiredtotakeorpayforthesharescoveredbytheunderwritersoption
topurchaseadditionalsharesdescribedbelow.
Theunderwritersinitiallyproposetoofferpartofthesharesofcommonstockdirectlytothepublicattheofferingpricelistedon
thecoverpageofthisprospectusandparttocertaindealers.Aftertheinitialofferingofthesharesofcommonstock,theofferingprice
andothersellingtermsmayfromtimetotimebevariedbytherepresentatives.
Wehavegrantedtotheunderwritersanoption,exercisablefor30daysfromthedateofthisprospectus,topurchaseupto
additionalsharesofcommonstockatthepublicofferingpricelistedonthecoverpageofthisprospectus,lessunderwritingdiscounts
andcommissions.Totheextenttheoptionisexercised,eachunderwriterwillbecomeobligated,subjecttocertainconditions,to
purchaseaboutthesamepercentageoftheadditionalsharesofcommonstockasthenumberlistednexttotheunderwritersnamein
theprecedingtablebearstothetotalnumberofsharesofcommonstocklistednexttothenamesofallunderwritersinthepreceding
table.
Thefollowingtableshowsthepershareandtotalpublicofferingprice,underwritingdiscountsandcommissions,andproceeds
beforeexpensestous.Theseamountsareshownassumingbothnoexerciseandfullexerciseoftheunderwritersoptiontopurchase
uptoanadditionalsharesofcommonstock.

Per
Share

Publicofferingprice
Underwritingdiscountsandcommissionstobepaidbyus
Proceeds,beforeexpenses,tous

148

Total

No
Full
Exercise
Exercise

$
$

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Theestimatedofferingexpensespayablebyus,exclusiveoftheunderwritingdiscountsandcommissions,areapproximately
$.
Theunderwritershaveinformedusthattheydonotintendsalestodiscretionaryaccountstoexceed5%ofthetotalnumberof
sharesofcommonstockofferedbythem.
WehaveappliedtolistourcommonstockontheNewYorkStockExchangeunderthesymbolONDK.
Weandalldirectorsandofficersandtheholdersof%ofouroutstandingstockandstockoptionshaveagreedthat,without
thepriorwrittenconsentofMorganStanley&Co.LLCandMerrillLynch,Pierce,Fenner&SmithIncorporatedonbehalfofthe
underwriters,weandtheywillnot,duringtheperiodending180daysafterthedateofthisprospectus(therestrictedperiod):

offer,pledge,sell,contracttosell,sellanyoptionorcontracttopurchase,purchaseanyoptionorcontracttosell,grantany
option,rightorwarranttopurchase,lendorotherwisetransferordisposeof,directlyorindirectly,anysharesofcommon
stockoranysecuritiesconvertibleintoorexercisableorexchangeableforsharesofcommonstockprovidedthatwemay
issueupto5%ofourcapitalstockinconnectionwithoneormoreacquisitionsorstrategictransactionscompletedduring
therestrictedperiod

fileanyregistrationstatementwiththeSecuritiesandExchangeCommissionrelatingtotheofferingofanysharesof
commonstockoranysecuritiesconvertibleintoorexercisableorexchangeableforcommonstockor

enterintoanyswaporotherarrangementthattransferstoanother,inwholeorinpart,anyoftheeconomicconsequencesof
ownershipofthecommonstock,

whetheranysuchtransactiondescribedaboveistobesettledbydeliveryofcommonstockorsuchothersecurities,incashor
otherwise.Inaddition,weandeachsuchpersonagreesthat,withoutthepriorwrittenconsentofMorganStanley&Co.LLCand
MerrillLynch,Pierce,Fenner&SmithIncorporatedonbehalfoftheunderwriters,weorsuchotherpersonwillnot,duringthe
restrictedperiod,makeanydemandfor,orexerciseanyrightwithrespectto,theregistrationofanysharesofcommonstockorany
securityconvertibleintoorexercisableorexchangeableforcommonstock.
Intheeventthatareleaseoftheforegoingrestrictionsisgrantedtoanydirector,officeror1%orgreaterequityholder,weare
obligatedtoreleaseeachofourequityholdersonaproratabasis.Suchproratareleaseshallnotapplyto(i)releasestoanyindividual
partyinanamountlessthanorequalto100,000shares(ii)anyprimaryorsecondarypublicofferingorunderwrittensaleduringthe
restrictedperiod,or(iii)areleaseduetopersonalhardship.
Therestrictionsdescribedintheimmediatelyprecedingparagraphdonotapplyto:

thesaleofsecuritiespursuanttothetermsoftheunderwritingagreement

transactionsbyanypersonotherthanusrelatingtosharesofcommonstockorothersecuritiesacquiredinthisofferingor
inopenmarkettransactionsafterthecompletionoftheofferingofthesharesprovidedthatduringtherestrictedperiodno
filingunderSection16(a)oftheSecuritiesExchangeActof1934,asamended,ortheExchangeAct,isrequiredor
voluntarilymadeinconnectionwithsubsequentsalesofthecommonstockorothersecuritiesacquiredinsuch
transactions

transfersofsharesofcommonstockoranysecurityconvertibleintoorexercisableorexchangeableforcommonstock(i)to
thespouse,domesticpartner,parent,sibling,childorgrandchild(each,animmediatefamilymember)oftheholderortoa
trustformedforthebenefitoftheholderorofanimmediatefamilymemberoftheholder,(ii)byabonafidegift,willor
intestacy,(iii)iftheholderisacorporation,partnership,limitedliabilitycompanyorotherbusinessentity(A)toanother
corporation,

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partnership,limitedliabilitycompanyorotherbusinessentitythatcontrols,iscontrolledbyorisundercommoncontrol
withtheholderor(B)aspartofadisposition,transferordistributionbytheholdertoitsequityholdersor(iv)iftheholder
isatrust,toatrustororbeneficiaryofthetrustprovidedthatinthecaseofanytransferordistributionpursuanttothis
exception,(i)eachdonee,transfereeordistributeeshallsignanddeliveralockuplettersubstantiallyintheformentered
intobytheholderand(ii)nofilingunderSection16(a)oftheExchangeAct,reportingareductioninbeneficialownership
ofsharesofcommonstock,shallberequiredorshallbevoluntarilymadeduringtherestrictedperiod

thereceiptbytheholderfromusofsharesofcommonstockuponthevestingofrestrictedstockawardsorothersecurities
convertibleintocommonstockorupontheexerciseofoptionsorwarrants,orthetransferofsharesofcommonstockorany
securitiesconvertibleintocommonstocktousuponavestingeventofoursecuritiesorupontheexerciseofoptionsor
warrantstopurchaseoursecurities,ineachcaseonacashlessornetexercisebasisortocovertaxwithholding
obligationsoftheholderinconnectionwithsuchvestingorexerciseprovidedthatnofilingunderSection16(a)ofthe
ExchangeAct,reportingareductioninbeneficialownershipofsharesofcommonstock,shallberequiredorshallbe
voluntarilymadeduringtherestrictedperiod

theestablishmentofatradingplanpursuanttoRule10b51undertheExchangeActforthetransferofsharesofcommon
stock,providedthat(i)suchplandoesnotprovideforthetransferofcommonstockduringtherestrictedperiodand(ii)to
theextentapublicannouncementorfilingundertheExchangeAct,ifany,isrequiredoforvoluntarilymadebyoron
behalfoftheholderorusregardingtheestablishmentofsuchplan,suchannouncementorfilingshallincludeastatement
totheeffectthatnotransferofcommonstockmaybemadeundersuchplanduringtherestrictedperiod

thetransferofsharesofcommonstock(oranysecurityconvertibleintoorexercisableorexchangeableforcommonstock)
heldbythepartysubjecttothelockuprestrictionsthatoccursbyoperationoflaw,pursuanttoaqualifieddomesticorder
orinconnectionwithadivorcesettlementprovidedthateachtransfereeshallsignanddeliver,priortosuchtransfer,a
lockuplettersubstantiallyintheformexecutedbythepartysubjecttothelockuprestrictionsprovided,further,thatif
thepartysubjecttothelockuprestrictionsisrequiredtofileareportunderSection16(a)oftheExchangeAct,reportinga
reductioninbeneficialownershipofsharesofcommonstockduringtherestrictedperiod,thepartysubjecttothelockup
restrictionsshallincludeastatementinsuchreporttotheeffectthatsuchtransferwasmadepursuanttoadomesticorderor
divorcesettlementor

thetransferofsharesofcommonstock(oranysecurityconvertibleintoorexercisableorexchangeableforcommonstock)
pursuanttoabonafidethirdpartytenderoffer,merger,consolidationorothersimilartransactionmadetoallholdersofthe
commonstockinvolvingachangeincontrolthathasbeenapprovedbyourboardofdirectors,providedthatintheevent
thatthetenderoffer,merger,consolidationorothersuchtransactionisnotcompleted,thecommonstockownedbythe
partysubjecttothelockuprestrictionsshallremainsubjecttosuchrestrictions.

MorganStanley&Co.LLCandMerrillLynch,Pierce,Fenner&SmithIncorporated,intheirsolediscretion,mayreleasethe
commonstockandothersecuritiessubjecttothelockupagreementsdescribedaboveinwholeorinpartatanytime.Intheevent
MorganStanley&Co.LLCandMerrillLynch,Pierce,Fenner&SmithIncorporatedreleaseanycommonstockandothersecurities
subjecttothelockupagreementsheldbyourofficersanddirectors,wehaveagreedtopubliclyannouncetheimpendingreleaseor
waiveratleasttwobusinessdaysbeforetheeffectivedateofthereleaseorwaiver.
Inordertofacilitatetheofferingofthecommonstock,theunderwritersmayengageintransactionsthatstabilize,maintainor
otherwiseaffectthepriceofthecommonstock.Specifically,theunderwritersmaysellmoresharesthantheyareobligatedtopurchase
undertheunderwritingagreement,creatingashortposition.Ashortsaleiscoverediftheshortpositionisnogreaterthanthenumber
ofsharesavailableforpurchasebytheunderwritersundertheoptiontopurchaseadditionalshares.Theunderwriterscancloseouta
coveredshortsale

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byexercisingtheoptiontopurchaseadditionalsharesorpurchasingsharesintheopenmarket.Indeterminingthesourceofsharesto
closeoutacoveredshortsale,theunderwriterswillconsider,amongotherthings,theopenmarketpriceofsharescomparedtothe
priceavailableundertheoptiontopurchaseadditionalshares.Theunderwritersmayalsosellsharesinexcessoftheoptionto
purchaseadditionalshares,creatinganakedshortposition.Theunderwritersmustcloseoutanynakedshortpositionbypurchasing
sharesintheopenmarket.Anakedshortpositionismorelikelytobecreatediftheunderwritersareconcernedthattheremaybe
downwardpressureonthepriceofthecommonstockintheopenmarketafterpricingthatcouldadverselyaffectinvestorswho
purchaseinthisoffering.Asanadditionalmeansoffacilitatingthisoffering,theunderwritersmaybidfor,andpurchase,sharesof
commonstockintheopenmarkettostabilizethepriceofthecommonstock.Theseactivitiesmayraiseormaintainthemarketprice
ofthecommonstockaboveindependentmarketlevelsorpreventorretardadeclineinthemarketpriceofthecommonstock.The
underwritersarenotrequiredtoengageintheseactivitiesandmayendanyoftheseactivitiesatanytime.
Weandtheunderwritershaveagreedtoindemnifyeachotheragainstcertainliabilities,includingliabilitiesundertheSecurities
Act.
Aprospectusinelectronicformatmaybemadeavailableonwebsitesmaintainedbyoneormoreunderwriters,orsellinggroup
members,ifany,participatinginthisoffering.Therepresentativesmayagreetoallocateanumberofsharesofcommonstockto
underwritersforsaletotheironlinebrokerageaccountholders.Internetdistributionswillbeallocatedbytherepresentativesto
underwritersthatmaymakeInternetdistributionsonthesamebasisasotherallocations.
Theunderwritersandtheirrespectiveaffiliatesarefullservicefinancialinstitutionsengagedinvariousactivities,whichmay
includesecuritiestrading,commercialandinvestmentbanking,financialadvisory,investmentmanagement,investmentresearch,
principalinvestment,hedging,financingandbrokerageactivities.Certainoftheunderwritersandtheirrespectiveaffiliateshave,
fromtimetotime,performed,andmayinthefutureperform,variousfinancialadvisoryandinvestmentbankingservicesforus,for
whichtheyreceivedorwillreceivecustomaryfeesandexpenses.
DeutscheBankSecuritiesInc.actedassolebookrunnerinconnectionwithourOnDeckAssetSecuritizationTrustLLC,or
ODAST,inMay2014.Inaddition,anaffiliateofDeutscheBankSecuritiesInc.actsas(i)administrativeandcollateralagentforour
OnDeckAccountReceivablesTrust20131LLC,orODART,forwhichservicessuchaffiliatereceivescustomaryfees,andisalender
undertheODARTdebtagreementand(ii)payingagentandcollateralagentundera$75millioncreditfacilityenteredintoin
August2014,the2014CreditFacility,forwhichsuchaffiliatereceivescustomaryfees,andisalenderunderthe2014CreditFacility.
AnaffiliateofJefferiesLLCservesastheadministrativeagentunderthe2014CreditFacility,forwhichsuchaffiliatereceives
customaryfees,andisalenderunderthe2014CreditFacility.Inaddition,anaffiliateofJefferiesLLCpurchasesloansinourOnDeck
Marketplace.
Inaddition,intheordinarycourseoftheirvariousbusinessactivities,theunderwritersandtheirrespectiveaffiliatesmaymake
orholdabroadarrayofinvestmentsandactivelytradedebtandequitysecurities(orrelatedderivativesecurities)andfinancial
instruments(includingbankloans)fortheirownaccountandfortheaccountsoftheircustomersandmayatanytimeholdlongand
shortpositionsinsuchsecuritiesandinstruments.Suchinvestmentandsecuritiesactivitiesmayinvolveoursecuritiesand
instruments.Theunderwritersandtheirrespectiveaffiliatesmayalsomakeinvestmentrecommendationsorpublishorexpress
independentresearchviewsinrespectofsuchsecuritiesorinstrumentsandmayatanytimehold,orrecommendtoclientsthatthey
acquire,longorshortpositionsinsuchsecuritiesandinstruments.
PricingoftheOffering
Priortothisoffering,therehasbeennopublicmarketforourcommonstock.Theinitialpublicofferingpricewasdeterminedby
negotiationsbetweenusandtherepresentatives.Amongthefactorsconsideredin

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determiningtheinitialpublicofferingpricewereourfutureprospectsandthoseofourindustryingeneral,oursales,earningsand
certainotherfinancialandoperatinginformationinrecentperiods,andthepriceearningsratios,pricesalesratios,marketpricesof
securities,andcertainfinancialandoperatinginformationofcompaniesengagedinactivitiessimilartoours.
SellingRestrictions
EuropeanEconomicArea
InrelationtoeachMemberStateoftheEuropeanEconomicAreawhichhasimplementedtheProspectusDirective(each,a
RelevantMemberState)anoffertothepublicofanysharesofourcommonstockmaynotbemadeinthatRelevantMemberState,
exceptthatanoffertothepublicinthatRelevantMemberStateofanysharesofourcommonstockmaybemadeatanytimeunder
thefollowingexemptionsundertheProspectusDirective,iftheyhavebeenimplementedinthatRelevantMemberState:

(a) toanylegalentitywhichisaqualifiedinvestorasdefinedintheProspectusDirective
(b) tofewerthan100or,iftheRelevantMemberStatehasimplementedtherelevantprovisionofthe2010PDAmending
Directive,150,naturalorlegalpersons(otherthanqualifiedinvestorsasdefinedintheProspectusDirective),aspermitted
undertheProspectusDirective,subjecttoobtainingthepriorconsentoftherepresentativesforanysuchofferor
(c) inanyothercircumstancesfallingwithinArticle3(2)oftheProspectusDirective,providedthatnosuchofferofsharesof
ourcommonstockshallresultinarequirementforthepublicationbyusoranyunderwriterofaprospectuspursuantto
Article3oftheProspectusDirective.

Forthepurposesofthisprovision,theexpressionanoffertothepublicinrelationtoanysharesofourcommonstockinany
RelevantMemberStatemeansthecommunicationinanyformandbyanymeansofsufficientinformationonthetermsoftheoffer
andanysharesofourcommonstocktobeofferedsoastoenableaninvestortodecidetopurchaseanysharesofourcommonstock,as
thesamemaybevariedinthatMemberStatebyanymeasureimplementingtheProspectusDirectiveinthatMemberState,the
expressionProspectusDirectivemeansDirective2003/71/EC(andamendmentsthereto,includingthe2010PDAmending
Directive,totheextentimplementedintheRelevantMemberState),andincludesanyrelevantimplementingmeasureinthe
RelevantMemberState,andtheexpression2010PDAmendingDirectivemeansDirective2010/73/EU.
UnitedKingdom
Eachunderwriterhasrepresentedandagreedthat:

(a) ithasonlycommunicatedorcausedtobecommunicatedandwillonlycommunicateorcausetobecommunicatedan
invitationorinducementtoengageininvestmentactivity(withinthemeaningofSection21oftheFinancialServicesand
MarketsAct2000,orFSMA,receivedbyitinconnectionwiththeissueorsaleofthesharesofourcommonstockin
circumstancesinwhichSection21(1)oftheFSMAdoesnotapplytousand
(b) ithascompliedandwillcomplywithallapplicableprovisionsoftheFSMAwithrespecttoanythingdonebyitinrelation
tothesharesofourcommonstockin,fromorotherwiseinvolvingtheUnitedKingdom.
NoticetoProspectiveInvestorsinSwitzerland

ThesharesmaynotbepubliclyofferedinSwitzerlandandwillnotbelistedontheSIXSwissExchange,orSIX,oronanyother
stockexchangeorregulatedtradingfacilityinSwitzerland.Thisprospectushasbeenpreparedwithoutregardtothedisclosure
standardsforissuanceprospectusesunderart.652aorart.1156oftheSwissCodeofObligationsorthedisclosurestandardsforlisting
prospectusesunderart.27ff.oftheSIXListingRulesorthelistingrulesofanyotherstockexchangeorregulatedtradingfacilityin
Switzerland.Neitherthis

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prospectusnoranyotherofferingormarketingmaterialrelatingtothesharesortheofferingmaybepubliclydistributedorotherwise
madepubliclyavailableinSwitzerland.
Neitherthisprospectusnoranyotherofferingormarketingmaterialrelatingtous,theofferingortheshareshasbeenorwillbe
filedwithorapprovedbyanySwissregulatoryauthority.Inparticular,thisprospectuswillnotbefiledwith,andtheofferofshares
willnotbesupervisedby,theSwissFinancialMarketSupervisoryAuthorityFINMA,andtheofferofshareshasnotbeenandwill
notbeauthorizedundertheSwissFederalActonCollectiveInvestmentSchemes,orCISA.Theinvestorprotectionaffordedto
acquirersofinterestsincollectiveinvestmentschemesundertheCISAdoesnotextendtoacquirersofshares.
NoticetoProspectiveInvestorsintheDubaiInternationalFinancialCentre
ThisprospectusrelatestoanExemptOfferinaccordancewiththeOfferedSecuritiesRulesoftheDubaiFinancialServices
Authority,orDFSA.ThisprospectusisintendedfordistributiononlytopersonsofatypespecifiedintheOfferedSecuritiesRulesof
theDFSA.Itmustnotbedeliveredto,orreliedonby,anyotherperson.TheDFSAhasnoresponsibilityforreviewingorverifying
anydocumentsinconnectionwithExemptOffers.TheDFSAhasnotapprovedthisprospectusortakenstepstoverifythe
informationsetforthhereinandhasnoresponsibilityfortheprospectus.Thesharestowhichthisprospectusrelatesmaybeilliquid
and/orsubjecttorestrictionsontheirresale.Prospectivepurchasersofthesharesofferedshouldconducttheirownduediligenceon
theshares.Ifyoudonotunderstandthecontentsofthisprospectusyoushouldconsultanauthorizedfinancialadvisor.
NoticetoProspectiveInvestorsinAustralia
Noplacementdocument,prospectus,productdisclosurestatementorotherdisclosuredocumenthasbeenlodgedwiththe
AustralianSecuritiesandInvestmentsCommission,inrelationtotheoffering.Thisprospectusdoesnotconstituteaprospectus,
productdisclosurestatementorotherdisclosuredocumentundertheCorporationsAct2001,ortheCorporationsAct,anddoesnot
purporttoincludetheinformationrequiredforaprospectus,productdisclosurestatementorotherdisclosuredocumentunderthe
CorporationsAct.
AnyofferinAustraliaofthesharesmayonlybemadetopersons,ortheExemptInvestors,whoaresophisticatedinvestors
(withinthemeaningofsection708(8)oftheCorporationsAct),professionalinvestors(withinthemeaningofsection708(11)of
theCorporationsAct)orotherwisepursuanttooneormoreexemptionscontainedinsection708oftheCorporationsActsothatitis
lawfultooffertheshareswithoutdisclosuretoinvestorsunderChapter6DoftheCorporationsAct.
ThesharesappliedforbyExemptInvestorsinAustraliamustnotbeofferedforsaleinAustraliaintheperiodof12monthsafter
thedateofallotmentundertheoffering,exceptincircumstanceswheredisclosuretoinvestorsunderChapter6DoftheCorporations
Actwouldnotberequiredpursuanttoanexemptionundersection708oftheCorporationsActorotherwiseorwheretheofferis
pursuanttoadisclosuredocumentwhichcomplieswithChapter6DoftheCorporationsAct.Anypersonacquiringsharesmust
observesuchAustralianonsalerestrictions.
Thisprospectuscontainsgeneralinformationonlyanddoesnottakeaccountoftheinvestmentobjectives,financialsituationor
particularneedsofanyparticularperson.Itdoesnotcontainanysecuritiesrecommendationsorfinancialproductadvice.Before
makinganinvestmentdecision,investorsneedtoconsiderwhethertheinformationinthisprospectusisappropriatetotheirneeds,
objectivesandcircumstances,and,ifnecessary,seekexpertadviceonthosematters.
NoticetoProspectiveInvestorsinHongKong
TheshareshavenotbeenofferedorsoldandwillnotbeofferedorsoldinHongKong,bymeansofanydocument,otherthan
(a)toprofessionalinvestorsasdefinedintheSecuritiesandFuturesOrdinance

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(Cap.571)ofHongKongandanyrulesmadeunderthatOrdinanceor(b)inothercircumstanceswhichdonotresultinthedocument
beingaprospectusasdefinedintheCompaniesOrdinance(Cap.32)ofHongKongorwhichdonotconstituteanoffertothe
publicwithinthemeaningofthatOrdinance.Noadvertisement,invitationordocumentrelatingtotheshareshasbeenormaybe
issuedorhasbeenormaybeinthepossessionofanypersonforthepurposesofissue,whetherinHongKongorelsewhere,whichis
directedat,orthecontentsofwhicharelikelytobeaccessedorreadby,thepublicofHongKong(exceptifpermittedtodosounder
thesecuritieslawsofHongKong)otherthanwithrespecttoshareswhichareorareintendedtobedisposedofonlytopersons
outsideHongKongoronlytoprofessionalinvestorsasdefinedintheSecuritiesandFuturesOrdinanceandanyrulesmadeunder
thatOrdinance.
NoticetoProspectiveInvestorsinJapan
TheshareshavenotbeenandwillnotberegisteredundertheFinancialInstrumentsandExchangeLawofJapan(LawNo.25of
1948,asamended)and,accordingly,willnotbeofferedorsold,directlyorindirectly,inJapan,orforthebenefitofanyJapanese
Personortoothersforreofferingorresale,directlyorindirectly,inJapanortoanyJapanesePerson,exceptincompliancewithall
applicablelaws,regulationsandministerialguidelinespromulgatedbyrelevantJapanesegovernmentalorregulatoryauthoritiesin
effectattherelevanttime.Forthepurposesofthisparagraph,JapanesePersonshallmeananypersonresidentinJapan,including
anycorporationorotherentityorganizedunderthelawsofJapan.
NoticetoProspectiveInvestorsinSingapore
ThisprospectushasnotbeenregisteredasaprospectuswiththeMonetaryAuthorityofSingapore.Accordingly,thisprospectus
andanyotherdocumentormaterialinconnectionwiththeofferorsale,orinvitationforsubscriptionorpurchase,ofsharesmaynot
becirculatedordistributed,normaythesharesbeofferedorsold,orbemadethesubjectofaninvitationforsubscriptionorpurchase,
whetherdirectlyorindirectly,topersonsinSingaporeotherthan(i)toaninstitutionalinvestorunderSection274oftheSecurities
andFuturesAct,Chapter289ofSingapore,ortheSFA,(ii)toarelevantpersonpursuanttoSection275(1),oranypersonpursuantto
Section275(1A),andinaccordancewiththeconditionsspecifiedinSection275,oftheSFA,or(iii)otherwisepursuantto,andin
accordancewiththeconditionsof,anyotherapplicableprovisionoftheSFA.
WherethesharesaresubscribedorpurchasedunderSection275oftheSFAbyarelevantpersonwhichis:

(a) acorporation(whichisnotanaccreditedinvestor(asdefinedinSection4AoftheSFA))thesolebusinessofwhichisto
holdinvestmentsandtheentiresharecapitalofwhichisownedbyoneormoreindividuals,eachofwhomisanaccredited
investoror
(b) atrust(wherethetrusteeisnotanaccreditedinvestor)whosesolepurposeistoholdinvestmentsandeachbeneficiaryof
thetrustisanindividualwhoisanaccreditedinvestor,

securities(asdefinedinSection239(1)oftheSFA)ofthatcorporationorthebeneficiariesrightsandinterest(howsoeverdescribed)
inthattrustshallnotbetransferredwithinsixmonthsafterthatcorporationorthattrusthasacquiredthesharespursuanttoanoffer
madeunderSection275oftheSFAexcept:

(a) toaninstitutionalinvestorortoarelevantpersondefinedinSection275(2)oftheSFA,ortoanypersonarisingfroman
offerreferredtoinSection275(1A)orSection276(4)(i)(B)oftheSFA
(b) wherenoconsiderationisorwillbegivenforthetransfer
(c) wherethetransferisbyoperationoflaw
(d) asspecifiedinSection276(7)oftheSFAor
(e) asspecifiedinRegulation32oftheSecuritiesandFutures(OffersofInvestments)(SharesandDebentures)Regulations
2005ofSingapore.
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LEGALMATTERS
ThevalidityofthesharesofcommonstockofferedherebywillbepasseduponforusbyWilsonSonsiniGoodrich&Rosati,
ProfessionalCorporation,PaloAlto,California.TheunderwritersarebeingrepresentedbyOrrick,Herrington&SutcliffeLLP,New
York,NewYorkinconnectionwiththisoffering.
EXPERTS
TheconsolidatedfinancialstatementsofOnDeckCapital,Inc.andsubsidiariesasofDecember31,2013and2012,andforeach
ofthetwoyearsintheperiodendedDecember31,2013auditedbyErnst&YoungLLPhavebeenincludedinrelianceontheirreport
givenontheirauthorityasexpertsinaccountingandauditing.
WHEREYOUCANFINDMOREINFORMATION
WehavefiledwiththeSECaregistrationstatementonFormS1undertheSecuritiesActwithrespecttothesharesofcommon
stockofferedbythisprospectus.Thisprospectus,whichconstitutesapartoftheregistrationstatement,doesnotcontainallofthe
informationsetforthintheregistrationstatement,someofwhichiscontainedinexhibitstotheregistrationstatementaspermittedby
therulesandregulationsoftheSEC.Forfurtherinformationwithrespecttousandourcommonstock,wereferyoutotheregistration
statement,includingtheexhibitsfiledasapartoftheregistrationstatement.Statementscontainedinthisprospectusconcerningthe
contentsofanycontractoranyotherdocumentisnotnecessarilycomplete.Ifacontractordocumenthasbeenfiledasanexhibitto
theregistrationstatement,pleaseseethecopyofthecontractordocumentthathasbeenfiled.Eachstatementinthisprospectus
relatingtoacontractordocumentfiledasanexhibitisqualifiedinallrespectsbythefiledexhibit.Youmayobtaincopiesofthis
informationbymailfromthePublicReferenceSectionoftheSEC,100FStreet,N.E.,Room1580,Washington,D.C.20549,at
prescribedrates.YoumayobtaininformationontheoperationofthepublicreferenceroomsbycallingtheSECat1800SEC0330.
TheSECalsomaintainsanInternetwebsitethatcontainsreports,proxystatementsandotherinformationaboutissuers,likeus,that
fileelectronicallywiththeSEC.Theaddressofthatwebsiteiswww.sec.gov.
Asaresultofthisoffering,wewillbecomesubjecttotheinformationandreportingrequirementsoftheSecuritiesExchangeAct
of1934and,inaccordancewiththislaw,willfileperiodicreports,proxystatementsandotherinformationwiththeSEC.These
periodicreports,proxystatementsandotherinformationwillbeavailableforinspectionandcopyingattheSECspublicreference
facilitiesandthewebsiteoftheSECreferredtoabove.Wealsomaintainawebsiteatwww.ondeck.com.Uponcompletionofthis
offering,youmayaccessthesematerialsfreeofchargeassoonasreasonablypracticableaftertheyareelectronicallyfiledwith,or
furnishedto,theSEC.Informationcontainedonourwebsiteisnotapartofthisprospectusandtheinclusionofourwebsiteaddressin
thisprospectusisaninactivetextualreferenceonly.

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INDEXTOCONSOLIDATEDFINANCIALSTATEMENTS

ReportofIndependentRegisteredPublicAccountingFirm
ConsolidatedBalanceSheetsasofDecember31,2012and2013
ConsolidatedStatementsofOperationsfortheyearsendedDecember31,2012and2013
ConsolidatedStatementsofChangesinStockholdersDeficitfortheyearsendedDecember31,2012and2013
ConsolidatedStatementsofCashFlowsfortheyearsendedDecember31,2012and2013
NotestoConsolidatedFinancialStatements

ConsolidatedBalanceSheetsasofDecember31,2013andSeptember30,2014(unaudited)
UnauditedConsolidatedStatementsofOperationsfortheninemonthsendedSeptember30,2013and2014
UnauditedConsolidatedStatementsofChangesinStockholdersDeficitfortheninemonthsendedSeptember30,2014
UnauditedConsolidatedStatementsofCashFlowsfortheninemonthsendedSeptember30,2013and2014
NotestoUnauditedConsolidatedFinancialStatements

F1

F2
F3
F4
F5
F6
F7

F33
F34
F35
F36
F37

TableofContents

ReportofIndependentRegisteredPublicAccountingFirm
TotheBoardofDirectorsof
OnDeckCapital,Inc.andsubsidiaries
WehaveauditedtheaccompanyingconsolidatedbalancesheetsofOnDeckCapital,Inc.andsubsidiaries(theCompany)as
ofDecember31,2013and2012,andtherelatedconsolidatedstatementsofoperations,changesinstockholdersdeficitandcash
flowsforeachofthetwoyearsintheperiodendedDecember31,2013.Thesefinancialstatementsaretheresponsibilityofthe
Companysmanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.
WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).
Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsare
freeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthe
financialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,
aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforour
opinion.
Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancial
positionofOnDeckCapital,Inc.andsubsidiariesatDecember31,2013and2012,andtheconsolidatedresultsoftheiroperations
andtheircashflowsforeachofthetwoyearsintheperiodendedDecember31,2013,inconformitywithU.S.generallyaccepted
accountingprinciples.

NewYork,NewYork
September29,2014

F2

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
ConsolidatedBalanceSheets
(inthousands,exceptshareandpersharedata)

Assets
Cashandcashequivalents
Restrictedcash
Loans
Less:Allowanceforloanlosses
Loans,netofallowanceforloanlosses
Loansheldforsale
Deferreddebtissuancecosts
Property,equipmentandsoftware,net
Otherassets
Totalassets

$ 7,386
9,195
90,975
(9,288)
81,687

2,440
4,005
1,797
$106,510

Liabilities,redeemableconvertiblepreferredstockandstockholdersdeficit
Liabilities:
Accountspayable
Interestpayable
Fundingdebt
Corporatedebt
Warrantliability
Accruedexpensesandotherliabilities
Totalliabilities

December31,
2012
2013

$ 1,731
1,173
96,297
8,000

707
2,535
110,443

Commitmentsandcontingencies(Note15)

Redeemableconvertiblepreferredstock:
SeriesApreferredstock,parvalue$.01,2,976,680sharesauthorized2,976,680and
2,219,331,sharesissuedandoutstandingatDecember31,2012and2013,respectively
SeriesBpreferredstock,parvalue$.01,5,677,581sharesauthorized5,423,361and
5,377,631sharesissuedandoutstandingatDecember31,2012and2013,respectively
SeriesCpreferredstock,parvalue$.01,4,867,769sharesauthorized,4,867,769sharesissued
andoutstandingatDecember31,2012and2013
SeriesC1preferredstock,parvalue$.01,1,500,000sharesauthorized850,556sharesissued
andoutstandingatDecember31,2012and2013
SeriesDpreferredstock,parvalue$.01,7,233,878sharesauthorized7,233,878sharesissued
andoutstandingatDecember31,2013
Totalredeemableconvertiblepreferredstock
Stockholdersdeficit:
Commonstock$0.01parvalue,24,000,000and31,964,661sharesauthorizedand
2,382,752and2,233,807sharesissuedandoutstandingatDecember31,2012and2013,
respectively
Treasurystockatcost
Additionalpaidincapital

Accumulateddeficit
Totalstockholdersdeficit
Totalliabilities,redeemableconvertiblepreferredstockandstockholdersdeficit

F3

$ 1,161
1,120
188,297
15,000
4,446
6,563
216,587

21,838

22,918

23,113

24,749

53,226

5,025

31
(483)
739

(57,446)
(57,159)
$106,510

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

$ 4,670
14,842
222,521
(19,443)
203,078
1,423
2,327
7,169
1,941
$235,450

3,250

2,559

5,401

62,716
118,343

38
(5,656)
1,614

(95,476)
(99,480)
$235,450

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
ConsolidatedStatementsofOperations
(inthousands,exceptshareandpersharedata)

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue
Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue
Netrevenue

Operatingexpenses:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totaloperatingexpenses
Lossfromoperations
Other(expense)income:
Interestexpense
Warrantliabilityfairvalueadjustment
Totalother(expense)income
Lossbeforeprovisionforincometaxes
Provisionforincometaxes
Netloss
SeriesAandSeriesBpreferredstockredemptions
Accretionofdividendsonredeemableconvertiblepreferredstock
Netlossattributabletocommonstockholders

Netlosspercommonshare:
Basicanddiluted

Proforma,basicanddiluted(unaudited)

YearEndedDecember31,
2012

2013

25,273

370
25,643

12,469
8,294
20,763
4,880

6,633
5,001
2,919
6,935
21,488
(16,608)

(88)
(148)
(236)
(16,844)

(16,844)

(3,440)
(20,284)

62,941
788
1,520
65,249

26,570
13,419
39,989
25,260

18,095
8,760
5,577
12,169
44,601
(19,341)

(1,276)
(3,739)
(5,015)
(24,356)

(24,356)
(5,254)
(7,470)
(37,080)

(8.54)

(17.28)

(0.96)

Weightedaveragecommonsharesoutstanding:
Basicanddiluted

Proforma,basicanddiluted(unaudited)

F4

2,375,220

2,146,013

21,544,497

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
ConsolidatedStatementsofChangesinStockholdersDeficit
YearsEndedDecember31,2012and2013
(inthousands,exceptsharedata)

BalanceJanuary1,2012
Stockbasedcompensation
Exerciseofwarrants
Exerciseofstockoptions
Accretionofdividendsonredeemable
convertiblepreferredstock
Netloss
BalanceDecember31,2012
Stockbasedcompensation
Redemptionofpreferredstock
SeriesAandB
Issuanceofcommonstockwarrant
Redemptionofwarrants
Exerciseofstockoptions
Redemptionofcommonstock
Accretionofdividendsonredeemable
convertiblepreferredstock
Netloss
BalanceDecember31,2013

Amount

Additional
Paidin
Capital

3,092,070

10,388
36,221

31

467
244
6
22

(37,162)

$ (479)

(4)

(37,143)
244
6
18

3,138,679

31

739
448

(3,440)
(16,844)
(57,446)

$ (483)

(3,440)
(16,844)
(57,159)
448

613,603

45

382

(5,254)

(950)

(5,173)

(5,254)
45
(950)
389
(5,173)

38 $ 1,614 $

(7,470)
(24,356)
(95,476)

$(5,656)

(7,470)
(24,356)
(99,480)

CommonStock
Shares

3,752,282 $

Accumulated
Deficit

Treasury
Stock

Total
Stockholders
Deficit

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
ConsolidatedStatementsofCashFlows
(inthousands)

Cashflowsfromoperatingactivities
Netloss
Adjustmentstoreconcilenetlosstonetcashprovidedbyinoperatingactivities:
Provisionforloanlosses
Depreciationandamortization
Amortizationofdebtissuancecosts
Stockbasedcompensation
Debtdiscount
Preferredstockwarrantissuanceandwarrantliabilityfairvalueadjustment
Commonstockwarrantissuance
Changesinoperatingassetsandliabilities:
Otherassets
Accountspayable
Interestpayable
Accruedexpensesandotherliabilities
Originationsofloansheldforsale
Salesofloansheldforsale
Netcashprovidedbyoperatingactivities

YearEndedDecember31,
2012

2013

$ (16,844)

12,469

1,545

1,068

229

524

(1,253)

1,430

286

2,228

1,682

$ (24,356)

26,570
2,645
2,184
438
959
3,739
45

(143)

(570)

(53)

4,028
(18,937)
17,514
14,063

Cashflowsfrominvestingactivities
Changeinrestrictedcash
Purchasesofproperty,equipmentandsoftware
Capitalizedinternalusesoftware
Originationsoftermloansandlinesofcredit,excludingrolloversintoneworiginations
Changeinnetdeferredoriginationcosts
Repaymentsoftermloansandlinesofcredit
Netcashusedininvestingactivities

Cashflowsfromfinancingactivities
Proceedsfromexerciseofstockoptionsandwarrants
Redemptionofcommonstockandwarrants
Proceedsfromtheissuanceofredeemableconvertiblepreferredstock
Redemptionofpreferredstock
Proceedsfromtheissuanceofdebt
Paymentsofdebtissuancecosts
Repaymentofdebt
Netcashprovidedbyfinancingactivities
Netincrease(decrease)incashandcashequivalents
Cashandcashequivalentsatbeginningofyear
Cashandcashequivalentsatendofyear

Supplementaldisclosureofothercashflowinformation
Cashpaidforinterest

Supplementaldisclosuresofnoncashinvestingandfinancingactivities

Unpaidprincipalbalanceoftermloansrolledintoneworiginations

$
15
$ 20,748

$
10
$ 59,623

Conversionofdebttoredeemableconvertiblepreferredstock

8,959

Accretionofdividendsonredeemableconvertiblepreferredstock

3,440

7,470

(2,459)
(1,843)
(1,336)
(152,498)

197
98,806
(59,133)

24

4,675

166,677
(2,720)
(106,644)
62,012

4,561

2,825
$ 7,386
$

9,674

(5,647)
(3,705)
(2,093)
(380,357)
(5,858)
238,253
(159,407)

389
(6,123)
49,717
(6,282)
216,860
(2,071)
(109,862)
142,628
(2,716)

7,386
$ 4,670
$ 10,616

Stockbasedcompensationincludedincapitalizedinternalusesoftware

Theaccompanyingnotesareanintegralpartoftheseconsolidatedfinancialstatements.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements
1.Organization
OnDeckCapital,Inc.s(OnDeckandcollectivelywithitssubsidiariestheCompany)principalactivityisproviding
financingproductstosmallbusinesseslocatedthroughouttheUnitedStates,includingtermloans(typicallythreetotwentyfour
monthsindurationfor$5,000$250,000)andlinesofcredit.TheCompanyusestechnologyandanalyticstoaggregatedataabouta
businessandthenquicklyandefficientlyanalyzesthecreditworthinessofthebusinessusingtheCompanysproprietarycredit
scoringmodel.
OnDeckoriginatesmostoftheloansinitsportfolioandalsopurchasesloansfromBankofInternetFederalBank(BofI).
OnDecksubsequentlytransfersmostloansintooneofitswhollyownedsubsidiaries.AsofDecember31,2013,theCompanyhas
fivewhollyownedsubsidiariesrelatedtoassetbackedrevolvingdebtfacilitiesthatinclude:SmallBusinessAssetFund2009LLC
(SBAF),FundforODCReceivables(FOR),SBLPIILLC(SBLPII),OnDeckAccountReceivablesTrust20131LLC
(ODART)andOnDeckAssetCompanyLLC(ODAC)(collectively,theSubsidiaries).FORhasbeendormantsinceJuly2,
2012.SubsidiariesacquireloansoriginatedorpurchasedbyOnDeckandholdthemforthesolebenefitofthelendersofeach
subsidiary.Eachsubsidiaryhasspecificcriteriafortheloansthatcanbetransferredintotheentity,suchasterm,sizeandindustry
concentration.
2.SummaryofSignificantAccountingPolicies
BasisofPresentationandPrinciplesofConsolidation
TheCompanypreparestheconsolidatedfinancialstatementsinaccordancewithaccountingprinciplesgenerallyacceptedin
theUnitedStatesofAmerica(U.S.GAAP).TheaccompanyingconsolidatedfinancialstatementsincludetheaccountsofOnDeck
anditswhollyownedsubsidiaries:SBAF,SBLPII,ODART,ODACandFOR.Allintercompanytransactionsandaccountshavebeen
eliminatedinconsolidation.
UnauditedProFormaPresentation
TheCompanyintendstoconfidentiallysubmitaRegistrationStatementonFormS1withtheUnitedStatesSecuritiesand
ExchangeCommission(theSEC)fortheproposedinitialpublicoffering(IPO)ofsharesofitscommonstock.Uponthe
consummationoftheIPO,subjecttocertainrequirementsdescribedinNote8,alloftheredeemableconvertiblepreferredstock
outstandingwillconvertintocommonstockandallpreferredstockwarrantsoutstandingwillconvertintocommonstockwarrants.
TheunauditedproformanetlosspercommonsharefortheyearendedDecember31,2013assumescompletionoftheIPOand
theconversionofalloutstandingsharesofredeemableconvertiblepreferredstockintoanaggregateof20,549,165sharesofcommon
stockasifsuchsharesconvertedasofJanuary1,2013oratthetimeofissuance,iflater.
TheCompanybelievesthattheunauditedproformanetlosspercommonshareprovidesmaterialinformationtoinvestors
becausetheconversionoftheredeemableconvertiblepreferredstockintocommonstockisexpectedtooccurupontheclosingofthe
CompanysIPOand,therefore,thedisclosureofproformanetlosspercommonshareprovidesameasureofnetlosspercommonshare
thatismorecomparabletowhatwillbereportedasapubliccompany.
Reclassifications
Certainreclassificationshavebeenmadetotheprioryearamountstoconformtothecurrentyearpresentation.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)
UseofEstimates
ThepreparationoffinancialstatementsinconformitywithU.S.GAAPrequirestheCompanytomakeestimatesand
assumptionsthataffectthereportedamountsintheconsolidatedfinancialstatementsandaccompanyingnotes.Significantestimates
includeservicingassets/liabilities,theusefullivesoflonglivedassets,capitalizablesoftwaredevelopmentcosts,allowanceforloan
losses,valuationofwarrants,valuationallowancefordeferredtaxassetsandstockbasedcompensationexpense.TheCompanybases
itsestimatesonhistoricalexperience,currenteventsandotherfactorsitbelievestobereasonableunderthecircumstances.These
estimatesandassumptionsareinherentlysubjectiveinnatureactualresultsmaydifferfromtheseestimatesandassumptions.
ComprehensiveLoss
Therearenosignificantitemsofcomprehensivelossotherthannetlossforallperiodspresented.
CashandCashEquivalents
Cashandcashequivalentsincludechecking,savingsandmoneymarketaccounts.TheCompanyconsidersallhighlyliquid
investmentswithoriginalmaturitiesofthreemonthsorlessatthetimeofpurchasetobecashequivalents.
RestrictedCash
RestrictedcashrepresentsfundsheldindemanddepositaccountsasreservesoncertaindebtfacilitiesandascollateralforBofI
transactions.TheCompanyhasnoabilitytodrawontherestrictedaccounts.
LoansandLoansHeldforSale
Loans
TheCompanyoriginatestermloansandlinesofcredit(collectively,loans)thataregenerallyshortterminnature,andrequire
dailyorweeklyrepayments.ThroughoriginationofloanstheCompanyhastherighttoplacealienonthegeneralassetsofthe
customerbyfilingaUCCclaim,whichmaynotbeperfected.Loansarecarriedatamortizedcost,reducedbyavaluationallowance
forloanlossesestimatedasofthebalancesheetdates.InaccordancewithAccountingStandardsCodification(ASC)Subtopic310
20,NonrefundableFeesandOtherCosts,theamortizedcostofaloanisequaltotheunpaidprincipalbalance,plusnetdeferred
originationcosts.Additionally,whenatermloanisoriginatedinconjunctionwiththeextinguishmentofapreviouslyissuedterm
loan,managementdetermineswhetherthisisanewloanoramodificationtoanexistingloaninaccordancewithASC31020.If
accountedforasanewloan,ratherthanamodification,anyremainingunamortizednetdeferredcostsarerecognizedwhenthenew
loanisoriginated.Netdeferredoriginationcostsarecomprisedofcertaindirectoriginationcosts,netofallloanoriginationfees
received.Directoriginationcostsinexcessofloanoriginationfeesreceivedareincludedintheloanbalanceandamortizedoverthe
termoftheloanusingtheeffectiveinterestmethod.Loanoriginationcostsarelimitedtodirectcostsattributabletooriginatinga
loan,includingcommissionsandpersonnelcostsdirectlyrelatedtothetimespentbythoseindividualsperformingactivitiesrelated
toloanorigination.
Loanoriginationfeesincludefeeschargedtotheborrowersthatincreasetheloanseffectiveinterestyieldandotherfees
chargedrelatedtoorigination.TheCompanyhastheabilityandintenttoholdtheseloanstomaturity.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

LoansHeldforSale
InOctober2013,theCompanystartedaprogramwherebytheCompanyoriginatesandsellscertainloanstothirdparty
institutionalinvestorsandretainsservicingrights.TheCompanysellswholeloanstopurchasersinexchangeforacashpayment.
Determinationtoholdorsellaloanismadewithinthreedaysofinitialfunding.Loansheldforsalearerecordedatthelowerofcost
ormarketuntiltheloansaresold.Costofloansheldforsaleisinclusiveofunpaidprincipalplusnetdeferredoriginationcosts.
TheCompanyevaluateswhetheraservicingassetorliabilityhasbeenincurred.TheCompanyestimatesthefairvalueofthe
loanservicingassetorliabilityconsideringthecontractualservicingfeerevenue,adequatecompensationforitsservicingobligation,
thenondelinquentprincipalbalancesofloansandprojectedservicingrevenuesovertheremaininglivesoftheloans.Asof
December31,2012and2013,theCompanyservicedanunpaidprincipalamountof$0and$16.0millionoftermloansforothers,
respectively,anddeterminedthatnoservicingassetorliabilityisnecessary.
AllowanceforLoanLosses
Theallowanceforloanlosses(ALLL)isestablishedthroughperiodicchargestotheprovisionforloanlosses.Loanlossesare
chargedagainsttheALLLwhenmanagementbelievesthatthefuturecollectionofprincipalisunlikely.Subsequentrecoveries,if
any,arecreditedtotheALLL.
TheCompanyevaluatesthecreditworthinessofitsportfolioonapooledbasis,duetoitscompositionofsmall,homogenous
loanswithsimilargeneralcreditriskcharacteristicsanddiversifiedamongvariablesincludingindustryandgeography.The
Companyusesaproprietaryforecastlossrateatoriginationfornewloansthathavenothadtheopportunitytomakepaymentswhen
theyarefirstfunded.Theallowanceissubjectiveasitrequiresmaterialestimates,includingsuchfactorsashistoricaltrends,known
andinherentrisksintheloanportfolio,adversesituationsthatmayaffectborrowersabilitytorepayandcurrenteconomic
conditions.Otherqualitativefactorsconsideredmayincludeitemssuchasuncertaintiesinforecastingandmodelingtechniques,
changesinportfoliocomposition,seasonality,businessconditionsandemergingtrends.Recoveryofthecarryingvalueofloansis
dependenttoagreatextentonconditionsthatmaybebeyondmanagementscontrol.Anycombinationoftheaforementionedfactors
mayadverselyaffecttheCompanysloanportfolioresultinginincreaseddelinquenciesandloanlossesandcouldrequireadditional
provisionsforcreditlosses,whichcouldimpactfutureperiods.Intheopinionofmanagement,theCompanyhasprovidedadequate
allowancestoabsorbprobablecreditlossesinherentinitsloanportfoliobasedonavailableandrelevantinformationaffectingthe
loanportfolioateachbalancesheetdate.
AccrualforUnfundedLoanCommitmentsandOffBalanceSheetCreditExposures
InSeptember2013,theCompanyintroducedalineofcreditproduct.TheCompanyestimatesprobablelossesonunfundedloan
commitmentssimilarlytotheALLLprocessandincludesthecalculatedamountinaccruedexpensesandotherliabilities.The
Companybelievestheaccrualforunfundedloancommitmentsissufficienttoabsorbestimatedprobablelossesrelatedtothese
unfundedcreditfacilities.Thedeterminationoftheadequacyoftheaccrualisbasedonevaluationsoftheunfundedcreditfacilities,
includinganassessmentoftheprobabilityofcommitmentusage,creditriskfactorsforlinesofcreditoutstandingtothesecustomers
andthetermsandexpirationdatesoftheunfundedcreditfacilities.AsofDecember31,2013,theCompanysoffbalancesheetcredit
exposurerelatedtotheundrawnlineofcreditbalanceswas$2.2million.Theaccrualforunfundedloancommitmentswas$13,000.
Netadjustmentstotheaccrualforunfundedloancommitmentsarechargedtotheprovisionforloanlosses.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

AccrualforThirdPartyRepresentations
Asacomponentoftheloansaleagreements,theCompanyhasmadecertainrepresentationstothirdpartiesthatpurchaseloans.
Anysignificantestimatedpostsaleobligationsorcontingentobligationstothepurchaseroftheloans,suchasdelinquent/fraudulent
loanrepurchaseobligationsorexcesslossindemnificationobligations,wouldbeaccruedifprobableandestimableinaccordance
withASC450,Contingencies.Therearenorestrictedassetsrelatedtotheseagreements.AsofDecember31,2012and2013,the
Companyhasnotincurredanysignificantlossesandhasnoestimableandprobableobligationsrequiringaccrual.
NonaccrualLoans,RestructuredLoansandChargedOffLoans
TheCompanyconsidersaloantobedelinquentwhenthedailyorweeklypaymentsareonedaypastdue.TheCompanystops
recognizinginterestincomeonloansthataredelinquentandnonpaying.Loansarereturnedtoaccrualstatusiftheyarebroughtto
nondelinquentstatusorhaveperformedinaccordancewiththecontractualtermsforareasonableperiodoftimeand,in
managementsjudgment,willcontinuetomakeperiodicprincipalandinterestpaymentsasscheduled.
Aspartofitsefforttomaximizereceipts,theCompanymayagreetorevisedpaymentplanswithcertainborrowerswhohave
experiencedorareexpectedtoexperiencedifficultyinmeetingtheloanscontractuallyrequiredpayments.TheCompanysloan
revisionpolicyonlyallowsfordelaysinpayment.Managementevaluatesthesignificanceofthemodificationscomparedtooriginal
terms.Todate,allmodificationshavebeeninsignificantrelativetotheloans.
Afterthe90thdayofdelinquency,theCompanywillmakeaninitialassessmentofwhetheranindividualloanshouldbe
chargedoffbasedonpaymentstatusandinformationgatheredthroughcollectionefforts.AloanischargedoffwhentheCompany
determinesitisprobablethatitwillbeunabletocollectalloftheoriginallyscheduledprincipalpaymentsaccordingtothe
contractualtermsoftheoriginalloanagreement.
DeferredDebtIssuanceCostsandDebt
TheCompanyborrowsfromvariouslenderstofinanceitslendingactivitiesandgeneralcorporateoperations.Costsincurredin
connectionwithfinancing,suchasbankerfees,originationfeesandlegalfees,areclassifiedbymanagementasdeferreddebtissuance
costs.Managementcapitalizesthesecostsandamortizesthemovertheexpectedlifeoftherelatedfinancingagreementsusingthe
effectiveinterestmethod.Therelatedfeesareexpensedimmediatelyuponearlyextinguishmentofthedebtinadebtmodification,
theinitialissuancecostsandanyadditionalfeesincurredasaresultofthemodificationaredeferredoverthetermofthenew
agreement.
Interestexpenseandamortizationofdeferreddebtissuancecostsincurredondebtusedtofundloanoriginationsarerecordedas
fundingcostsintheconsolidatedstatementsofoperationsandcalculatedusingtheeffectiveinterestyieldmethod.Interestexpense
andamortizationofdeferreddebtissuancecostsincurredondebtusedtofundgeneralcorporateoperationsarerecordedasinterest
expense,acomponentofotherexpense,intheconsolidatedstatementsofoperationsandcalculatedusingtheeffectiveinterestyield
method.
Property,EquipmentandSoftware
Property,equipmentandsoftwareconsistsofcomputerandofficeequipment,purchasedsoftware,capitalizedinternaluse
softwarecostsandleaseholdimprovements.Property,equipmentandsoftwarearestatedatcostlessaccumulateddepreciationand
amortization.Computerandofficeequipmentandpurchasedsoftwarearedepreciated

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

overtheestimatedusefullivesoftheassetsusingthestraightlinemethod.Leaseholdimprovementsareamortizedovertheshorterof
thetermsoftherespectiveleasesortheestimatedlivesoftheimprovements.
InaccordancewithASCsubtopic35040,InternalUseSoftware,thecoststodevelopsoftwarefortheCompanyswebsiteand
otherinternalusesarecapitalizedbeginningwhenthepreliminaryprojectstageiscompleted,managementhasauthorizedfunding
anditisprobablethattheprojectwillbecompletedandthesoftwarewillbeusedtoperformthefunctionintended.Capitalized
internalusesoftwarecostsprimarilyincludesalariesandpayrollrelatedcostsforemployeesdirectlyinvolvedinthedevelopment
efforts,softwarelicensesacquiredandfeespaidtooutsideconsultants.
Softwaredevelopmentcostsincurredpriortomeetingthecriteriaforcapitalizationandcostsincurredfortrainingand
maintenanceareexpensedasincurred.Certainupgradesandenhancementstoexistingsoftwarethatresultinadditionalfunctionality
arecapitalized.Capitalizedsoftwaredevelopmentcostsareamortizedusingthestraightlinemethodovertheirexpectedusefullives,
generallythreeyears.
TheCompanyreviewslonglivedassetsforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarrying
valuesofthoseassetsmaynotberecoverable.Recoverabilityofthelonglivedassetismeasuredbycomparingthecarryingamount
oftheassetorassetgrouptofutureundiscountednetcashflowsexpectedtobegenerated.Ifsuchassetsarenotrecoverable,the
impairmenttoberecognizedismeasuredastheexcesscarryingamount.Assetsheldforsalearereportedatthelowerofthecarrying
amountorfairvalue,lesscoststosell.During2012and2013,noimpairmentsoflonglivedassetsweredeemednecessary.
RedeemableConvertiblePreferredStock
TheCompanysredeemableconvertiblepreferredstockisredeemableattheoptionoftheholderafterthepassageoftimeand,
therefore,hasbeenclassifiedoutsideofpermanentequityinaccordancewiththeSECStaffAccountingBulletin(SAB)Topic3C,
RedeemablePreferredStock.TheCompanymakesperiodicaccretionstothecarryingamountoftheredeemableconvertiblepreferred
stocksothatthecarryingamountwillequaltheredemptionamountattheearliestredemptiondate,February25,2019.When
preferredstockwarrantsareexercisedforsharesofredeemableconvertiblepreferredstockandthefairvalueoftheredeemable
preferredstockonthedateofexerciseofthewarrantsismorethantheredemptionamountofthepreferredstock,thecarryingamount
ofthepreferredstockisrecordedatitsfairvalueonthedateofissuanceonthebalancesheet.
PreferredStockWarrants
TheCompanyissueswarrantsforcertainseriesofitsredeemableconvertiblepreferredstocktothirdpartiesinconnectionwith
certainagreements.Asthewarrantholdershavetherighttodemandtheirpreferredsharestobesettledincashafterthepassageof
time,theCompanyrecordsthewarrantsasliabilities.TheCompanyvaluesthewarrantsateachbalancesheetdateusingtheBlack
ScholesMertonOptionPricingModel.Anychangeinwarrantvalueisrecordedthroughawarrantliabilityfairvalueadjustmentin
theconsolidatedstatementsofoperations.
Thefairvalueofwarrantsissuedinassociationwithnewdebtagreementsistreatedasadebtdiscountandreducestheinitial
carryingvalueoftherelateddebt.Thediscountisamortizedasinterestexpenseandisaccretedtothenotecarryingvalueusingthe
effectiveinterestmethodoverthetermofthenotes.Thefairvalueofwarrantsissuedinassociationwithconsultingagreementsand
bankingarrangementsistreatedasconsultingexpenseandbankfees,respectively,andarerecordedasanoperatingexpenseinthe
statementsofoperations.Agreementsandarrangementswithperiodsofperformanceareamortizedoverthecontractualperiodofthe
services.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

RevenueRecognition
InterestIncome
TheCompanygeneratesrevenueprimarilythroughinterestandoriginationfeesearnedonloansoriginatedandheldtomaturity.
TheCompanyrecognizesinterestandoriginationfeerevenueoverthetermsoftheunderlyingloansusingtheeffectiveinterest
methodonunpaidprincipalamounts.Originationfeescollectedbutnotyetrecognizedasrevenuearenettedwithdirectorigination
costsandrecordedasacomponentofloansintheconsolidatedbalancesheets.
Borrowerswhoelecttoprepaytermloansarerequiredtopayinterestandfeesthatwouldhavebeenassessedhadtheloansbeen
repaidovertheiroriginalterms.Asaresult,revenuerecognitionisnotimpactedbyestimatesforprepayments.
GainonSalesofLoans
InOctober2013,theCompanystartedaprogramwherebytheCompanyoriginatesandsellscertainloanstothirdparty
purchasersandretainsservicingrights.TheCompanyaccountsfortheloansalesinaccordancewithASCTopic860,Transfersand
Servicing.Inaccordancewiththisguidance,atransferofafinancialasset,agroupoffinancialassets,oraparticipatinginterestina
financialassetisaccountedforasasaleifallofthefollowingconditionsaremet:

1. Thefinancialassetsareisolatedfromthetransferoranditsconsolidatedaffiliatesaswellasitscreditors.
2. Thetransfereeorbeneficialinterestholdershavetherighttopledgeorexchangethetransferredfinancialassets.
3. Thetransferordoesnotmaintaineffectivecontrolofthetransferredassets.

FortheyearendedDecember31,2013,allsalesmettherequirementsforsaletreatmentundertheguidanceforTransfersand
Servicing.TheCompanyrecordsthegainorlossonthesaleofaloanatthesaledateinanamountequaltotheproceedsreceivedless
outstandingprincipalandnetdeferredoriginationcosts.
OtherRevenue
TheCompanyretainsservicingrightsonsoldloansandrecognizesservicingrevenueoncurrentoutstandingloanprincipal
balancesofthesoldloansasacomponentofotherrevenue.InaccordancewithASCTopic860,TransfersandServicingofFinancial
Assets,theCompanyhasnotrecognizedaservicingassetorliabilityasthebenefitsofservicingarejustadequatetocompensatethe
Companyforitsservicingresponsibilities.Otherrevenuealsoincludesmarketingfeesearnedfromourbankpartners,whichare
recognizedastherelatedservicesareprovided,andmonthlyfeeschargedtocustomersfortheCompanyslineofcreditproducts.
StockBasedCompensation
InaccordancewithASCTopic718,CompensationStockCompensation,allstockbasedcompensationmadetoemployeesis
measuredbasedonthegrantdatefairvalueoftheawardsandrecognizedascompensationexpenseonastraightlinebasisoverthe
periodduringwhichtheoptionholderisrequiredtoperformservicesinexchangefortheaward(thevestingperiod).TheCompany
usestheBlackScholesMertonOptionPricingModeltoestimate

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

thefairvalueofstockoptions.Theuseoftheoptionvaluationmodelrequiressubjectiveassumptions,includingthefairvalueofthe
Companyscommonstock,theexpectedtermoftheoptionandtheexpectedstockpricevolatilitybasedonpeercompanies.
Additionally,therecognitionofstockbasedcompensationexpenserequiresanestimationofthenumberofoptionsthatwill
ultimatelyvestandthenumberofoptionsthatwillultimatelybeforfeited.
AdvertisingCosts
Advertisingcostsareexpensedasincurredandareincludedinthesalesandmarketinglineitemintheconsolidatedstatements
ofoperations.FortheyearsendedDecember31,2012and2013,advertisingcoststotaled$1.2millionand$7.2million,respectively.
IncomeTaxes
TheCompanyrecognizesdeferredtaxassetsandliabilitiesfortheexpectedfuturetaxconsequencesoftemporarydifferences
betweenthefinancialreportingandtaxbasisofassetsandliabilities,aswellasforoperatinglossandtaxcreditcarryforwards.
Deferredtaxassetsandliabilitiesaremeasuredusingthetaxratesthatareexpectedtoapplytotaxableincomefortheyearsinwhich
thosetaxassetsandliabilitiesareexpectedtoberealizedorsettled.Valuationallowancesarerecordedtoreducedeferredtaxassetsto
theamounttheCompanybelievesismorelikelythannottoberealized.
UncertaintaxpositionsarerecognizedonlywhentheCompanybelievesitismorelikelythannotthatthetaxpositionwillbe
upheldonexaminationbythetaxingauthoritiesbasedonthemeritsoftheposition.TheCompanyrecognizesinterestandpenalties,
ifany,relatedtouncertaintaxpositionsinincometaxexpense.TheCompanydidnothaveanyaccruedinterestorpenalties
associatedwithuncertaintaxpositionsasofDecember31,2012and2013.
TheCompanyfilesincometaxreturnsintheUnitedStatesforfederalandvariousstatejurisdictions.TheCompanyisnolonger
subjecttoU.S.federal,state,andlocalincometaxexaminationsforyearspriorto2010,althoughcarryforwardattributesthatwere
generatedpriorto2010maystillbeadjusteduponexaminationbytheInternalRevenueServiceifusedinafutureperiod.Noincome
taxreturnsarecurrentlyunderexaminationbytaxingauthorities.
FairValueMeasurement
TheCompanyusesathreetierfairvaluehierarchytoclassifyanddiscloseallassetsandliabilitiesmeasuredatfairvalueona
recurringbasis,aswellasassetsandliabilitiesmeasuredatfairvalueonanonrecurringbasis,inperiodssubsequenttotheirinitial
measurement.ThehierarchyrequirestheCompanytouseobservableinputswhenavailable,andtominimizetheuseofunobservable
inputswhendeterminingfairvalue.Thethreetiersaredefinedasfollows:
Level1:Quotedpricesinactivemarketsorliabilitiesinactivemarketsforidenticalassetsorliabilities,accessiblebythe
Companyatthemeasurementdate.
Level2:Quotedpricesforsimilarassetsorliabilitiesinactivemarkets,orquotedpricesforidenticalorsimilarassetsor
liabilitiesinmarketsthatarenotactive,orotherobservableinputsotherthanquotedprices.
Level3:Unobservableinputsforassetsorliabilitiesforwhichthereislittleornomarketdata,whichrequiretheCompanyto
developitsownassumptions.Theseunobservableassumptionsreflectestimatesofinputsthatmarketparticipantswouldusein
pricingtheassetorliability.Valuationtechniquesincludethe

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

useofoptionpricingmodels,discountedcashflows,orsimilartechniques,whichincorporatemanagementsownestimatesof
assumptionsthatmarketparticipantswoulduseinpricingtheinstrumentorvaluationsthatrequiresignificantmanagement
judgmentorestimation.
Afinancialinstrumentscategorizationwithinthevaluationhierarchyisbasedonthelowestlevelofinputthatissignificantto
thefairvaluemeasurement.
BasicandDilutedNetLossperCommonShare
Basicnetlosspercommonshareiscomputedbydividingnetlosspershareavailabletocommonstockholdersbytheweighted
averagenumberofcommonsharesoutstandingfortheperiodandexcludestheeffectsofanypotentiallydilutivesecurities.The
Companycomputesnetlosspercommonshareusingthetwoclassmethodrequiredforparticipatingsecurities.TheCompany
considersallseriesofredeemableconvertiblepreferredstocktobeparticipatingsecuritiesduetotheircumulativedividendrights.In
accordancewiththetwoclassmethod,earningsallocatedtotheseparticipatingsecurities,whichincludeparticipationrightsin
undistributedearnings,aresubtractedfromnetincomeorlosstodeterminetotalundistributedearningsorlossestobeallocatedto
commonstockholders.Allparticipatingsecuritiesareexcludedfrombasicweightedaveragecommonsharesoutstanding.
Dilutednetlosspercommonshareincludesthedilutionthatwouldoccurupontheexerciseorconversionofallpotentially
dilutivesecuritiesintocommonstockusingthetreasurystockorifconvertedmethods,asapplicable.Dilutednetlossper
commonshareiscomputedunderthetwoclassmethodbyusingtheweightedaveragenumberofcommonsharesoutstanding,plus,
forperiodswithnetincomeattributabletocommonstockholders,thepotentialdilutiveeffectsofstockoptions,warrantsand
convertiblepreferredstock.Inaddition,theCompanyanalyzesthepotentialdilutiveeffectoftheoutstandingparticipatingsecurities
undertheifconvertedmethodwhencalculatingdilutedearningspershareinwhichitisassumedthattheoutstandingparticipating
securitiesconvertintocommonstockatthebeginningoftheperiod.TheCompanyreportsthemoredilutiveoftheapproaches(two
classorifconverted)asitsdilutednetincomepershareduringtheperiod.DuetonetlossesfortheyearsendedDecember31,2012
and2013,basicanddilutednetlosspercommonsharewerethesame,astheeffectofpotentiallydilutivesecuritieswouldhavebeen
antidilutive.
RecentlyAdoptedAccountingPronouncements
EffectiveJanuary1,2012,theCompanyadoptedFASBASU201104,AmendmentstoAchieveCommonFairValue
MeasurementandDisclosureRequirementsinU.S.GAAPandIFRSs,whichamendsASCTopic820,FairValueMeasurement.The
amendedguidancechangesthewordingusedtodescribemanyrequirementsinU.S.GAAPformeasuringfairvalueandfor
disclosinginformationaboutfairvaluemeasurements.Additionally,theamendmentsclarifytheFASBsintentabouttheapplication
ofexistingfairvaluemeasurementrequirements.Theadoptionoftheseprovisionsresultedinadditionaldisclosuresinthe
Companysconsolidatedfinancialstatements.
RecentAccountingPronouncementsNotYetAdopted
InJuly2013,theFASBissuedASU201311,PresentationofanUnrecognizedTaxBenefitWhenaNetOperatingLoss
Carryforward,aSimilarTaxLoss,oraTaxCreditCarryforwardExists,whichamendsASCTopic740,IncomeTaxes.ASU201311
requiresentitiestopresentunrecognizedtaxbenefitsasaliabilityandnotcombineitwithdeferredtaxassetstotheextentanet
operatinglosscarryforward,asimilartaxloss,orataxcreditcarryforwardisnotavailableatthereportingdate.Thisaccounting
standardwillbeeffectivefortheCompanybeginningJanuary1,2014.Theadoptionoftheseprovisionsisnotexpectedtohavea
significantimpactontheCompanysconsolidatedfinancialstatements.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

InMay2014,theFASBissuedASU201409,RevenueRecognition,whichcreatesASC606,RevenuefromContractswith
Customers,andsupersedesASC605,RevenueRecognition.ASU201409requiresrevenuetoberecognizedatanamountthat
reflectstheconsiderationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsorservices.Thisaccountingstandard
iseffectiveforinterimandannualperiodsbeginningafterDecember15,2016.TheCompanyiscurrentlyassessingtheimpactthis
accountingstandardwillhaveonitsconsolidatedfinancialstatements.
3.NetLossPerCommonShare
Basicanddilutednetlosspercommonshareiscalculatedasfollows(inthousands,exceptshareandpersharedata):

Numerator:
Netloss
Less:SeriesAandBpreferredstockredemptions
Less:Accretionofdividendsontheredeemableconvertiblepreferredstock
Netlossattributabletocommonstockholders

YearEndedDecember31,
2012

2013

(16,844)

(3,440)
(20,284)

(24,356)
(5,254)
(7,470)
(37,080)

Denominator:
Weightedaveragecommonsharesoutstanding,basicanddiluted

2,375,220

2,146,013

Netlosspercommonshare,basicanddiluted

(8.54)

(17.28)

Dilutedlosspercommonshareisthesameasbasiclosspercommonshareforallperiodspresentedbecausetheeffectsof
potentiallydilutiveitemswereantidilutivegiventheCompanysnetloss.Thefollowingcommonshareequivalentsecuritieshave
beenexcludedfromthecalculationofweightedaveragecommonsharesoutstandingbecausetheeffectisantidilutivefortheperiods
presented:

AntiDilutiveCommonShareEquivalents
Redeemableconvertiblepreferredstock:
SeriesA
SeriesB
SeriesC
SeriesC1
SeriesD
Warrantstopurchaseredeemableconvertiblepreferredstock
Warrantstopurchasecommonstock
Stockoptions
Totalantidilutivecommonshareequivalents

YearEndedDecember31,
2012

2013

2,976,680
5,423,361
4,867,769
850,556

696,884
2,221,817
3,171,396
20,208,463

2,219,331
5,377,631
4,867,769
850,556
7,233,878
696,884
2,028,533
3,907,485
27,182,067

ProFormaNetLossPerCommonShare(unaudited)
ThenumeratoranddenominatorusedincomputingproformanetlosspercommonsharefortheyearendedDecember31,2013
havebeenadjustedtoassumetheconversionofalloutstandingsharesofredeemable

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

convertiblepreferredstocktocommonstockasofthebeginningoftheperiodoratthetimeofissuance,iflater,withtheexceptionof
redeemableconvertiblepreferredstockredeemedduringtheyearandthereforeexcludedfromthenumerator.Theadjustmentalso
assumesthereclassificationoftheoutstandingwarrantliabilitiestoadditionalpaidincapitalasofthebeginningoftheperiod.Pro
formanetlosspersharedoesnotgiveeffecttopotentialdilutivesecuritieswheretheimpactwouldbeantidilutive.
Thefollowingtablepresentsthecalculationofproformabasicanddilutednetlosspercommonshare(inthousands,except
shareandpersharedata)fortheyearendedDecember31,2013:

Numerator:
Netlossattributabletocommonshareholders
Plus:accretionofdividendsonredeemableconvertiblepreferredstock
Plus:changesinfairvalueofthepreferredstockwarrantliabilities
Proformanumeratorforbasicanddilutedlosspershare

Yearended
December31,
2013

Denominator:
Denominatorforbasicanddilutednetlosspershareweightedaverageshares
Plus:conversionofredeemableconvertiblepreferredstocktocommonstockweightedaverage
shares(1)
Proformadenominatorforbasicanddilutedlosspershareweightedaverageshares

Proformabasicanddilutedlosspershare

(37,080)
7,470
3,739
(25,871)

2,146,013

19,398,484
21,544,497

(1.20)

(1) TheweightedaveragesharesofredeemableconvertiblepreferredstockconvertedtocommonstockasofDecember31,2013:

SeriesASeriesC1(issuedpriortoJanuary1,2013)
SeriesD(firstroundissuedFebruary7,2013)
SeriesD(secondroundissuedApril7,2013)
Totalredeemableconvertiblepreferredstockconvertedtocommonstock

Totalshares
outstanding

Weighted
AverageShares
Outstanding

13,315,287
5,190,058
2,043,820
20,549,165

13,315,287
4,649,723
1,433,474
19,398,484

4.InterestIncome
InterestincomewascomprisedofthefollowingcomponentsfortheyearendedDecember31(inthousands):

Interestonunpaidprincipalbalance
Amortizationofnetdeferredoriginationcosts
Totalinterestincome

F16

2012

$15,082
10,191
$25,273

2013

$51,706
11,235
$62,941

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

5.Loans,AllowanceforLoanLossesandLoansHeldforSale
LoansconsistedofthefollowingasofDecember31(inthousands):

Termloans
Linesofcredit
Totalunpaidprincipalbalance
Netdeferredoriginationcosts
Totalloans

2012

$90,276

90,276

699
$90,975

2013

$213,570
2,396
215,966
6,555
$222,521

TheactivityintheallowanceforloanlossesfortheyearsendedDecember31,2012and2013consistedofthefollowing(in
thousands):

BalanceatJanuary1
Provisionforloanlosses
Loanschargedoff
Recoveriesofloanspreviouslychargedoff
AllowanceforloanlossesatDecember31

2012

$ 3,662
12,469
(6,881)

38
$ 9,288

2013

$ 9,288
26,570
(17,651)
1,236
$ 19,443

OnDeckoriginatesmostoftheloansinitsportfolioandalsopurchasesloansfromissuingbankpartners.Purchasesoffinancing
receivablesfortheyearsendedDecember31,2012and2013were$36.6millionand$73.5million,respectively.
In2013,theCompanybegansellingpreviouslychargedoffloanstoathirdpartydebtcollector.Theproceedsfromthesesales
arerecordedasacomponentoftherecoveriesofloanspreviouslychargedoff.
Belowisatablethatillustratestheloanbalancerelatedtonondelinquent,payingandnonpayingdelinquentloansandthe
correspondingallowanceforloanlossesasofDecember31,2012and2013(inthousands):

Nondelinquentloans
Delinquent:paying(accrualstatus)
Delinquent:nonpaying(nonaccrualstatus)
Total

2012
Unpaid
Principal
Balance

2013
Unpaid
Principal
Balance

$77,862
8,139
4,275
$90,276

$191,849
17,473
6,644
$215,966

Thebalanceoftheallowanceforloanlossesfornondelinquentloanswas$3.7millionand$9.8millionasofDecember31,
2012andDecember31,2013,respectively,whilethebalanceoftheallowanceforloanlossesfordelinquentloanswas$5.6million
and$9.6millionasofDecember31,2012andDecember31,2013,respectively.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

ThefollowingtableshowsanaginganalysisoftermloansbydelinquencystatusasofDecember31,2012and2013(in
thousands):

Bydelinquencystatus:
Nondelinquentloans
114calendardayspastdue
1529calendardayspastdue
3059calendardayspastdue
6089calendardayspastdue
90+calendardayspastdue
Totalunpaidprincipalbalance

2012

$ 77,862

4,358

3,059

2,253

1,756

988
$ 90,276

2013

$191,849
7,658
4,237
5,206
3,648
3,368
$215,966

LoansHeldforSale
LoansheldforsaleconsistedofthefollowingasofDecember31(inthousands):

Loansheldforsale
Netdeferredoriginationcosts
Loansheldforsale,net

2012

2013

$1,320
103
$1,423

6.Property,EquipmentandSoftware,net
Property,equipmentandsoftware,net,consistedofthefollowingasofDecember31(inthousands):

Computer/officeequipment
Capitalizedinternalusesoftware
Leaseholdimprovements
Totalproperty,equipmentandsoftware,atcost
Lessaccumulateddepreciationandamortization
Property,equipmentandsoftware,net

Estimated
UsefulLife

36months
36months
Lifeoflease

2012

$ 1,169
5,243
1,528
7,940
(3,935)
$ 4,005

2013

Amortizationexpenseoncapitalizedinternalusesoftwarecostswas$1.0millionand$1.2millionfortheyearsended
December31,2012and2013,respectively,andisincludedinaccumulateddepreciationandamortizationintheconsolidated
statementsofoperations.

F18

$ 2,419
7,628
3,702
13,749
(6,580)
$ 7,169

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

7.Debt
ThefollowingtablesummarizestheCompanysoutstandingdebtasofDecember31,2012andDecember31,2013:

Description

FundingDebt:
SBLPIIAgreement
ODARTAgreement
ODACAgreement
SBAFAgreement
LHAgreement

Type

SFAgreement

SSL&SA
CorporateDebt:
Square1Agreement
ConvertibleNote

MaturityDate

Revolving
July2014
Revolving
August2015
Revolving October2015
Revolving
Ongoing
Revolving December2014
Extinguished
August2013

Revolving December2014
Extinguished
August2013

Revolving
July2014

Interest
Rate

December31,
December31,
2012

2013

(inthousands)

7.8%
4.7%
8.4%
8.6%

58,072

10,283

84,990
52,253
24,374
18,680

16.0%

10,652

16.0%
16.0%

17,290

96,297

8,000
188,297

5.0%

6.0%

8,000

$ 104,297 $ 203,297

Revolving September2015
Convertible
March2015
Note
Extinguished
February2013

15,000

InApril2009,andassubsequentlyamended,SBAFenteredintoaLoanandSecurityAgreement(theSBAFAgreement)with
certainlendersandDeutscheBankTrustCompanyAmericasascollateralagent.AllassetsofSBAFarepledgedascollateralforthe
outstandingprincipal.Interestisaccruedmonthlyatvariableratesthat,asofDecember31,2013,rangefrom8%to13%perannum.
Principalplusanyreinvestedinterestisrepaidin12equalmonthlyinstallments.
InMarch2010,FORenteredintoarevolvingcreditagreement(theFORAgreement)withFortressCreditCoLLC
(Fortress).TheFORAgreementwasterminatedonJuly2,2012andtheaggregateamountoutstandingof$28.8millionwaspaidat
thattime.ThemodificationoftheFORAgreementwasdoneinconnectionwiththecommencementoftheSBLPIIAgreementandis
describedfurtherbelow.AsofDecember31,2013,therewerenoamountspayable.
InJuly2012,andassubsequentlyamended,SBLPIIenteredintoa$100millionrevolvingcreditagreement(theSBLPII
Agreement)withGoldmanSachsBankUSA(GoldmanSachs)andFortress.Eachlenderadvancesupto85%oftheprincipalof
loanssoldtoSBLPII.AllassetsandstockofSBLPIIarepledgedascollateralfortheoutstandingprincipal.Interestisaccruedequal
totheapplicablemarginplusthebaserate(2.25%floor)orDailyLIBOR(1.25%floor),dependingonthetypeofloan.Theaverage
interestrateatDecember31,2013was7.75%perannum.Interestandprincipalarepaidmonthly.AsofDecember31,2013,the
SBLPIIAgreementhadavailablefundsof$15million.AsofDecember31,2012,priortothe2013amendmentthatincreasedthe
revolvingcreditamountfrom$80millionto$100million,theSBLPIIAgreementhadavailablefundsof$21.9million.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

InJuly2012,andassubsequentlyamended,theCompanyenteredintoloanandsecurityagreements(theLHandSF
Agreements)withLighthouseCapitalPartnersVI,L.P.(LighthouseCapital)andcertainentities,includingSFCapital
Investments,LPandSFCapitalPartners,LP(collectively,totheextentoftheirparticipationreferredtoasSFCapital.)Lighthouse
Capitaladvanced$10.8millionandSFCapitaladvanced$17.5milliontotheCompany.TheLHandSFAgreementscalledfor
interestonlypaymentsuntilJanuary2014.TheLHandSFAgreementswereterminatedonAugust7,2013atwhichtimethe
amountsoutstandingof$8.3millionand$9millionwerepaidtoLighthouseCapitalandSFCapital,respectively.The
extinguishmentoftheLHandSFAgreementsweredoneinconnectionwiththecommencementoftheSSL&SAandSquare1
Agreement,whicharefurtherdescribedbelow.
InDecember2012,theCompanyissuedtoSAPVenturesFundIHoldings,LLCandRREVenturesIVLPan$8million
convertiblenote(theConvertibleNote)bearinginterestat6%.TheConvertibleNotecontainedaprovisiontoautomatically
converttheprincipalandanyaccruedinterestintoSeriesDconvertibleredeemablepreferredstock(SeriesD)ata10%discount
provided(i)theinitialissuanceofSeriesDclosedpriorto120daysfollowingthedateofthenoteand(ii)netproceedsfromthe
issuancewereinexcessof$20million.TheConvertibleNotewasaccountedforinaccordancewithASCSubtopic47020,Debtwith
ConversionandOtherOptions,andASCTopic815,DerivativesandHedging.OnFebruary7,2013,theCompanycloseda
qualifyingsaleofSeriesDcausingthenotetoconvertautomaticallyinto1,077,035sharesofSeriesDforavalueof$9millionof
which$8millionextinguishedthenotepayableand$1millionwasrecordedasinterestexpense.SeeNote9forfurtherdiscussionof
theSeriesDtransaction.AsofDecember31,2012,theConvertibleNotehadanoutstandingbalanceof$8million.
InAugust2013,andassubsequentlyamended,theCompanyenteredintoan$8millionseniorsubordinatedloanandsecurity
agreement(theSSL&SA)withcertainentitiesincludedinSFCapital.SubstantiallyallassetsofOnDeckarepledgedascollateral.
TheSSL&SAcallsforinterestonlypaymentsat16%andprincipaldueuponmaturityonJuly3,2014.
InAugust2013,theCompanyenteredintoa$15millionloanandsecurityagreementwithSquare1Bank(theSquare1
Agreement).SubstantiallyallassetsofOnDeckarepledgedascollateral.Interestonlypaymentsbasedontheprimerateplus1.5%
(5%floor)aremadeuntilmaturityonSeptember7,2015atwhichtimeallprincipalisdue.AtDecember31,2013,theaverage
interestratewas5%.
InAugust2013,ODARTenteredintoan$111.8millionrevolvingcreditagreement(theODARTAgreement)withDeutsche
BankAG(DeutscheBank),KeyEquipmentFinance,Inc.(KeyBank)(collectivelyClassA)andODBLIIILLC,asubsidiary
ofWaterfallAssetManagement(WAM)(ClassB).Lendersadvanceupto95%oftheprincipalofloanssoldtoODART.Ofthe
totalavailablecredit,DeutscheBankallowsfor$75millionClassAcommitments,KeyBankallowsfor$25millionClassA
commitmentsandWAMallowsfor$11.8millionClassBcommitments.AllassetsandstockofODARTarepledgedascollateralfor
theoutstandingprincipal.ClassAcommitmentsbearinterestatcostoffundsrateplus4.25%,whichapproximated4.4%at
December31,2013.ClassBcommitmentsbearinterestat8%plusthegreaterof1%orLIBOR,whichapproximated9%at
December31,2013.Principalandinterestarepaidmonthly.ThefacilitymaturesonAugust16,2015.AsofDecember31,2013,the
ODARTAgreementhadanoutstandingbalanceof$52.3million,withClassAandClassBavailablefundsof$53.2millionand
$6.3million,respectively.
InOctober2013,ODACenteredintoa$25millionrevolvingcreditagreement(theODACAgreement)withWAM.The
lenderadvancesupto95%oftheprincipalofloanssoldtoODAC.AllassetsandstockofODACarepledgedascollateralforthe
outstandingprincipal.InterestaccruesatLIBORplus8.25%.Principalandinterestarepaidmonthly.Thefacilitymatureson
October23,2015.AsofDecember31,2013,theODACAgreementhadavailablefundsof$0.6million.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

AsofDecember31,2013,theCompanyisincompliancewithallfinancialcovenantsrequiredpertheaboveagreements,as
amended.
TheCompanycapitalized$2.7millionand$2.1millionofdeferreddebtissuancecostsandamortized$1millionand$2.1
millionduringtheyearsendedDecember31,2012and2013,respectively.TheCompanyisamortizingthedeferreddebtissuance
costsovertheexpectedlifeofthedebtagreementsusingtheinterestmethodandhasincludedamortizationininterestexpenseinthe
consolidatedstatementsofoperations.
8.WarrantLiability
Inconjunctionwithcertaindebtagreements,theCompanyissuedwarrantstopurchasesharesofSeriesBredeemable
convertiblepreferredstock(SeriesBwarrants)andSeriesC1redeemableconvertiblepreferredstock(SeriesC1warrants).Asof
December31,2013,theholderswereentitledtopurchase254,220sharesofSeriesBatapriceof$2.9502pershareand442,664
sharesofSeriesC1atapriceof$5.5258pershare.Thewarrantsareexercisableuponvestingthroughtheearlieroftenyearsafter
issuance(variousdatesthroughDecember12,2022),ortwoyearsafterautomaticconversiontowarrantstopurchasecommonstock
uponclosingaqualifiedinitialpublicoffering(afirmcommitmentunderwrittenpublicofferingpursuanttoaneffectiveregistration
statementundertheSecuritiesActof1933,asamended,resultinginatleast$40millionofgrossproceeds,netoftheunderwriting
discountandcommissions,totheCompany,aQualifiedIPO).Thewarrantsareclassifiedasliabilitiesintheaccompanying
consolidatedbalancesheetsandadjustedtofairvalueeachperiodbecausetheyarecurrentlyexercisableintoredeemablesecurities.
FortheyearsendedDecember31,2012and2013,changesinthefairvalueofthewarrantswererecognizedintheconsolidated
statementsofoperationsaswarrantliabilityfairvalueadjustment.
9.RedeemableConvertiblePreferredStock
Thefollowingtablesummarizesthepricepershareandauthorizednumberofsharesofredeemableconvertiblepreferredstockas
ofDecember31:

SeriesName

SeriesA
SeriesB
SeriesC
SeriesC1
SeriesD

Original
IssuePrice
perShare

$0.72900
2.95020
4.20000
5.52580
8.31775

NumberofSharesAuthorized
2012

2013

2,976,680
5,677,581
4,867,769
1,500,000

2,976,680
5,677,581
4,867,769
1,500,000
7,233,878

SeriesA,SeriesB,SeriesC,SeriesC1andSeriesDredeemableconvertiblepreferredstockarecollectivelyreferredtoasthe
preferredstockandindividuallyastheSeriesA,SeriesB,SeriesC,SeriesC1andSeriesD.Eachofthepricespershare
isreferredtoastheoriginalissuepriceandexcludesthecostofissuance.Anycostsincurredinconnectionwiththeissuanceof
variousclassesofthepreferredstockhavebeenrecordedasareductionofthecarryingamount.TheCompanymayissueandredeem
preferredstockfromtimetotimeinoneormoreseries.Anysharesofpreferredstockthatareredeemed,purchased,oracquiredbythe
Companymaybereissued,exceptasrestrictedbylaworcontract.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

ThefollowingtablesummarizesthenumberofsharesofpreferredstockoutstandingasofDecember31,2012and2013by
originalissuancedates:

SeriesName

SeriesA
SeriesA
SeriesA
TotalSeriesA
SeriesB
SeriesB
SeriesB
SeriesB
SeriesB
SeriesB
TotalSeriesB

IssuanceDate

August11,2006
October27,2006
February14,2007

December3,2007
April2,2008
May9,2008
February4,2009
March18,2009
March19,2009

NumberofSharesOutstanding
December31,
December31,
2012

2013

1,474,622
857,339
644,719
2,976,680

1,390,448
573,539
255,344
2,219,331

2,932,005
169,480
288,116

84,740
1,883,473

65,547
5,423,361

2,886,275
169,480
288,116

84,740
1,883,473

65,547
5,377,631
3,534,435
1,333,334
4,867,769

SeriesC
SeriesC
TotalSeriesC

December20,2010
April6,2011

3,534,435
1,333,334
4,867,769

TotalSeriesC1

January26,2012

850,556

February7,2013
April19,2013

SeriesD
SeriesD
TotalSeriesD

850,556

5,190,058
2,043,820
7,233,878

Thefollowingtablepresentsasummaryofactivityforthepreferredstockissuedandoutstandingfortheyearsended
December31,2012and2013(inthousands):

Balance,January1,2012
Issuanceofpreferredstock
Accretionofdividendsonpreferredstock
Balance,December31,2012
Redemptionofpreferredstock(1)
Issuanceofpreferredstock(2)
Accretionofdividendsonpreferredstock
Balance,December31,2013

SeriesA

SeriesB

$ 3,076

174
3,250
(835)


144
$ 2,559

$20,558

1,280
21,838
(193)

1,273
$22,918

SeriesC SeriesC1 SeriesD

$21,477

1,636
23,113

1,636
$24,749

Total
Amount

$
$
$ 45,111
4,675
4,675

350
3,440
5,025
53,226

(1,028)

58,675 58,675

376 4,041 7,470

$ 5,401 $62,716 $118,343

(1) During2013,theCompanyredeemed757,349sharesofSeriesAand45,730sharesofSeriesBstockheldbyinvestors.The
differentialbetweentheredemptionpriceandthecarryingvalueofthesharesof$5.3millionwaschargedtoaccumulated
deficitinaccordancewithaccountingfordistinguishingliabilitiesfromequity.
(2) IncludestheconversionoftheConvertibleNote(refertoNote7).

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

Dividends
Eachseriesofpreferredstockcontainsacumulativedividendrateof8%pershare.Nodividendsweredeclaredasof
December31,2012and2013orthroughthedateofissuingthesefinancialstatements.Cumulativedividendsarepayableintheevent
ofredemption.Inadditiontothepreferentialcumulativedividends,holdersofpreferredstockareentitledtoreceive,onanif
convertedbasis,anydeclaredorpaiddividendsontheCompanyscommonstock.
Conversion
Eachshareofredeemableconvertiblepreferredstockisconvertible,attheoptionoftheholder,intooneshareofcommonstock
(subjecttoadjustmentsforeventsofdilution).Mandatoryconversionwilloccurinthefollowingsituations:
SeriesDTheearlieroftheclosingofthesaleofsharesofcommonstocktothepublicatapriceofatleasttwo(2)timesthe
SeriesDoriginalissuepricepershare(subjecttoappropriateadjustmentforstocksplits),inaQualifiedIPO,oradatespecified
byvoteorwrittenconsentoftheholdersofatleastsixtysevenpercent(67%)oftheSeriesDthenoutstanding.
SeriesCandSeriesC1UpontheclosingofaQualifiedIPO.
SeriesBTheearlieroftheclosingofaQualifiedIPO,oradatespecifiedbyvoteorwrittenconsentoftheholdersofatleast
sixtysevenpercent(67%)oftheSeriesBthenoutstanding.
SeriesATheearlieroftheclosingofaQualifiedIPO,oradatespecifiedbyvoteorwrittenconsentoftheholdersofatleast
seventypercent(70%)oftheSeriesAthenoutstanding.
PreferredStock(allseries)Uponvoteorwrittenconsentofatleastsixtysevenpercent(67%)oftheoutstandingsharesofall
series,eightypercent(80%)ofSeriesCsharesandsixtysevenpercent(67%)ofSeriesDshares.
Liquidation
Intheeventofanyliquidation,dissolution,mergerorconsolidation(resultinginthecommonandpreferredstockholderslossof
majority),dispositionortransferofassets,orwindingupoftheCompany,whethervoluntaryorinvoluntary(aLiquidationEvent),
andafteralldeclareddividendshavebeenpaid,holdersofcertainseriesofpreferredstockareentitledtoparticipateinthe
distributionofremainingCompanyassetsalongwithcommonstockholdersatarateequaltothefollowing:
SeriesDIfliquidationoccurswithintwentyfourmonthsoftheSeriesDissuance,theSeriesDholdersareentitledtoan
originalissuemultiplierrangingfrom1.502.00timestheoriginalissueprice.
SeriesCTheSeriesCholdersareentitledtoanoriginalissuepricemultiplierof2.00timestheoriginalissueprice.
SeriesATheSeriesAholdersareentitledtoanoriginalissuepricemultiplierof2.00timestheoriginalissueprice.
SeriesBandSeriesC1TheSeriesBandSeriesC1holdersdonothaveamultiplierintheirpreferentialtreatmentinthe
distributionofremainingassets.
RedemptionRights
Eachseriesofpreferredstockisredeemableattheelectionofitsholders,withinsixtydaysafterthereceiptofawrittenrequest
fromatleastamajorityoftheholdersoftheoutstandingsharesoftherespectiveseriesof

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

preferredstockandatanearliestpossiblepreferredstockredemptiondateofFebruary25,2019,asamended.Theredemptionpriceis
equaltoanyunpaidcumulativedividendsandotherdividendsplustheoriginalissueprice.
VotingRights
TheSeriesA,SeriesB,andSeriesDholderseachhavetherighttoelectonememberoftheboardofdirectors(theBoard).The
SeriesCholdershavetherighttoelecttwomembersoftheBoard.Forvotingpurposes,thenumberofvotesperholderisequaltothe
numberofsharesofcommonstockintowhichthesharesofpreferredstockareconvertible.TheSeriesC1holdersdonothaveBoard
designationrights.
10.StockholdersDeficit
CommonStock
AtDecember31,2013,theCompanyhadreservedatotalof27,943,493ofitsauthorized31,964,661sharesofcommonstock
forfutureissuanceasfollows:

Reservation

Conversionofpreferredstock
Outstandingstockoptions
Outstandingcommonstockwarrants
Possiblefutureissuanceunderstockoptionplans
Totalcommonstockreservedforfutureissuance

NumberofSharesReserved
atDecember31,2013

21,452,829
3,907,485
2,028,533
554,646
27,943,493

During2013,theCompanyrepurchased644,548sharesofcommonstockheldbyinvestorsatatotalvalueof$5.0million.In
connectionwiththistransaction,theCompanyalsoredeemed133,309commonstockwarrantsthatresultedinanincreasein
accumulateddeficitof$0.9million.
InMay2013,theCompanyrepurchased139,652optionsofaformermemberofOnDeckmanagementatapriceabovethestrike
priceoftheoptions.Thenetcostof$1millionisrecordedascompensationexpenseandisincludedingeneralandadministrativein
theconsolidatedstatementofoperations.
During2013,theCompanyredeemed118,000sharesofcommonstockheldbyemployeesatatotalcostof$0.9millionof
whichtheamountpaidinexcessoffairvaluewasrecordedascompensationexpenseandisincludedingeneralandadministrativein
theconsolidatedstatementofoperations.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

11.IncomeTax
TheCompanysfinancialstatementsincludeatotalincometaxexpenseof$0onnetlossesof$16.9millionand$24.4million
fortheyearsendedDecember31,2012and2013,respectively.Areconciliationofthedifferencebetweentheprovisionforincome
taxesandincometaxesatthestatutoryU.S.federalincometaxrateisasfollowsfortheyearsendedDecember31:

Federalstatutoryrate
Effectof:
Changeinvaluationallowance
Federaleffectofchangeinstateandlocaltaxvaluationallowance
Permanentitems
Incometaxprovisioneffectiverate

2012

2013

34.0%

(40.6)%
6.7%
(0.1)%
0.0%

34.0%

(36.7)%

6.3%
(3.6)%

0.0%

ThesignificantcomponentsoftheCompanysdeferredtaxassetwereasfollowsasofDecember31(inthousands):

Deferredtaxassetsrelatingto:
Netoperatinglosscarryforwards
Loanlossreserve
Property,equipmentandsoftware
Deferredrent
Miscellaneousitems
Totalgrossdeferredtaxassets
Deferredtaxliabilities:
Internallydevelopedsoftware
Deferredissuancecosts
Totalgrossdeferredtaxliabilities
Deferredassetslessliabilities
Less:valuationallowance
Netdeferredtaxasset

2012

14,493
3,581
154

1
18,229

642

321

963
17,266
(17,266)
$

2013

$ 18,686
7,684

458

386

2
27,216

908

109
1,017
26,199
(26,199)
$

Inassessingtherealizabilityofdeferredtaxassets,managementconsiderswhetheritismorelikelythannotthatsomeportionor
allofthedeferredtaxassetswillnotberealized.Theultimaterealizationofdeferredtaxassetsisdependentuponthegenerationof
futuretaxableincomeduringtheperiodsinwhichthosetemporarydifferencesbecomedeductible.Managementconsidersthe
scheduledreversalofdeferredtaxliabilities,projectedfuturetaxableincome,andplannedtaxstrategiesinmakingthisassessment.
Baseduponthelevelofhistoricallossesandprojectionsforfuturetaxableincomeovertheperiodsinwhichthedeferredtaxassets
aredeductible,managementbelievesitismorelikelythannotthattheCompanywillnotrealizethebenefitsofthesedeductible
differencesinthefuture.Therefore,theCompanyhasrecordedafullvaluationallowanceonitsnetdeferredtaxasset.
Netoperatinglosscarryforwardsforfederalincometaxpurposeswereapproximately$37.6millionand$47.5millionat
December31,2012and2013,respectively,and,ifnotutilized,willexpireatvariousdates

F25

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

beginningin2027.Statenetoperatinglosscarryforwardswere$37.5millionand$47.2millionatDecember31,2012and2013,
respectively.Netoperatinglosscarryforwardsandtaxcreditcarryforwardsreflectedabovemaybelimitedduetohistoricalandfuture
ownershipchanges.
12.FairValueofFinancialInstruments
ThecarryingamountsofcertainoftheCompanysfinancialinstruments,includingcashandcashequivalents,restrictedcash,
loansreceivable,loansheldforsaleandaccountspayableandotheraccruedliabilities,approximateLevel3fairvalueduetotheir
shorttermnature.ThecarryingvalueoftheCompanysfinancingobligationsapproximatesfairvalue,consideringtheborrowing
ratescurrentlyavailabletotheCompanyforfinancingobligationswithsimilartermsandcreditrisks.
TherewerenotransfersbetweenlevelsfortheyearsendedDecember31,2012and2013.
AssetsandLiabilitiesMeasuredatFairValueonaRecurringBasis
TheCompanyevaluatesitsfinancialassetsandliabilitiessubjecttofairvaluemeasurementsonarecurringbasistodetermine
theappropriatelevelatwhichtoclassifythemforeachreportingperiod.Thisdeterminationrequiressignificantjudgmentstobe
made.
ThefollowingtablespresentinformationabouttheCompanysassetsandliabilitiesthataremeasuredatfairvalueona
recurringbasisusingtheabovecategories,asofDecember31,2012and2013(inthousands).

Description

Liabilities:
Warrantliability(1)
Totalliabilities

Level1

December31,2012
Level2
Level3

$
$

$
$

Level1

Description

Liabilities:
Warrantliability(1)
Totalliabilities

$
$

$ 707
$ 707

December31,2013
Level2
Level3

$
$

$4,446
$4,446

Total

$ 707
$ 707

Total

$4,446
$4,446

(1) TheCompanyswarrantliability(Note8)isclassifiedwithinLevel3becausetheliabilitiesarevaluedusingsignificant
unobservableinputs.TheCompanyusesaBlackScholesMertonOptionPricingModelandvariousinputsandassumptions
basedonthecontractualagreementsforthewarrantstodeterminefairvalueatissuanceandsubsequentmeasurements.Estimates
ofthevolatilityfortheoptionpricingmodelwerebasedontheassetvolatilityofcommonstockofagroupofcomparable,
publiclytradedcompanies.Estimatesofexpectedtermwerebasedontheremainingcontractualperiodofthewarrants.
Ahypotheticalincreaseordecreaseinassumedassetvolatilityof10%wouldresultinadecreaseofapproximately9%oran
increaseofapproximately20%,respectively,inthefairvalueofthewarrants.Intheconsolidatedstatementsofoperations,changesin
fairvalueareincludedinwarrantliabilityfairvalueadjustment.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

AssetsandLiabilitiesMeasuredatFairValueonaRecurringBasisUsingSignificantUnobservableInputs(Level3)
ThefollowingtablepresentsthechangesintheCompanysLevel3instrumentsmeasuredatfairvalueonarecurringbasisfor
theyearsendedDecember31(inthousands):

WarrantliabilitybalanceatJanuary1
Issuanceofwarrantsatfairvalue
Changeinfairvalue
WarrantliabilitybalanceatDecember31

2012

2013

$ 183
376
148
$ 707

$ 707

3,739
$4,446

13.RelatedParties
DuringAprilandMay2013,OnDeckenteredintostockredemptionagreementswithcertainSeriesAandBpreferred
stockholders.Pertheagreements,OnDeckredeemed757,349sharesofSeriesAfor$5.9millionand47,730sharesofSeriesBfor$0.4
million.
Fromtimetotime,theCompanyissueswarrantsinconnectionwithnewdebtagreements.Thesefeatureshaveresultedincertain
notespayablebeingduetorelatedpartiesholdingcommonstockandcommonorpreferredstockwarrantsoftheCompany.
14.StockBasedCompensation
TheCompanymaintainstheAmendedandRestated2007StockOptionPlan,pursuanttowhichtheCompanyhasauthorized
5,338,562sharesofitscommonstockforissuancetoitsemployees,directorsandnonemployeethirdparties.Thetermsofthestock
optiongrants,includingtheexercisepricepershareandvestingperiods,aredeterminedbytheCompensationCommitteeofthe
Board(theCommittee).StockoptionsaregrantedatexercisepricesdefinedbytheCommitteebut,historically,havebeenequalto
thefairmarketvalueoftheCompanyscommonstockatthedateofgrant.AsofDecember31,2013,theCompanyhad554,646
sharesallocatedtotheplanbutnotyetissued.Theoptionstypicallyvestatarateof25%afteroneyearfromthevesting
commencementdateandthenmonthlyoveranadditionalthreeyearperiod.Theoptionsexpiretenyearsfromthegrantdateor,for
terminatedemployees,90daysaftertheemployeesterminationdate.Compensationexpenseforthefairvalueoftheoptionsattheir
grantdateisrecognizedratablyoverthevestingperiod.
Stockbasedcompensationexpenserelatedtostockoptionsisallocatedtooperatingexpensesintheconsolidatedstatementsof
operationsandfortheyearsendedDecember31,2012and2013was$0.2millionand$0.4million,respectively.
TheCompanyvaluesstockoptionsusingtheBlackScholesMertonOptionPricingModel,whichrequirestheinputof
subjectiveassumptions,includingtheriskfreeinterestrate,expectedterm,expectedstockpricevolatilityanddividendyield.The
riskfreeinterestrateassumptionisbaseduponobservedinterestratesforconstantmaturityU.S.Treasurysecuritiesconsistentwith
theexpectedtermoftheCompanysemployeestockoptions.Theexpectedtermrepresentstheperiodoftimethestockoptionsare
expectedtobeoutstandingandisbasedonthesimplifiedmethod.Underthesimplifiedmethod,theexpectedtermofanoptionis
presumedtobethemidpointbetweenthevestingdateandtheendofthecontractualterm.Managementusesthesimplifiedmethod
duetothelackofsufficienthistoricalexercisedatatoprovideareasonablebasisuponwhichtootherwiseestimatetheexpectedterm
ofthestockoptions.Expectedvolatilityisbasedonhistoricalvolatilitiesforpubliclytradedstockofcomparablecompaniesoverthe
estimatedexpectedlifeofthestockoptions.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

TheCompanyassumednodividendyieldbecauseitdoesnotexpecttopaydividendsinthenearfuture,whichisconsistent
withtheCompanyshistoryofnotpayingdividends.
Thefollowingtablesummarizestheassumptionsusedforestimatingthefairvalueofstockoptionsgrantedfortheyearsended
December31:

Riskfreeinterestrate
Expectedterm(years)
Expectedvolatility
Dividendyield
Weightedaveragegrantdatefairvaluepershare

2012

2013

0.830.96% 0.882.29%
5.866.13 5.768.52
5960%
5460%

0%

0%

$0.46

$1.30

ThefollowingisasummaryofoptionactivityfortheyearendedDecember31,2012:

OutstandingatJanuary1,2012
Granted
Exercised
Forfeited
Expired
OutstandingatDecember31,2012

Numberof
Options

Weighted
Average
Exercise
Price

$
$
$
$
$
$

0.66
0.85
0.54
0.72
0.53
0.71

Weighted
Average
Remaining
Contractual
Term
(inyears)

8.24

Aggregate
Intrinsic
Value

(inthousands)

449

2,557,081
866,046
(30,468)
(190,386)
(30,877)
3,171,396

ExercisableatDecember31,2012

1,269,304

0.61

7.22

307

VestedorexpectedtovestasofDecember31,2012

2,651,951

0.70

8.13

403

ThefollowingisasummaryofoptionactivityfortheyearendedDecember31,2013:

OutstandingatJanuary1,2013
Granted
Exercised
Forfeited
Expired
OutstandingatDecember31,2013
ExercisableatDecember31,2013
VestedorexpectedtovestasofDecember31,2013

Numberof
Options

Weighted
Average
Exercise
Price

0.71
1.38
0.61
0.91
0.75
1.03

8.41

Aggregate
Intrinsic
Value

(inthousands)

3,171,396
1,856,500
(753,255)
(362,157)
(4,999)
3,907,485

1,314,792

0.76

7.10

8,458

3,056,293

1.00

8.28

19,618

F28

$
$
$
$
$
$

Weighted
Average
Remaining
Contractual
Term
(inyears)

24,972

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

Stockbasedcompensationexpenserelatedtostockoptionsisincludedinthefollowinglineitemsintheaccompanying
consolidatedstatementsofoperationsfortheyearendedDecember31(inthousands):

Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Total

2012

2013

$ 47
7
9
166
$229

$118
47
30
243
$438

TotalcompensationcostrelatedtononvestedawardsnotyetrecognizedasofDecember31,2013was$2.7millionandwillbe
recognizedoveraweightedaverageperiodofapproximately3.4years.Theaggregateintrinsicvalueofemployeeoptionsexercised
duringtheyearsendedDecember31,2012and2013was$4,000and$1million,respectively.
15.CommitmentsandContingencies
LeaseCommitments
OperatingLeases
InMay2011,theCompanyenteredintoanoperatingleaseforasatelliteofficeinVirginia.Theagreementcalledformonthly
rentalpaymentsof$12,000,subjecttoescalation,throughAugust2016.InMay2013,theCompanyvacatedthisofficewiththe
intenttosubleasetheproperty.InNovember2013,theCompanyterminatedtherentalagreementandrecognizedtheearly
terminationfeeof$0.2millionasacomponentofrentexpense.InNovember2011,theCompanyenteredintoanoperatingleasein
NewYorkforitscorporateheadquarters.Theagreementcallsformonthlyrentalpaymentsof$27,000,subjecttoescalation,through
October2021.InMarch2013,theCompanyvacatedthisofficewiththeintenttosubleasetheproperty.TheCompanyrecordeda
liabilityof$0.5million,basedonremainingleaserentals,adjustedfordeferredrentrecognizedundertheleaseandestimated
subleaserentalsthatcouldreasonablybeobtained.InJuly2013,theCompanyenteredintoasubleaseagreementrequiringtenant
monthlypaymentsof$26,000,subjecttoescalation,andallowingfora6.5monthrentholidayduringthefirstyear.Asof
December31,2013,totalfutureminimumsubleasepaymentstobereceivedunderthesubleaseagreementis$2.7million,subjectto
escalation.
InSeptember2012,theCompanyenteredintoanoperatingleaseinNewYorkforitscorporateheadquarters.Theagreement
callsformonthlyrentalpaymentsof$83,000,subjecttoescalation,throughAugust2023andallowsforatwelvemonthrentholiday
duringthefirstyear.Deferredrentisincludedinthebalancesheetsasacomponentofaccruedexpensesandotherliabilities.The
agreementprovidedfora$1.6millionleaseholdimprovementincentivethathasbeenrecordedasaliabilityandisbeingamortized
overthetermofthelease.
InMay2013,theCompanyenteredintoanoperatingagreementinVirginiaforasatelliteoffice.Theagreementcallsfor
monthlyrentalpaymentsof$37,000,subjecttoescalation,throughSeptember2018andallowsforafivemonthrentholidayduring
thesecondyear.Deferredrentisincludedinthebalancesheetsasacomponentofaccruedexpensesandotherliabilities.The
agreementprovidedfora$0.5millionleaseholdimprovementincentivethathasbeenrecordedasaliabilityandisbeingamortized
overthetermofthelease.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

CapitalLeases
InMarch2012,theCompanyenteredintoacapitalleaseagreementforadatawarehouse.Theagreementcalledformonthly
principalandinterestpaymentsof$5,000throughApril2015.AsofDecember31,2013,totalfutureminimumpaymentsis$76,000.
LeaseCommitments
AtDecember31,2013,futureminimumleasecommitmentsunderoperatingandcapitalleases,netofsubleaseincome,forthe
remainingtermsoftheoperatingleasesareasfollows(inthousands):

FortheyearsendingDecember31,
2014
2015
2016
2017
2018
Thereafter
Total

$ 1,772
1,733
1,914
1,974
1,958
5,956
$15,307

ConcentrationsofCreditRisk
FinancialinstrumentsthatpotentiallysubjecttheCompanytosignificantconcentrationsofcreditriskconsistprincipallyof
cash,cashequivalents,restrictedcashandloans.TheCompanyholdscash,cashequivalentsandrestrictedcashinaccountsat
regulateddomesticfinancialinstitutionsinamountsthatmayexceedFDICinsuredamounts.TheCompanybelievesthese
institutionstobeofhighcreditqualityandhasnotexperiencedanyrelatedlossestodate.
TheCompanyisexposedtodefaultriskonborrowerloansoriginated.TheCompanyperformsevaluationsofborrowers
financialconditionsasneededanddoesnotallowborrowerstohavemorethantwoloansoutstandingatanyonetime.Thereisno
singleborrowerorgroupofborrowersthatcompriseasignificantportionoftheCompanysloanportfolio.
Contingencies
TheCompanymaybesubjecttopendinglegalproceedingsandregulatoryactionsintheordinarycourseofbusiness.The
resultsofsuchproceedingscannotbepredictedwithcertainty,buttheCompanydoesnotanticipatethatthefinaloutcome,ifany,
arisingoutofanysuchmatterwillhaveamaterialadverseeffectonitsbusiness,financialconditionorresultsofoperations.
16.SegmentReporting
Operatingsegmentsaredefinedascomponentsofanenterpriseforwhichdiscretefinancialinformationisavailablethatis
evaluatedregularlybythechiefoperatingdecisionmaker(CODM)forpurposesofallocatingresourcesandevaluatingfinancial
performance.TheCompanysCODMreviewsfinancialinformationpresentedonaconsolidatedbasisforpurposesofallocating
resourcesandevaluatingfinancialperformance.Assuch,theCompanysoperationsconstituteasingleoperatingsegmentandone
reportablesegment.
AllrevenuewasgeneratedandallassetswereheldintheUnitedStatesduringtheyearsendedDecember31,2012and2013.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

17.SubsequentEvents
SubsequenttoDecember31,2013butpriortotheissuanceofthefinancialstatements,theCompanyauthorized2,700,000
sharesandissued2,617,273sharesofSeriesEredeemableconvertiblepreferredstock(SeriesE)atanoriginalissuepriceof$29.42
foratotalof$77million.Theissuanceoftheseshareswouldmateriallyimpactthenumberofpotentialcommonshareequivalents.
Approximately$30millionoftheproceedsoftheissuancewasusedtorepaycertaindebtpayableunderagreementswithSFCapital
andSquare1.
InJanuary2014,theCompanyenteredintofivecapitalleaseagreementsforequipmentusedinoneoftheCompanysdata
centers.Theagreementscallformonthlypaymentsof$18,000throughDecember2016.
OnJanuary2,2014,ODACenteredintoasecondamendmentwithWAM,significantlyincreasingthefinancinglimitofthe
ODACAgreementfrom$25millionto$50million.Noothersignificanttermsweremodifiedundertheamendment.
OnJanuary22,2014,theCompanyenteredintoasecondamendmentwithSFCapital,significantlyincreasingthecreditlimit
availableontheSSL&SAfrom$8millionto$18millionwithborrowingsupto$8millionbearingtheoriginalinterestrateof16%
andallborrowingsinexcessof$8millionbearinganinterestrateof12%.Noothersignificanttermsweremodifiedunderthe
amendment.OnFebruary27,2014,theoutstandingprincipalof$18.0millionwaspaidinfullwithproceedsfromtheSeriesE
financing.
OnJanuary23,2014,theCompanysignedaleasetorentadditionalspaceinthesamebuildingofitscorporateheadquartersin
NewYorkCity.TheleaseterminatesinAugust2023andcallsformonthlypaymentsof$61,000,withescalationsbeginninginits
secondyear.Thetermsalsoprovideforatenantallowanceof$0.9millionandrentholidayforthefirst16months.
OnFebruary4,2014,OnDeckCapital,Inc.(ODCICanada)wasformedinBritishColumbiaforpurposesofhavinga
presenceinCanadaanddoesnothaveanyassets,liabilitiesorbusinessactivitythroughthedatetheconsolidatedfinancial
statementswereavailabletobeissued.AllCanadianloansareoriginatedandheldbyOnDeckandnoneareoriginatedandheldby
ODCICanada.
OnApril7,2014,theSBLPIIAgreementwasterminatedandtheamountoutstandingof$63.2millionwaspaidinfulltothe
lenders.Approximately$54millionofeligibleloansweretransferredtoODARTandwerepurchasedwiththeexistingODART
Agreement.TheremainingbalanceduewaspaidbyOnDeck.
OnMay8,2014,ODASTenteredintoa$175millionsecuritizationagreementwithDeutscheBankSecurities(Deutsche
Bank)asadministrativeagent.Ofthetotalcommitment,DeutscheBankallowsfor$156.7millionofClassA(primarygroupof
lenders)assetbackednotesand$18.3millionofClassB(subordinategroupoflenders)assetbackednotes.Theagreementrequires
pooledloanswithaminimumaggregateprincipalbalanceofapproximately$183.2milliontobetransferredfromOnDeckto
ODAST.ClassAandClassBcommitmentsbearinterestat3.15%and5.68%,respectively.Monthlypaymentsofinterestaredue
beginningJune17,2014andprincipalandinterestareduebeginninginJune2016,withthefinalpaymentoccurringinMay2018.
OnJune18,2014,thesubsidiaries,whichweredormant,SBLPIIandFORweredissolved.
InJuly2014,OnDeckAssetPool,LLC(ODAP)wasformed.InAugust2014thisentityenteredintoa$75millionrevolving
lineofcreditwithJefferiesMortgageFunding,LLC.ThecommitmentbearsinterestatLIBORplus4%,andmaturesinAugust2016.

F31

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoConsolidatedFinancialStatements(Continued)

InJuly2014,oneinvestorexercised285,164SeriesC1preferredwarrantsfor$1.6million.Theexerciseswillincreasethetotal
redeemableconvertiblepreferredstockoutstandingwhilereducingthecorrespondingwarrantliabilityinsubsequentperiods.
InAugust2014,twoinvestorsexercised197,851and15,566sharesofSeriesBandC1preferredstockwarrants,respectively,
foracombinedtotalof$0.7million.Additionally,fourinvestorsexercised785,204ofcommonstockwarrantsfor$0.5million.The
exerciseofthepreferredwarrantswillincreasethetotalredeemableconvertiblepreferredstockoutstandingwhilereducingthe
correspondingwarrantliabilityinsubsequentperiods.
InSeptember2014,twoinvestorsexercised56,369and4,434sharesofSeriesBandC1preferredstockwarrants,respectively,
foracombinedtotalof$0.2million.Additionally,10investorsexercised496,336ofcommonstockwarrantsfor$0.4million.The
exerciseofthepreferredwarrantswillincreasethetotalredeemableconvertiblepreferredstockoutstandingwhilereducingthe
correspondingwarrantliabilityinsubsequentperiods.
OnSeptember15,2014,theCompanyenteredintoanamendmentoftheODARTagreementincreasingtherevolvingcredit
agreementfrom$111.8millionto$167.6million.Ofthetotalavailablecredit,DeutscheBankincreasedfrom$75millionto
$125millionofClassAcommitments,KeyBankcontinuestoallow$25millionClassAcommitmentsandWAMincreasedfrom
$11.8millionto$17.6millionClassBcommitments.ClassAcommitmentsbearinterestatcostoffundsrateplus3%.ClassB
commitmentsbearinterestat7.25%plusthegreaterof1%orLIBOR.ThefacilitymaturitydatewasextendedfromAugust16,2015
toSeptember15,2016.
TheCompanyhasevaluatedsubsequenteventsthroughtheissuancedateoftheseconsolidatedfinancialstatementsand
determinedthatnoeventsortransactionsmetthedefinitionofasubsequenteventforpurposesofrecognitionordisclosureinthe
consolidatedfinancialstatements,otherthanthosepreviouslydisclosed.

F32

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
UnauditedConsolidatedBalanceSheets
(inthousands,exceptsharedata)

Assets
Cashandcashequivalents
Restrictedcash
Loans
Less:Allowanceforloanlosses
Loans,netofallowanceforloanlosses
Loansheldforsale
Deferreddebtissuancecosts
Property,equipmentandsoftware,net
Otherassets
Totalassets

December31,
2013
(audited)

$
4,670

14,842

222,521

(19,443)

203,078

1,423

2,327

7,169

1,941
$
235,450

Liabilities,redeemableconvertiblepreferredstockandstockholdersdeficit
Liabilities:
Accountspayable
Interestpayable
Fundingdebt
Corporatedebt
Warrantliability
Accruedexpensesandotherliabilities
Totalliabilities

1,161
1,120
188,297
15,000
4,446
6,563
216,587

Commitmentsandcontingencies(Note11)

Redeemableconvertiblepreferredstock:

SeriesApreferredstock,parvalue$.01,2,976,680and2,219,331sharesauthorizedat
December31,2013andSeptember30,2014,respectively2,219,331issuedand
outstandingatDecember31,2013andSeptember30,2014,nosharesissuedand
outstandingproforma

SeriesBpreferredstock,parvalue$.01,5,677,581and5,631,851sharesauthorizedat
December31,2013andSeptember30,2014,respectively5,377,631and5,631,851
sharesissuedandoutstandingatDecember31,2013andSeptember30,2014,
respectively,nosharesissuedandoutstandingproforma

SeriesCpreferredstock,parvalue$.01,4,867,769sharesauthorized,issuedand
outstandingatDecember31,2013andSeptember30,2014,nosharesissuedand
outstandingproforma

SeriesC1preferredstock,parvalue$.01,1,500,000and1,293,220sharesauthorizedat
December31,2013andSeptember30,2014,respectively850,556and1,155,720shares
issuedandoutstandingatDecember31,2013andSeptember30,2014,respectively,no
sharesissuedandoutstandingproforma

SeriesDpreferredstock,parvalue$.01,7,233,878sharesauthorized,issuedand
outstandingatDecember31,2013andSeptember30,2014,nosharesissuedand
outstandingproforma

SeriesEpreferredstock,parvalue$.01,0and2,700,000sharesauthorizedand0and
2,617,273sharesissuedandoutstandingatDecember31,2013andSeptember30,2014,
respectively,nosharesissuedandoutstandingproforma

Totalredeemableconvertiblepreferredstock

Stockholders(deficit)equity:

Commonstock,parvalue$0.01,31,964,661,40,000,000and40,000,000sharesauthorized
and2,233,807,4,354,496and28,080,318sharesissuedandoutstandingatDecember31,
2013,September30,2014andSeptember30,2014proforma,respectively

Treasurystockatcost

Additionalpaidincapital

Accumulateddeficit

Totalstockholders(deficit)equity

Totalliabilities,redeemableconvertiblepreferredstockandstockholders(deficit)equity

September30,
2014
(unaudited)

$
22,642

22,615

433,391

(39,756)

393,635

2,653

5,281

13,254

5,927
$
466,007

22,642
22,615
433,391
(39,756)
393,635
2,653
5,281
13,254
5,927
466,007

3,936
717
347,204
3,000
2,802
10,418
368,077

3,936
717
347,204
3,000

10,418
365,275

2,559

2,657

22,918

29,860

24,749

25,975

5,401

12,932

62,716

66,326

118,343

80,613
218,363

38
(5,656)
1,614
(95,476)
(99,480)
235,450

59
(5,656)
4,885
(119,721)
(120,433)
466,007

296
(5,656)
225,813
(119,721)
100,732
466,007

Theaccompanyingnotesareanintegralpartoftheseunauditedconsolidatedfinancialstatements.

F33

September30,
2014
(proforma)

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
UnauditedConsolidatedStatementsofOperations
(inthousands,exceptshareandpersharedata)

Revenue:
Interestincome
Gainonsalesofloans
Otherrevenue
Grossrevenue
Costofrevenue:
Provisionforloanlosses
Fundingcosts
Totalcostofrevenue
Netrevenue

NineMonthsEndedSeptember30,

2013
2014

41,073

1,004
42,077

16,300
9,400
25,700
16,377

13,566
6,090
3,746
9,158
32,560
(16,183)

(1,070)
(1,496)
(2,566)
(18,749)

(18,749)
(5,254)
(5,414)
(29,417)

Operatingexpenses:
Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Totaloperatingexpenses
Lossfromoperations

Other(expense)income:
Interestexpense
Warrantliabilityfairvalueadjustment
Totalother(expense)income
Lossbeforeprovisionforincometaxes
Provisionforincometaxes
Netloss
SeriesAandBpreferredstockredemptions
Accretionofdividendsonredeemableconvertiblepreferredstock
Netlossattributabletocommonstockholders

Netlosspercommonshare:
Basicanddiluted

Proforma,basicanddiluted(unaudited)

Weightedaveragecommonsharesoutstandingbasicanddiluted
Basicanddiluted
Proforma,basicanddiluted(unaudited)

99,873
4,569
3,131
107,573

47,011
12,531
59,542
48,031

21,799
11,357
5,928
13,968
53,052
(5,021)

(274)
(9,122)
(9,396)
(14,417)

(14,417)

(9,828)
(24,245)

(13.73)

(8.48)

(0.21)

2,142,568

2,857,871

25,583,884

Theaccompanyingnotesareanintegralpartoftheseunauditedconsolidatedfinancialstatements.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
UnauditedConsolidatedStatementsofChangesinStockholdersDeficit
(inthousands,exceptsharedata)

BalanceJanuary1,2013
Stockbasedcompensation
BuybackofPreferredstockSeriesAandB
Issuanceofcommonstockwarrant
Buybackofwarrants
Exerciseofstockoptionsandwarrants
Buybackofcommonstock
Accretionofdividendsonredeemableconvertible
preferredstock
Netloss
BalanceDecember31,2013
Stockbasedcompensation
Issuanceofcommonstockwarrant
Exerciseofstockoptionsandwarrants
Accretionofdividendsonredeemableconvertible
preferredstock
Netloss
BalanceSeptember30,2014

Total
Additional Accumulated Treasury
Paidin
Stockholders
Deficit
Stock
Amount
Capital


Deficit

CommonStock
Shares

3,138,679

613,603

31

$ (57,446) $ (483)

(5,254)

(950)

(5,173)

(57,159)
448
(5,254)
45
(950)
389
(5,173)

3,752,282

2,120,689

38

21

(7,470)

(24,356)

$ 1,614 $ (95,476) $ (5,656)

1,606

64


1,601

(7,470)
(24,356)
(99,480)
1,606
64
1,622

5,872,971 $

739
448

45

382

(9,828)

(9,828)

(14,417)
(14,417)
59 $ 4,885 $ (119,721) $ (5,656) $ (120,433)

Theaccompanyingnotesareanintegralpartoftheseunauditedconsolidatedfinancialstatements.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
UnauditedConsolidatedStatementsofCashFlows
(inthousands)

Cashflowsfromoperatingactivities
Netloss
Adjustmentstoreconcilenetlosstonetcashprovidedbyoperatingactivities:
Provisionforloanlosses
Depreciationandamortization
Amortizationofdebtissuancecosts
Stockbasedcompensation
Lossondisposal
Debtdiscount
Preferredstockwarrantissuanceandwarrantliabilityfairvalueadjustment
Commonstockwarrantissuance
Changesinoperatingassetsandliabilities:
Otherassets
Accountspayable
Interestpayable
Accruedexpensesandotherliabilities
Originationsofloansheldforsale
Salesofloansheldforsale
Netcashprovidedbyoperatingactivities
Cashflowsfrominvestingactivities
Changeinrestrictedcash
Purchasesofproperty,equipmentandsoftware
Capitalizedinternalusesoftware
Originationsoftermloansandlinesofcredit,excludingrolloversintoneworiginations
Changeinnetdeferredoriginationcosts
Repaymentsoftermloansandlinesofcredit
Netcashusedininvestingactivities
Cashflowsfromfinancingactivities
Proceedsfromexerciseofstockoptionsandwarrants
Redemptionofcommonstockandwarrants
Proceedsfromtheissuanceofredeemableconvertiblepreferredstock
Redemptionofpreferredstock
Proceedsfromtheissuanceofdebt
Paymentsofdebtissuancecosts
Repaymentsofdebt
Netcashprovidedbyfinancingactivities
Netincreaseincashandcashequivalents
Cashandcashequivalentsatbeginningofperiod
Cashandcashequivalentsatendofperiod

NineMonthsEndedSeptember30,

2013
2014

(18,749)

16,300
1,764
1,487
267

959
1,496
25

369
(534)
(262)
3,731

6,853

(274)
(3,542)
(1,471)
(252,117)
(1,783)
157,745
(101,442)

297
(6,123)
49,717
(6,282)
142,343
(1,885)
(87,269)
90,798
(3,791)
7,386
3,595

Supplementaldisclosureofothercashflowinformation
Cashpaidforinterest

7,588

Supplementaldisclosuresofnoncashinvestingandfinancingactivities
Stockbasedcompensationincludedincapitalizedinternalusesoftware

159

Unpaidprincipalbalanceoftermloansrolledintoneworiginations

38,815

105,974

Conversionofdebttoredeemableconvertiblepreferredstock

8,959

5,414

9,828

Accretionofdividendsonredeemableconvertiblepreferredstock

F36

(14,417)

47,011
2,848
2,010
1,447
774

9,127
64

(3,986)
2,773
(403)
3,856
(76,212)
74,982
49,874

(7,773)
(7,411)
(2,137)
(606,120)
(4,785)
373,338
(254,888)

4,044

77,000

428,535
(4,964)
(281,629)
222,986
17,972
4,670
22,642

10,966

Theaccompanyingnotesareanintegralpartoftheseunauditedconsolidatedfinancialstatements.

TableofContents

ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements
1.Organization
OnDeckCapital,Inc.s(OnDeckandcollectivelywithitssubsidiariestheCompany)principalactivityisproviding
financingproductstosmallbusinesseslocatedthroughouttheUnitedStates,andrecentlyinCanadaaswell,includingtermloans
(typicallythreetotwentyfourmonthsindurationfor$5,000$250,000)andlinesofcredit.TheCompanyusestechnologyand
analyticstoaggregatedataaboutabusinessandthenquicklyandefficientlyanalyzesthecreditworthinessofthebusinessusingthe
Companysproprietarycreditscoringmodel.
OnDeckoriginatesmostoftheloansinitsportfolioandalsopurchasesloansfromBankofInternetFederalBank(BofI).
OnDecksubsequentlytransfersmostloansintooneofitswhollyownedsubsidiaries.AsofSeptember30,2014,theCompanyhas
fiveactivewhollyownedsubsidiariesrelatedtoassetbackedrevolvingdebtandsecuritizationfacilitiesthatinclude:SmallBusiness
AssetFund2009LLC(SBAF),OnDeckAccountsReceivablesTrust20131LLC(ODART),OnDeckAssetCompanyLLC
(ODAC),OnDeckAssetSecuritizationTrustLLC(ODAST),andOnDeckAssetPool,LLC(ODAP)(collectively,the
Subsidiaries).OnDeckCapital,Inc,(ODCICanada)wasformedinFebruary2014inBritishColumbiaforpurposesofhaving
presenceinCanadaanddoesnothaveanyassets,liabilitiesorbusinessactivitythroughthedatetheunauditedconsolidatedfinancial
statementswereavailabletobeissued.AllCanadianloansareoriginatedandheldbyOnDeckandnoneareoriginatedandheldby
ODCICanada.ODCS,LLC(ODCS)wasformedonJune13,2014forthepurposeofdebtrelatedcollections.Subsidiariesacquire
loansoriginatedorpurchasedbyOnDeckandholdthemforthesolebenefitofthelendersofeachsubsidiary.OnJune18,2014,the
subsidiariesthatweredormant,SBLPII,LCC(SBLPII)andFundforODCReceivables(FOR),weredissolved.InJuly2014,
ODAPwasformed.Eachsubsidiaryhasspecificcriteriafortheloansthatcanbetransferredintotheentity,suchasterm,sizeand
industryconcentration.
2.SummaryofSignificantAccountingPolicies
BasisofPresentationandPrinciplesofConsolidation
TheCompanypreparestheunauditedconsolidatedfinancialstatementsinaccordancewithaccountingprinciplesgenerally
acceptedintheUnitedStatesofAmerica(U.S.GAAP).Theaccompanyingunauditedconsolidatedfinancialstatementsincludethe
accountsofOnDeckanditswhollyownedsubsidiaries:SBAF,SBLPII,ODART,ODAC,ODAST,ODCS,ODCICanada,FORand
ODAP.Allintercompanytransactionsandaccountshavebeeneliminatedinconsolidation.
InterimConsolidatedFinancialInformation
TheaccompanyingunauditedconsolidatedfinancialstatementsandfootnoteshavebeenpreparedinaccordancewithU.S.
GAAPascontainedintheFinancialAccountingStandardsBoard(FASB)AccountingStandardsCodification(ASC)forinterim
financialinformation.TheresultsofoperationsfortheninemonthsendedSeptember30,2014arenotnecessarilyindicativeofthe
resultsforthefullyearortheresultsforanyfutureperiods.Theseunauditedconsolidatedfinancialstatementsshouldbereadin
conjunctionwiththeauditedconsolidatedfinancialstatementsandrelatedfootnotesfortheyearendedDecember31,2013
appearingelsewhereinthisprospectus.
UnauditedProFormaPresentation
TheCompanyconfidentiallysubmittedaRegistrationStatementonFormS1withtheUnitedStatesSecuritiesandExchange
Commission(theSEC)fortheproposedinitialpublicoffering(IPO)ofsharesofits

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

commonstock.UpontheconsummationoftheIPO,subjecttocertainrequirementsdescribedinNote6,alloftheredeemable
convertiblepreferredstockoutstandingwillconvertintocommonstock.Theunauditedproformaconsolidatedbalancesheetasof
September30,2014hasbeenpreparedassumingtheconversionofalloutstandingredeemableconvertiblepreferredstockintoan
aggregateof23,725,822sharesofcommonstock.
TheunauditedproformanetlosspercommonsharefortheninemonthsendedSeptember30,2014assumescompletionofthe
IPOandtheconversionofalloutstandingsharesofredeemableconvertiblepreferredstockintoanaggregateof23,725,822sharesof
commonstockasifsuchsharesconvertedasofJanuary1,2014oratthetimeofissuance,iflater.
TheCompanybelievesthattheunauditedproformanetlosspercommonshareprovidesmaterialinformationtoinvestors
becausetheconversionoftheredeemableconvertiblepreferredstockintocommonstockisexpectedtooccurupontheclosingofthe
CompanysIPOand,therefore,thedisclosureofproformanetlosspercommonshareprovidesameasureofnetlosspercommonshare
thatismorecomparabletowhatwillbereportedasapubliccompany.
Reclassifications
Certainreclassificationshavebeenmadetotheprioryearamountstoconformtothecurrentyearpresentation.
UseofEstimates
ThepreparationoffinancialstatementsinconformitywithU.S.GAAPrequirestheCompanytomakeestimatesand
assumptionsthataffectthereportedamountsintheunauditedconsolidatedfinancialstatementsandaccompanyingnotes.Significant
estimatesincludeservicingassets/liabilities,theusefullivesoflonglivedassets,capitalizablesoftwaredevelopmentcosts,
allowanceforloanlosses,valuationofwarrants,valuationallowancefordeferredtaxassetsandstockbasedcompensationexpense.
TheCompanybasesitsestimatesonhistoricalexperience,currenteventsandotherfactorsitbelievestobereasonableunderthe
circumstances.Theseestimatesandassumptionsareinherentlysubjectiveinnatureactualresultsmaydifferfromtheseestimatesand
assumptions.
ComprehensiveLoss
Therearenosignificantitemsofcomprehensivelossotherthannetlossforallperiodspresented.
CashandCashEquivalents
Cashandcashequivalentsincludechecking,savingsandmoneymarketaccounts.TheCompanyconsidersallhighlyliquid
investmentswithoriginalmaturitiesofthreemonthsorlessatthetimeofpurchasetobecashequivalents.
RestrictedCash
RestrictedcashrepresentsfundsheldindemanddepositaccountsasreservesoncertaindebtfacilitiesandascollateralforBofI
transactions.TheCompanyhasnoabilitytodrawontherestrictedaccounts.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

LoansandLoansHeldforSale
Loans
TheCompanyoriginatestermloansandlinesofcredit(collectively,loans)thataregenerallyshortterminnature,andrequire
dailyorweeklyrepayments.ThroughoriginationofloanstheCompanyhastherighttoplacealienonthegeneralassetsofthe
customerbyfilingaUCCclaim,whichmaynotbeperfected.Loansarecarriedatamortizedcost,reducedbyavaluationallowance
forloanlossesestimatedasofthebalancesheetdates.InaccordancewithAccountingStandardsCodification(ASC)Subtopic310
20,NonrefundableFeesandOtherCosts,theamortizedcostofaloanisequaltotheunpaidprincipalbalance,plusnetdeferred
originationcosts.Additionally,whenatermloanisoriginatedinconjunctionwiththeextinguishmentofapreviouslyissuedterm
loan,managementdetermineswhetherthisisanewloanoramodificationtoanexistingloaninaccordancewithASC31020.If
accountedforasanewloan,ratherthanamodification,anyremainingunamortizednetdeferredcostsarerecognizedwhenthenew
loanisoriginated.Netdeferredoriginationcostsarecomprisedofcertaindirectoriginationcosts,netofallloanoriginationfees
received.Directoriginationcostsinexcessofloanoriginationfeesreceivedareincludedintheloanbalanceandamortizedoverthe
termoftheloanusingtheeffectiveinterestmethod.Loanoriginationcostsarelimitedtodirectcostsattributabletooriginatinga
loan,includingcommissionsandpersonnelcostsdirectlyrelatedtothetimespentbythoseindividualsperformingactivitiesrelated
toloanorigination.
Loanoriginationfeesincludefeeschargedtotheborrowersthatincreasetheloanseffectiveinterestyieldandotherfees
chargedrelatedtoorigination.TheCompanyhastheabilityandintenttoholdtheseloanstomaturity.
LoansHeldforSale
InOctober2013,theCompanystartedaprogramwherebytheCompanyoriginatesandsellscertainloanstothirdparty
institutionalinvestorsandretainsservicingrights.TheCompanysellswholeloanstopurchasersinexchangeforacashpayment.
Determinationtoholdorsellaloanismadewithinthreedaysofinitialfunding.Loansheldforsalearerecordedatthelowerofcost
ormarketuntiltheloansaresold.Costofloansheldforsaleisinclusiveofunpaidprincipalplusnetdeferredoriginationcosts.
TheCompanyevaluateswhetheraservicingassetorliabilityhasbeenincurred.TheCompanyestimatesthefairvalueofthe
loanservicingassetorliabilityconsideringthecontractualservicingfeerevenue,adequatecompensationforitsservicingobligation,
thenondelinquentprincipalbalancesofloansandprojectedservicingrevenuesovertheremaininglivesoftheloans.Asof
December31,2013andSeptember30,2014theCompanyservicedanunpaidprincipalamountof$16.0millionand$41.7millionof
termloansforothers,respectively,anddeterminedthatnoservicingassetorliabilityisnecessary.
AllowanceforLoanLosses
Theallowanceforloanlosses(ALLL)isestablishedthroughperiodicchargestotheprovisionforloanlosses.Loanlossesare
chargedagainsttheALLLwhenmanagementbelievesthatthefuturecollectionofprincipalisunlikely.Subsequentrecoveries,if
any,arecreditedtotheALLL.
TheCompanyevaluatesthecreditworthinessofitsportfolioonapooledbasis,duetoitscompositionofsmall,homogenous
loanswithsimilargeneralcreditriskcharacteristicsanddiversifiedamongvariablesincludingindustryandgeography.The
Companyusesaproprietaryforecastlossrateatoriginationfornewloansthathavenothadtheopportunitytomakepaymentswhen
theyarefirstfunded.Theallowanceissubjectiveasit

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

requiresmaterialestimatesincludingsuchfactorsashistoricaltrends,knownandinherentrisksintheloanportfolio,adverse
situationsthatmayaffectborrowersabilitytorepayandcurrenteconomicconditions.Otherqualitativefactorsconsideredmay
includeitemssuchasuncertaintiesinforecastingandmodelingtechniques,changesinportfoliocomposition,seasonality,business
conditionsandemergingtrends.Recoveryofthecarryingvalueofloansisdependenttoagreatextentonconditionsthatmaybe
beyondmanagementscontrol.AnycombinationoftheaforementionedfactorsmayadverselyaffecttheCompanysloanportfolio
resultinginincreaseddelinquenciesandloanlossesandcouldrequireadditionalprovisionsforcreditlosseswhichcouldimpact
futureperiods.Intheopinionofmanagement,theCompanyhasprovidedadequateallowancestoabsorbprobablecreditlosses
inherentinitsloanportfoliobasedonavailableandrelevantinformationaffectingtheloanportfolioateachbalancesheetdate.
AccrualforUnfundedLoanCommitmentsandOffBalanceSheetCreditExposures
InSeptember2013,theCompanyintroducedalineofcreditproduct.TheCompanyestimatesprobablelossesonunfundedloan
commitmentssimilarlytotheALLLprocessandincludesthecalculatedamountinaccruedexpensesandotherliabilities.The
Companybelievestheaccrualforunfundedloancommitmentsissufficienttoabsorbestimatedprobablelossesrelatedtothese
unfundedcreditfacilities.Thedeterminationoftheadequacyoftheaccrualisbasedonevaluationsoftheunfundedcreditfacilities,
includinganassessmentoftheprobabilityofcommitmentusage,creditriskfactorsforlinesofcreditoutstandingtothesecustomers
andthetermsandexpirationdatesoftheunfundedcreditfacilities.AsofDecember31,2013andSeptember30,2014,offbalance
sheetcreditexposuresrelatedtotheundrawnlineofcreditbalanceswas$2.2millionand$17.6million,respectively.Theaccrualfor
probableloanlossesrelatedtounfundedlineofcreditcommitmentswasapproximately$13,000and$0.2millionasofDecember31,
2013andSeptember30,2014,respectively.Netadjustmentstotheaccrualforunfundedloancommitmentsarechargedtothe
provisionforloanlosses.
AccrualforThirdPartyRepresentations
Asacomponentoftheloansaleagreements,theCompanyhasmadecertainrepresentationstothirdpartiesthatpurchaseloans.
Anysignificantestimatedpostsaleobligationsorcontingentobligationstothepurchaseroftheloans,suchasdelinquentor
fraudulentloanrepurchaseobligationsorexcesslossindemnificationobligations,wouldbeaccruedifprobableandestimablein
accordancewithASC450,Contingencies.Therearenorestrictedassetsrelatedtotheseagreements.AsofDecember31,2013and
September30,2014,theCompanyhadnotincurredanysignificantlossesandhadnoestimableandprobableobligationsrequiring
accrual.
NonaccrualLoans,RestructuredLoansandChargedOffLoans
TheCompanyconsidersaloantobedelinquentwhenthedailyorweeklypaymentsareonedaypastdue.TheCompanystops
recognizinginterestincomeonloanswhenloansaredelinquentandnonpaying.Loansarereturnedtoaccrualstatusiftheyare
broughttonondelinquentstatusorhaveperformedinaccordancewiththecontractualtermsforareasonableperiodoftimeand,in
managementsjudgment,willcontinuetomakeperiodicprincipalandinterestpaymentsasscheduled.
Aspartofitsefforttomaximizereceipts,theCompanymayagreetorevisedpaymentplanswithcertainborrowerswhohave
experiencedorareexpectedtoexperiencedifficultyinmeetingtheloanscontractuallyrequiredpayments.TheCompanysloan
revisionpolicyonlyallowsfordelaysinpayment.Managementevaluatesthesignificanceofthemodificationscomparedtooriginal
terms.Todate,allmodificationshavebeeninsignificantrelativetotheloans.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

Afterthe90thdayofdelinquency,theCompanywillmakeaninitialassessmentofwhetheranindividualloanshouldbe
chargedoffbasedonpaymentstatusandinformationgatheredthroughcollectionefforts.AloanischargedoffwhentheCompany
determinesitisprobablethatitwillbeunabletocollectalloftheoriginallyscheduledprincipalandinterestpaymentsaccordingto
thecontractualtermsoftheoriginalloanagreement.
DeferredDebtIssuanceCostsandDebt
TheCompanyborrowsfromvariouslenderstofinanceitslendingactivitiesandgeneralcorporateoperations.Costsincurredin
connectionwithfinancing,suchasbankerfees,originationfeesandlegalfees,areclassifiedbymanagementasdeferreddebtissuance
costs.Managementcapitalizesthesecostsandamortizesthemovertheexpectedlifeoftherelatedfinancingagreementsusingthe
effectiveinterestmethod.Therelatedfeesareexpensedimmediatelyuponearlyextinguishmentofthedebtinadebtmodification,
theinitialissuancecostsandanyadditionalfeesincurredasaresultofthemodificationaredeferredoverthetermofthenew
agreement.
Interestexpenseandamortizationofdeferreddebtissuancecostsincurredondebtusedtofundloanoriginationsarerecordedas
fundingcostsintheunauditedconsolidatedstatementsofoperationsandcalculatedusingtheeffectiveinterestyieldmethod.Interest
expenseandamortizationofdeferreddebtissuancecostsincurredondebtusedtofundgeneralbusinessoperationsarerecordedas
interestexpense,acomponentofotherexpense,intheunauditedconsolidatedstatementsofoperationsandcalculatedusingthe
effectiveinterestyieldmethod.
Property,EquipmentandSoftware
Property,equipmentandsoftwareconsistsofcomputerandofficeequipment,purchasedsoftware,capitalizedinternaluse
softwarecostsandleaseholdimprovements.Property,equipmentandsoftwarearestatedatcostlessaccumulateddepreciationand
amortization.Computerandofficeequipmentandpurchasedsoftwarearedepreciatedovertheestimatedusefullivesoftheassets
usingthestraightlinemethod.Leaseholdimprovementsareamortizedovertheshorterofthetermsoftherespectiveleasesorthe
estimatedlivesoftheimprovements.
InaccordancewithASCsubtopic35040,InternalUseSoftware,thecoststodevelopsoftwarefortheCompanyswebsiteand
otherinternalusesarecapitalizedbeginningwhenthepreliminaryprojectstageiscompleted,managementhasauthorizedfunding
anditisprobablethattheprojectwillbecompletedandthesoftwarewillbeusedtoperformthefunctionintended.Capitalized
internalusesoftwarecostsprimarilyincludesalariesandpayrollrelatedcostsforemployeesdirectlyinvolvedinthedevelopment
efforts,softwarelicensesacquiredandfeespaidtooutsideconsultants.
Softwaredevelopmentcostsincurredpriortomeetingthecriteriaforcapitalizationandcostsincurredfortrainingand
maintenanceareexpensedasincurred.Certainupgradesandenhancementstoexistingsoftwarethatresultinadditionalfunctionality
arecapitalized.Capitalizedsoftwaredevelopmentcostsareamortizedusingthestraightlinemethodovertheirexpectedusefullives,
generallythreeyears.
TheCompanyreviewslonglivedassetsforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarrying
valuesofthoseassetsmaynotberecoverable.Recoverabilityofthelonglivedassetismeasuredbycomparingthecarryingamount
oftheassetorassetgrouptofutureundiscountednetcashflowsexpectedtobegenerated.Ifsuchassetsarenotrecoverable,the
impairmenttoberecognizedismeasuredastheexcesscarryingamount.Assetsheldforsalearereportedatthelowerofthecarrying
amountorfairvalue,lesscoststosell.DuringtheninemonthsendedSeptember30,2013and2014,noimpairmentsoflonglived
assetsweredeemednecessary.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

RedeemableConvertiblePreferredStock
TheCompanysredeemableconvertiblepreferredstockisredeemableattheoptionoftheholderafterthepassageoftimeand
thereforehasbeenclassifiedoutsideofpermanentequityinaccordancewiththeSECStaffAccountingBulletin(SAB)Topic3C,
RedeemablePreferredStock.TheCompanymakesperiodicaccretionstothecarryingamountoftheredeemableconvertiblepreferred
stocksothatthecarryingamountwillequaltheredemptionamountattheearliestredemptiondate,February25,2019.When
preferredstockwarrantsareexercisedforsharesofredeemableconvertiblepreferredstockandthefairvalueoftheredeemable
preferredstockonthedateofexerciseofthewarrantsismorethantheredemptionamountofthepreferredstock,thecarryingamount
ofthepreferredstockisrecordedatitsfairvalueonthedateofissuanceonthebalancesheet.
PreferredStockWarrants
TheCompanyissueswarrantsforcertainseriesofitsredeemableconvertiblepreferredstocktothirdpartiesinconnectionwith
certainagreements.Asthewarrantholdershavetherighttodemandtheirpreferredsharestobesettledincashafterthepassageof
time,theCompanyrecordsthewarrantsasliabilities.TheCompanyvaluesthewarrantsateachbalancesheetdateusingtheBlack
ScholesMertonOptionPricingModeloracombinationofmethodologiesasdescribedinNote9.Anychangeinwarrantvalueis
recordedthroughwarrantliabilityfairvalueadjustmentintheunauditedconsolidatedstatementsofoperations.
Thefairvalueofwarrantsissuedinassociationwithnewdebtagreementsistreatedasadebtdiscountandreducestheinitial
carryingvalueoftherelateddebt.Thediscountisamortizedasinterestexpenseandisaccretedtothenotecarryingvalueusingthe
effectiveinterestmethodoverthetermofthenotes.Thefairvalueofwarrantsissuedinassociationwithconsultingagreementsand
bankingarrangementsistreatedasconsultingexpenseandbankfees,respectively,andisrecordedasanoperatingexpenseinthe
unauditedconsolidatedstatementsofoperations.Agreementsandarrangementswithperiodsofperformanceareamortizedoverthe
contractualperiodoftheservices.
RevenueRecognition
InterestIncome
TheCompanygeneratesrevenueprimarilythroughinterestandoriginationfeesearnedonloansoriginatedandheldtomaturity.
TheCompanyrecognizesinterestandoriginationfeerevenueoverthetermsoftheunderlyingloansusingtheeffectiveinterest
methodonunpaidprincipalamounts.Originationfeescollectedbutnotyetrecognizedasrevenuearenettedwithdirectorigination
costsandarerecordedasacomponentofloansintheconsolidatedbalancesheets.
Borrowerswhoelecttoprepaytermloansarerequiredtopayinterestandfeesthatwouldhavebeenassessedhadtheloansbeen
repaidovertheiroriginalterms.Asaresult,revenuerecognitionisnotimpactedbyestimatesforprepayments.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

GainonSalesofLoans
InOctober2013,theCompanystartedaprogramwherebytheCompanyoriginatesandsellscertainloanstothirdparty
purchasersandretainsservicingrights.TheCompanyaccountsfortheloansalesinaccordancewithASCTopic860,Transfersand
ServicingofFinancialAssets.Inaccordancewiththisguidance,atransferofafinancialasset,agroupoffinancialassets,ora
participatinginterestinafinancialassetisaccountedforasasaleifallofthefollowingconditionsaremet:

1. Thefinancialassetsareisolatedfromthetransferoranditsconsolidatedaffiliatesaswellasitscreditors
2. Thetransfereeorbeneficialinterestholdershavetherighttopledgeorexchangethetransferredfinancialassets
3. Thetransferordoesnotmaintaineffectivecontrolofthetransferredassets

FortheninemonthsendedSeptember30,2014,allsalesmettherequirementsforsaletreatmentundertheguidanceforTransfers
andServicing.TheCompanyrecordsthegainorlossonthesaleofaloanatthesaledateinanamountequaltotheproceedsreceived
lessoutstandingprincipalandnetdeferredoriginationcosts.
OtherRevenue
TheCompanyretainsservicingrightsonsoldloansandrecognizesservicingrevenueoncurrentoutstandingloanprincipal
balancesofthesoldloansasacomponentofotherrevenue.InaccordancewithASCTopic860,TransfersandServicingofFinancial
Assets,theCompanyhasnotrecognizedaservicingassetorliabilityasthebenefitsofservicingarejustadequatetocompensatethe
Companyforitsservicingresponsibilities.Otherrevenuealsoincludesmarketingfeesearnedfromourbankpartners,whichare
recognizedastherelatedservicesareprovidedandthemonthlyfeeschargedtocustomersfortheCompanyslineofcreditproducts.
StockBasedCompensation
InaccordancewithASCTopic718,CompensationStockCompensation,allstockbasedcompensationmadetoemployeesis
measuredbasedonthegrantdatefairvalueoftheawardsandrecognizedascompensationexpenseonastraightlinebasisoverthe
periodduringwhichtheoptionholderisrequiredtoperformservicesinexchangefortheaward(thevestingperiod).TheCompany
usestheBlackScholesMertonOptionPricingModeltoestimatethefairvalueofstockoptions.Theuseoftheoptionvaluation
modelrequiressubjectiveassumptions,includingthefairvalueoftheCompanyscommonstock,theexpectedtermoftheoptionand
theexpectedstockpricevolatilitybasedonpeercompanies.Additionally,therecognitionofstockbasedcompensationexpense
requiresanestimationofthenumberofoptionsthatwillultimatelyvestandthenumberofoptionsthatwillultimatelybeforfeited.
AdvertisingCosts
Advertisingcostsareexpensedasincurredandareincludedinthesalesandmarketinglineitemintheunauditedconsolidated
statementsofoperations.FortheninemonthperiodendedSeptember30,2013and2014,advertisingcoststotaled$5.3millionand
$9.0million,respectively.

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IncomeTaxes
TheCompanyrecognizesdeferredtaxassetsandliabilitiesfortheexpectedfuturetaxconsequencesoftemporarydifferences
betweenthefinancialreportingandtaxbasisofassetsandliabilities,aswellasforoperatinglossandtaxcreditcarryforwards.
Deferredtaxassetsandliabilitiesaremeasuredusingthetaxratesthatareexpectedtoapplytotaxableincomefortheyearsinwhich
thosetaxassetsandliabilitiesareexpectedtoberealizedorsettled.Valuationallowancesarerecordedtoreducedeferredtaxassetsto
theamounttheCompanybelievesismorelikelythannottoberealized.
UncertaintaxpositionsarerecognizedonlywhentheCompanybelievesitismorelikelythannotthatthetaxpositionwillbe
upheldonexaminationbythetaxingauthoritiesbasedonthemeritsoftheposition.TheCompanyrecognizesinterestandpenalties,
ifany,relatedtouncertaintaxpositionsinincometaxexpense.TheCompanydidnothaveanyaccruedinterestorpenalties
associatedwithuncertaintaxpositionsasofDecember31,2013orSeptember30,2014.
TheCompanyfilesincometaxreturnsintheUnitedStatesforfederalandvariousstatejurisdictions.TheCompanyisnolonger
subjecttoU.S.federal,stateandlocalincometaxexaminationsforyearspriorto2010,althoughcarryforwardattributesthatwere
generatedpriorto2010maystillbeadjusteduponexaminationbytheInternalRevenueServiceifusedinafutureperiod.Noincome
taxreturnsarecurrentlyunderexaminationbytaxingauthorities.
FairValueMeasurement
TheCompanyusesathreetierfairvaluehierarchytoclassifyanddiscloseallassetsandliabilitiesmeasuredatfairvalueona
recurringbasis,aswellasassetsandliabilitiesmeasuredatfairvalueonanonrecurringbasis,inperiodssubsequenttotheirinitial
measurement.ThehierarchyrequirestheCompanytouseobservableinputswhenavailableandtominimizetheuseofunobservable
inputswhendeterminingfairvalue.Thethreetiersaredefinedasfollows:
Level1:Quotedpricesinactivemarketsorliabilitiesinactivemarketsforidenticalassetsorliabilities,accessiblebythe
Companyatthemeasurementdate.
Level2:Quotedpricesforsimilarassetsorliabilitiesinactivemarkets,orquotedpricesforidenticalorsimilarassetsor
liabilitiesinmarketsthatarenotactive,orotherobservableinputsotherthanquotedprices.
Level3:Unobservableinputsforassetsorliabilitiesforwhichthereislittleornomarketdata,whichrequiretheCompanyto
developitsownassumptions.Theseunobservableassumptionsreflectestimatesofinputsthatmarketparticipantswouldusein
pricingtheassetorliability.Valuationtechniquesincludetheuseofoptionpricingmodels,discountedcashflows,orsimilar
techniques,whichincorporatemanagementsownestimatesofassumptionsthatmarketparticipantswoulduseinpricingthe
instrumentorvaluationsthatrequiresignificantmanagementjudgmentorestimation.
Afinancialinstrumentscategorizationwithinthevaluationhierarchyisbasedonthelowestlevelofinputthatissignificantto
thefairvaluemeasurement.

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BasicandDilutedNetLossperCommonShare
Basicnetlosspercommonshareiscomputedbydividingnetlosspershareavailabletocommonstockholdersbytheweighted
averagenumberofcommonsharesoutstandingfortheperiodandexcludestheeffectsofanypotentiallydilutivesecurities.The
Companycomputesnetlosspercommonshareusingthetwoclassmethodrequiredforparticipatingsecurities.TheCompany
considersallseriesofredeemableconvertiblepreferredstocktobeparticipatingsecuritiesduetotheircumulativedividendrights.In
accordancewiththetwoclassmethod,earningsallocatedtotheseparticipatingsecurities,whichincludeparticipationrightsin
undistributedearnings,aresubtractedfromnetincomeorlosstodeterminetotalundistributedearningsorlossestobeallocatedto
commonstockholders.Allparticipatingsecuritiesareexcludedfrombasicweightedaveragecommonsharesoutstanding.
Dilutednetlosspercommonshareincludesthedilutionthatwouldoccurupontheexerciseorconversionofallpotentially
dilutivesecuritiesintocommonstockusingthetreasurystockorifconvertedmethods,asapplicable.Dilutednetlossper
commonshareiscomputedunderthetwoclassmethodbyusingtheweightedaveragenumberofcommonsharesoutstanding,plus,
forperiodswithnetincomeattributabletocommonstockholders,thepotentialdilutiveeffectsofstockoptions,warrantsand
convertiblepreferredstock.Inaddition,theCompanyanalyzesthepotentialdilutiveeffectoftheoutstandingparticipatingsecurities
undertheifconvertedmethodwhencalculatingdilutedearningspershareinwhichitisassumedthattheoutstandingparticipating
securitiesconvertintocommonstockatthebeginningoftheperiod.TheCompanyreportsthemoredilutiveoftheapproaches(two
classorifconverted)asitsdilutednetincomepershareduringtheperiod.Duetonetlossesfortheninemonthsended
September30,2013and2014,basicanddilutednetlosspercommonsharewerethesame,astheeffectofpotentiallydilutive
securitieswouldhavebeenantidilutive.
RecentlyAdoptedAccountingPronouncements
InJuly2013,theFASBissuedASU201311,PresentationofanUnrecognizedTaxBenefitWhenaNetOperatingLoss
Carryforward,aSimilarTaxLoss,oraTaxCreditCarryforwardExists,whichamendsASCTopic740,IncomeTaxes.ASU201311
requiresentitiestopresentunrecognizedtaxbenefitsasaliabilityandnotcombineitwithdeferredtaxassetstotheextentanet
operatinglosscarryforward,asimilartaxloss,orataxcreditcarryforwardisnotavailableatthereportingdate.Thisaccounting
standardiseffectiveforinterimandannualperiodsbeginningafterDecember15,2013andrequiresprospectiveapplication.The
adoptionoftheseprovisionsdoesnothaveasignificantimpactontheCompanysunauditedconsolidatedfinancialstatements.
RecentAccountingPronouncementsNotYetAdopted
InMay2014,theFASBissuedASU201409,RevenueRecognition,whichcreatesASC606,RevenuefromContractswith
Customers,andsupersedesASC605,RevenueRecognition.ASU201409requiresrevenuetoberecognizedatanamountthat
reflectstheconsiderationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsorservices.Thisaccountingstandard
iseffectiveforinterimandannualperiodsbeginningafterDecember15,2016.TheCompanyiscurrentlyassessingtheimpactthis
accountingstandardwillhaveonitsunauditedconsolidatedfinancialstatements.

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3.NetLossPerCommonShare
Basicanddilutednetlosspercommonshareiscalculatedasfollows(inthousands,exceptshareandpersharedata):

Numerator:
Netloss
Less:SeriesAandBpreferredstockredemptions
Less:accretionofdividendsontheredeemableconvertiblepreferredstock
Netlossattributabletocommonstockholders
Denominator:
Weightedaveragecommonsharesoutstanding,basicanddiluted
Netlosspercommonshare,basicanddiluted

NineMonthsEnded
September30,

2013
2014
(unaudited)
(unaudited)

(18,749)
(5,254)
(5,414)
(29,417)

(14,417)

(9,828)
(24,245)

2,142,568

2,857,871

(13.73)

(8.48)

Dilutedlosspercommonshareisthesameasbasiclosspercommonshareforallperiodspresentedbecausetheeffectsof
potentiallydilutiveitemswereantidilutivegiventheCompanysnetloss.Thefollowingcommonshareequivalentsecuritieshave
beenexcludedfromthecalculationofweightedaveragecommonsharesoutstandingbecausetheeffectisantidilutivefortheperiods
presented:

AntiDilutiveCommonShareEquivalents

Redeemableconvertiblepreferredstock:
SeriesA
SeriesB
SeriesC
SeriesC1
SeriesD
SeriesE
Warrantstopurchaseredeemableconvertiblepreferredstock
Warrantstopurchasecommonstock
Stockoptions
Totalantidilutivecommonshareequivalents

September30,
2013
(unaudited)

2,219,331
5,377,631
4,867,769
850,556
7,233,878

696,884
2,001,033
3,693,014
26,940,096

September30,
2014
(unaudited)

2,219,331
5,631,851
4,867,769
1,155,720
7,233,878
2,617,273
152,500
1,653,763
4,985,401
30,517,486

ProFormaNetLossPerCommonShare(unaudited)
Thenumeratoranddenominatorusedincomputingproformanetlosspercommonsharefortheninemonthsended
September30,2014havebeenadjustedtoassumetheconversionofalloutstandingsharesofredeemableconvertiblepreferredstock
tocommonstockasofthebeginningoftheperiodoratthetimeofissuance,iflater,andthereclassificationoftheoutstanding
warrantliabilitiesasofSeptember30,2014toadditionalpaidincapitalasofthebeginningoftheperiod.Proformanetlosspershare
doesnotgiveeffecttopotentialdilutivesecuritieswheretheimpactwouldbeantidilutive.

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Thefollowingtablepresentsthecalculationofproformabasicanddilutednetlosspershare(inthousands,exceptshareandper
sharedata)fortheninemonthsendedSeptember30,2014(unaudited):

Numerator:
Netlossattributabletocommonshareholders
Plus:accretionofdividendsonredeemableconvertiblepreferredstock
Plus:changesinfairvalueofthepreferredstockwarrantliabilities
Proformanumeratorforbasicanddilutedlosspershare

Denominator:

Denominatorforbasicanddilutednetlosspershareweightedaverageshares

Plus:conversionofredeemableconvertiblepreferredstocktocommonstockweightedaverageshares(1)
Proformadenominatorforbasicanddilutedlosspershareweightedaverageshares

Proformabasicanddilutedlosspershare

(24,245)
9,828
9,122
(5,295)

2,857,871
22,726,013
25,583,884
$
(0.21)

(1) TheweightedaveragesharesofredeemableconvertiblepreferredstockconvertedtocommonstockasofSeptember30,2014
(unaudited):

SeriesASeriesD(issuedpriortoJanuary1,2014)
SeriesE(issuedFebruary27,2014)
SeriesC1(issuedJuly28,2014)
SeriesBandSeriesC1(issuedAugust6,2014)
SeriesBandSeriesC1(issuedAugust12,2014)
SeriesBandSeriesC1(issuedSeptember3,2014)
Totalredeemableconvertiblepreferredstockconvertedtocommonstock

Totalshares
outstanding

Weighted
AverageShares
Outstanding

20,549,165
2,617,273
285,164
202,681

10,736

60,803
23,725,822

20,549,165
2,061,222

66,852

40,833

1,927

6,014
22,726,013

4.LoansandAllowanceforLoanLosses
LoansconsistedofthefollowingasofDecember31,2013andSeptember30,2014(inthousands):

Termloans
Lineofcredit
Totalunpaidprincipalbalance
Netdeferredoriginationcosts
Totalloans

F47

December31,
2013

September30,
2014
(unaudited)

$ 213,570

2,396
215,966

6,555
$ 222,521

405,783
16,267
422,050
11,341
433,391

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TheactivityintheallowanceforloanlossesfortheninemonthsendedSeptember30,2013and2014(unaudited)consistedof
thefollowing(inthousands):

BalanceatJanuary1,2013
Provisionforloanlosses
Loanschargedoff
Recoveriesofloanspreviouslychargedoff
AllowanceforloanlossesatSeptember30,2013

BalanceatJanuary1,2014
Provisionforloanlosses
Loanschargedoff
Recoveriesofloanspreviouslychargedoff
AllowanceforloanlossesatSeptember30,2014

$ 9,288
16,300
(11,994)
1,152
$ 14,746

$ 19,443
47,011
(28,462)
1,764
$ 39,756

OnDeckoriginatesmostoftheloansinitsportfolioandalsopurchasesloansfromissuingbankpartners.Purchasesoffinancing
receivablesfortheninemonthperiodendedSeptember30,2013and2014were$47.3millionand$126.5million,respectively.
Inthethirdquarterof2013,theCompanybegansellingpreviouslychargedoffloanstoathirdpartydebtcollector.The
proceedsfromthesesalesarerecordedasacomponentoftherecoveriesofloanspreviouslychargedoff.Fortheninemonthsended
September30,2013and2014,previouslychargedoffloanssoldaccountedfor$0and$1.4millionofrecoveriesofloanspreviously
chargedoff,respectively.
Belowisatablethatillustratestheloanbalancerelatedtonondelinquent,payingandnonpayingdelinquentloansasof
December31,2013andSeptember30,2014(unaudited)(inthousands):

Nondelinquentloans
Delinquent:Paying(accrualstatus)
Delinquent:NotPaying(nonaccrualstatus)
Total

December31,
2013

September30,2014
(unaudited)

$ 191,849

17,473

6,644
$ 215,966

380,155
30,210
11,685
422,050

Thebalanceoftheallowanceforloanlossesfornondelinquentloanswas$9.8millionand$19.3millionasofDecember31,
2013andSeptember30,2014,respectively,whilethebalanceoftheallowanceforloanlossesfordelinquentloanswas$9.6million
and$20.5millionasofDecember31,2013andSeptember30,2014,respectively.

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ThefollowingtableshowsanaginganalysisoftermloansbydelinquencystatusasofDecember31,2013andSeptember30,
2014(inthousands):

Bydelinquencystatus:
Nondelinquentloans
114calendardayspastdue
1529calendardayspastdue
3059calendardayspastdue
6089calendardayspastdue
90+calendardayspastdue
Totalunpaidprincipalbalance

September30,
2014
(unaudited)

December31,
2013

$ 191,849

7,658

4,237

5,206

3,648

3,368
$ 215,966

380,155
19,275
4,662
6,515
5,445
5,998
422,050

5.Debt
ThefollowingtablesummarizestheCompanysoutstandingdebtasofDecember31,2013andSeptember30,2014:

Description

FundingDebt:
ODASTAgreement
ODARTAgreement
ODACAgreement
ODAPAgreement
SBAFAgreement
SBLPIIAgreement

Type

Securitization
Facility

Revolving
Revolving
Revolving
Revolving
Revolving

MaturityDate

May2018
September2016
October2015
August2016

Ongoing

July2014
(Extinguished

April2014)

July2014
(Extinguished
February2014)

SSL&SA

CorporateDebt:
Square1Agreement

Revolving

Revolving

Interest
Rate

3.4%
3.6%
8.3%
5.0%
8.1%

52,253
24,374

18,680

174,970
84,573
28,330
40,483
18,848

7.8%

84,990

16%

8,000
188,297

347,204

September2015

September30,
December31,
2014
2013

(unaudited)
(inthousands)

5.0%

15,000
$ 203,297 $

3,000
350,204

InOctober2013,ODACenteredintoa$25millionrevolvingcreditagreement(theODACAgreement)withWaterfallAsset
Management(WAM).OnJanuary2,2014,ODACenteredintoasecondamendmentwithWAMsignificantlyincreasingthe
financinglimitoftheODACAgreementtofrom$25millionto$50million.Noothersignificanttermsweremodifiedunderthe
amendment.

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InAugust2013,andassubsequentlyamended,theCompanyenteredintoan$8millionseniorsubordinatedloanandsecurity
agreement(SSL&SA)withcertainentitiescollectivelyreferredtoasSFCapital.OnJanuary22,2014,theCompanyenteredintoa
secondamendmentwithSFCapital,significantlyincreasingthecreditlimitavailableonSSL&SAfrom$8millionto$18million
withborrowingsupto$8millionbearingtheoriginalinterestrateof16%andallborrowingsinexcessof$8millionbearingan
interestrateof12%.Noothersignificanttermsweremodifiedunderthisamendment.
OnFebruary27,2014,approximately$30millionoftheproceedsoftheissuanceoftheSeriesEredeemableconvertible
preferredshareswasusedtorepaytheSSL&SAinfullandportionsofcertainotherdebtpayable.
OnApril7,2014,theSBLPIIAgreementwasterminatedandtheamountoutstandingof$63,264,830waspaidinfulltothe
lenders.Approximately$54millionofeligibleloansweretransferredtoODARTandwerepurchasedwiththeexistingODART
Agreement.TheremainingbalanceduewaspaidbyOnDeck.
OnMay8,2014,ODASTenteredintoa$175millionsecuritizationagreementwithDeutscheBankSecurities(Deutsche
Bank)asadministrativeagent.Ofthetotalcommitment,DeutscheBankallowsfor$156.7millionofClassA(primarygroupof
lenders)assetbackednotesand$18.3millionofClassB(subordinategroupoflenders)assetbackednotes.Theagreementrequires
pooledloanstobetransferredfromtheCompanytoODASTwithaminimumaggregateprincipalbalanceofapproximately$183.2
million.ClassAandClassBcommitmentsbearinterestat3.15%and5.68%,respectively.Monthlypaymentsofinterestaredue
beginningJune17,2014andprincipalandinterestareduebeginninginJune2016,withthefinalpaymentoccurringinMay2018.
InAugust2014,ODAPenteredintoa$75millionrevolvinglineofcreditwithJefferiesMortgageFunding,LLC.The
commitmentbearsinterestatLIBORplus4%,andmaturesinAugust2016.
OnSeptember15,2014,theCompanyenteredintoanamendmentoftheODARTagreementincreasingtherevolvingcredit
agreementfrom$111.8millionto$167.6million.Ofthetotalavailablecredit,theClassAcommitmentsincreasedfrom$100million
to$150millionandtheClassBcommitmentsincreasedfrom$11.8millionto$17.6million.ClassAcommitmentsbearinterestat
costoffundsrateplus3%.ClassBcommitmentsbearinterestat7.25%plusthegreaterof1%orLIBOR.Thefacilitymaturitydate
wasalsoextendedfromAugust16,2015toSeptember15,2016.
AsofSeptember30,2014,theCompanyisincompliancewithallfinancialcovenantsrequiredperthedebtagreements,as
amended.
6.WarrantLiabilities
Inconjunctionwithcertainconsultingagreements,theCompanyissuedwarrantstopurchasesharesofSeriesEredeemable
convertiblepreferredstock(SeriesEwarrants).AsofSeptember30,2014,theholderswereentitledtopurchase15,000sharesof
SeriesEatapriceof$29.42pershare.Thewarrantsareexercisableuponvestingthroughtheearlieroftenyearsafterissuance
(variousdatesthroughJune6,2024),ortwoyearsafterclosingaqualifiedinitialpublicoffering(inafirmcommitmentunderwritten
publicofferingpursuanttoaneffectiveregistrationstatementundertheSecuritiesActof1933,asamended,resultinginatleast
$40,000,000ofgrossproceeds,netoftheunderwritingdiscountandcommissions,totheCorporation,IPO).AstheSeriesE

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warrantsvest,theywillberecordedasliabilitiesintheaccompanyingconsolidatedbalancesheetsandsubsequentlyadjustedtofair
valueeachperiodbecausetheyarecurrentlyexercisableintoredeemablesecurities.FortheninemonthsendedSeptember30,2013
and2014,changesinthefairvalueoftheseandpreviouslyissuedwarrantswererecognizedintheconsolidatedstatementsof
operationsaswarrantliabilityfairvalueadjustment.
InSeptember2014,inconjunctionwithageneralmarketingagreement,theCompanyissuedawarranttopurchasesharesof
commonstock(commonstockwarrant)toastrategicpartner.AsofSeptember30,2014,theholderwasentitledtopurchaseupto
1,103,248sharesofcommonstockatapriceof$21.32pershare.Thenumberofexercisablesharesisdependentuponperformance
conditions.Thewarrantisexercisableuponvestingthroughtheearlieroftenyearsafterissuance,September29,2024,oroneyear
aftertheterminationoftheagreement.Astheperformanceconditionsaremet,thecommonstockwarrantwillberecordedasa
liabilityintheconsolidatedbalancesheetsandassalesandmarketingexpenseintheconsolidatedstatementsofoperations.The
warrantliabilitywillbeadjustedtofairvalueeachperiodandrecognizedintheconsolidatedstatementsofoperationsaswarrant
liabilityfairvalueadjustment.FortheninemonthsendedSeptember30,2014,noperformanceconditionshadbeenmetandtherefore
noexpenseorliabilityhasbeenrecorded.
7.RedeemableConvertiblePreferredStock
Thefollowingtablesummarizesthepricepershareandauthorizednumberofsharesofredeemableconvertiblepreferredstock:

Series
Name

SeriesA
SeriesB
SeriesC
SeriesC1
SeriesD
SeriesE

Original
IssuePrice
perShare

$ 0.72900
2.95020
4.20000
5.52580
8.31775
29.42000

NumberofSharesAuthorized

September30,2014
December31,2013
(unaudited)

2,976,680
5,677,581
4,867,769
1,500,000
7,233,878

2,219,331
5,631,851
4,867,769
1,293,220
7,233,878
2,700,000

SeriesA,SeriesB,SeriesC,SeriesC1,SeriesDandSeriesEredeemableconvertiblepreferredstockarecollectivelyreferredto
asthepreferredstockandindividuallyastheSeriesA,SeriesB,SeriesC,SeriesC1,SeriesDandSeriesE.Eachofthe
pricespershareisreferredtoastheoriginalissuepriceandexcludesthecostofissuance.Anycostsincurredinconnectionwiththe
issuanceofvariousclassesofthepreferredstockhavebeenrecordedasareductionofthecarryingamount.TheCompanymayissue
andredeempreferredstockfromtimetotimeinoneormoreseries.Anysharesofpreferredstockthatareredeemed,purchasedor
acquiredbytheCompanymaybereissued,exceptasrestrictedbylaworcontract.

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ThefollowingtablesummarizesthepreferredstockoutstandingasofDecember31,2013andSeptember30,2014byoriginal
issuancedates:

SeriesName

SeriesA
SeriesA
SeriesA
Total:SeriesA

IssuanceDate

August11,2006
October27,2006
February14,2007

SeriesB
SeriesB
SeriesB
SeriesB
SeriesB
SeriesB
SeriesB
SeriesB
SeriesB
Total:SeriesB

December3,2007
April2,2008
May9,2008
February4,2009
March18,2009
March192009
August6,2014
August12,2014
September3,2014

SeriesC
SeriesC
Total:SeriesC

December20,2010
April6,2011

SeriesC1
SeriesC1
SeriesC1
SeriesC1
SeriesC1
Total:SeriesC1

January26,2012
July28,2014
August6,2014
August12,2014
September3,2014

SeriesD
SeriesD
Total:SeriesD

TotalSeriesE

February27,2014

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February7,2013
April19,2013

NumberofShares
Outstandingat

September30,
December31,
2014
2013

(unaudited)

1,390,448
573,539
255,344
2,219,331

1,390,448
573,539
255,344
2,219,331

2,886,275
169,480
288,116

84,740
1,883,473

65,547

5,377,631

2,886,275
169,480
288,116

84,740
1,883,473

65,547
187,898

9,953

56,369
5,631,851

3,534,435
1,333,334
4,867,769

3,534,435
1,333,334
4,867,769

850,556

850,556

850,556
285,164

14,783

783

4,434
1,155,720

5,190,058
2,043,820
7,233,878

5,190,058
2,043,820
7,233,878

2,617,273

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ThefollowingtablepresentsasummaryofactivityforthePreferredStockissuedandoutstandingfortheyearended
December31,2013andtheninemonthsendedSeptember30,2014(unaudited)(inthousands):

BalanceJanuary1,2013
Redemptionofpreferredstock(1)
Issuanceofpreferredstock(2)
Accretionofdividendsonpreferredstock
Balance,January1,2014
Issuanceofpreferredstock
Exerciseofpreferredstockwarrants
Accretionofdividendsonpreferredstock
Balance,September30,2014

Series
A

Series
B

Series
C

Series
C1

Series
D

Series
E

$3,250
(835)

144
2,559

98
$2,657

$21,838
(193)

1,273
22,918

5,982

960
$29,860

$23,113

1,636
24,749

1,226
$25,975

$ 5,025

376
5,401

7,225

306
$12,932

58,675
4,041
62,716

3,610
$66,326

76,985

3,628
$80,613

Total
Amount

$ 53,226
(1,028)
58,675
7,470
118,343
76,985
13,207
9,828
$218,363

(1) During2013,theCompanyredeemed757,349sharesofSeriesAand45,730sharesofSeriesBstockheldbyinvestors.The
differentialbetweentheredemptionpriceandthecarryingvalueofthesharesof$5.3millionwaschargedtoaccumulated
deficitinaccordancewithaccountingfordistinguishingliabilitiesfromequity.
(2) Includestheconversionofaconvertiblenote.
Dividends
Eachseriesofpreferredstockcontainsacumulativedividendrateof8%pershare.Nodividendsweredeclaredthrough
September30,2014orthroughthedateofissuingthesefinancialstatements.Cumulativedividendsarepayableintheeventof
redemption.Inadditiontothepreferentialcumulativedividends,holdersofpreferredstockareentitledtoreceive,onanifconverted
basis,anydeclaredorpaiddividendsontheCompanyscommonstock.
Conversion
Eachshareofredeemableconvertiblepreferredstockisconvertible,attheoptionoftheholder,intooneshareofcommonstock
(subjecttoadjustmentsforeventsofdilution).Mandatoryconversionwilloccurinthefollowingsituations:
SeriesETheearlieroftheclosingofaQualifiedIPO,oradatespecifiedbyvoteorwrittenconsentoftheholdersoratleasta
majorityoftheSeriesEthenoutstanding.
SeriesDTheearlieroftheclosingofthesaleofsharesofcommonstocktothepublicatapriceofatleasttwo(2)timesthe
SeriesDoriginalissuepricepershare(subjecttoappropriateadjustmentforstocksplits),inaQualifiedIPO,oradatespecified
byvoteorwrittenconsentoftheholdersofatleastsixtysevenpercent(67%)oftheSeriesDthenoutstanding.
SeriesCandSeriesC1UpontheclosingofaQualifiedIPO.

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SeriesBTheearlieroftheclosingofaQualifiedIPO,oradatespecifiedbyvoteorwrittenconsentoftheholdersofatleast
sixtysevenpercent(67%)oftheSeriesBthenoutstanding.
SeriesATheearlieroftheclosingofaQualifiedIPO,oradatespecifiedbyvoteorwrittenconsentoftheholdersofatleast
seventypercent(70%)oftheSeriesAthenoutstanding.
PreferredStock(allseries)Uponvoteorwrittenconsentofatleastsixtysevenpercent(67%)oftheoutstandingsharesofall
series,eightypercent(80%)ofSeriesCshares,sixtysevenpercent(67%)ofSeriesDsharesandsixtysevenpercent(67%)of
SeriesEshares.
Liquidation
Intheeventofanyliquidation,dissolution,mergerorconsolidation(resultinginthecommonandpreferredstockholderslossof
majority),dispositionortransferofassets,orwindingupoftheCompany,whethervoluntaryorinvoluntary(aLiquidationEvent),
andafteralldeclareddividendshavebeenpaid,holdersofcertainseriesofpreferredstockareentitledtoparticipateinthe
distributionofremainingCompanyassetsalongwithcommonstockholdersatarateequaltothefollowing:
SeriesDIfliquidationoccurswithin24monthsoftheSeriesDissuance,theSeriesDholdersareentitledtoanoriginalissue
multiplierrangingfrom1.501.75timestheoriginalissueprice.
SeriesCTheSeriesCholdersareentitledtoanoriginalissuepricemultiplierof2.00timestheoriginalissueprice.
SeriesATheSeriesAholdersareentitledtoanoriginalissuepricemultiplierof2.00timestheoriginalissueprice.
SeriesB,SeriesC1andSeriesETheSeriesB,SeriesC1andSeriesEholdersdonothaveamultiplierintheirpreferential
treatmentinliquidation.
RedemptionRights
Eachseriesofpreferredstockisredeemableattheelectionofitsholders,withinsixtydaysafterthereceiptofawrittenrequest
fromatleastamajorityoftheholdersoftheoutstandingsharesoftherespectiveseriesofpreferredstockandatanearliestpossible
preferredstockredemptiondateofFebruary25,2019.Theredemptionpriceisequaltoanyunpaidcumulativedividendsandother
dividendsplustheoriginalissueprice.
VotingRights
TheSeriesA,SeriesBandSeriesDholderseachhavetherighttoelectonememberoftheboardofdirectors(theBoard).The
SeriesCholdershavetherighttoelecttwomembersoftheBoard.Forvotingpurposes,thenumberofvotesperholderisequaltothe
numberofsharesofcommonstockintowhichthesharesofpreferredstockareconvertible.TheSeriesC1andSeriesEholdersdonot
haveBoarddesignationrights.
8.IncomeTax
Aspartoftheprocessofpreparingtheunauditedconsolidatedfinancialstatements,theCompanyisrequiredtoestimateits
incometaxesineachofthejurisdictionsinwhichitoperates.Thisprocessinvolvesdeterminingtheannualeffectivetaxrate,income
taxexpense(benefit)anddeferredincometaxexpense(benefit)relatedto

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

temporarydifferencesresultingfromdifferingtreatmentofitems,suchastheloanlossreserve,timingofdepreciationanddeferred
rentliabilities,fortaxandaccountingpurposes.Thesedifferencesresultindeferredtaxassetsandliabilities,whichareincluded
withintheaccompanyingconsolidatedbalancesheets.TheCompanymustthenassessthelikelihoodthatthedeferredtaxassetswill
berecoveredthroughthegenerationoffuturetaxableincome.
ZeroincometaxhasbeenincurredduringtheninemonthsendedSeptember30,2013and2014duetothebooklossesincurred
duringthoseperiods,theknownandanticipatedbooklossesforyearsendedDecember31,2013and2014,respectively,andthe
significantdeferredtaxassetsavailableforapplicationshouldpermanentandtemporarydifferencesfrombookincomeyieldtaxable
income.Theultimaterealizationofdeferredtaxassetsisdependentuponthegenerationoffuturetaxableincomeduringtheperiods
inwhichthosetemporarydifferencesbecomedeductible.Managementconsidersthescheduledreversalofdeferredtaxliabilities,
projectedfuturetaxableincomeandtaxplanningstrategiesinmakingthisassessment.Baseduponthelevelofhistoricallossesand
projectionsforfuturetaxableincomeovertheperiodsinwhichthedeferredtaxassetsaredeductible,managementbelievesitismore
likelythannotthattheCompanywillnotrealizethebenefitsofthesedeductibledifferencesinthefuture.Therefore,theCompany
hasrecordedafullvaluationallowanceonitsnetdeferredtaxasset.
9.FairValueofFinancialInstruments
AssetsandLiabilitiesMeasuredatFairValueonaRecurringBasis
TheCompanyevaluatesitsfinancialassetsandliabilitiessubjecttofairvaluemeasurementsonarecurringbasistodetermine
theappropriatelevelatwhichtoclassifythemforeachreportingperiod.Thisdeterminationrequiressignificantjudgmentstobe
made.
ThefollowingtablespresentinformationabouttheCompanysassetsandliabilitiesthataremeasuredatfairvalueona
recurringbasisusingtheabovecategories,asofDecember31,2013andSeptember30,2014(inthousands):

Description

Liabilities:
Warrantliability(1)
Totalliabilities

Description

Liabilities:
Warrantliability(1)
Totalliabilities

Level1

$
$

Level1

$
$

December31,2013
Level2
Level3

$
$

$4,446
$4,446

September30,2014
(unaudited)
Level2
Level3

$
$

$2,802
$2,802

Total

$4,446
$4,446

Total

$2,802
$2,802

(1) Thewarrantliabilities(Note6)areclassifiedwithinLevel3becausetheliabilitiesarevaluedusingsignificantunobservable
inputs.ThefairvalueofthesewarrantsisbasedonavaluationoftheCompanyscommonstock.Forvaluationsobtained
throughDecember31,2013,theequityvaluedeterminedwasthen

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

allocatedtothecommonstockusingtheOptionPricingMethod(OPM).Estimatesofthevolatilityfortheoptionpricing
modelwerebasedontheassetvolatilityofcommonstockofagroupofcomparable,publiclytradedcompanies.For
September30,2014,wedeterminedthemostreasonableestimateoftheunderlyingcommonstocktobeacombinationofthe
OPM,secondarytransactionswiththirdpartyinvestorsandanIPOscenarioasgreaterclaritydevelopedregardingthepriceof
thestockinathirdpartymarket.Estimatesofexpectedtermwerebasedontheremainingcontractualperiodofthewarrants.

Ahypotheticalincreaseordecreaseinassumedassetvolatilityof10%intheOPMwouldresultinanegligibleimpact(lessthan
0%)tothefairvalueofthewarrants.Intheunauditedconsolidatedstatementsofoperations,changesinfairvalueareincludedin
warrantliabilityfairvalueadjustment.
TherewerenotransfersbetweenlevelsfortheyearendedDecember31,2013andfortheninemonthsendedSeptember30,
2014.
AssetsandLiabilitiesMeasuredatFairValueonaRecurringBasisUsingSignificantUnobservableInputs(Level3)
ThefollowingtablepresentsthechangesintheCompanysLevel3instrumentsmeasuredatfairvalueonarecurringbasisfor
theninemonthsendedSeptember30,2013and2014(inthousands):

WarrantliabilitybalanceatJanuary1
Issuanceofwarrantsatfairvalue
Exerciseofwarrants
Changeinfairvalue
WarrantliabilitybalanceatSeptember30

2013
(unaudited)

2014
(unaudited)

$ 707

1,496
$ 2,203

$ 4,446

(10,766)

9,122
$ 2,802

AssetsandLiabilitiesDisclosedatFairValue
ThecarryingamountsofcertainoftheCompanysfinancialinstruments,includingloans,loansheldforsaleanddebt,
approximatefairvalueduetotheirshorttermnatureandareconsideredLevel3.ThecarryingvalueoftheCompanysfinancing
obligations,suchasdebt,approximatesfairvalue,consideringtheborrowingratescurrentlyavailabletotheCompanyforfinancing
obligationswithsimilartermsandcreditrisks.
10.StockBasedCompensation
TheCompanymaintainstheAmendedandRestated2007StockOptionPlan,pursuanttowhichtheCompanyhasauthorized
9,493,194sharesofitscommonstockforissuancetoitsemployees,directorsandnonemployeethirdparties.Thetermsofthestock
optiongrants,includingtheexercisepricepershareandvestingperiods,aredeterminedbytheCompensationCommitteeofthe
Board(theCommittee).StockoptionsaregrantedatexercisepricesdefinedbytheCommitteebut,historically,havebeenequalto
thefairmarketvalueoftheCompanyscommonstockatthedateofgrant.AsofSeptember30,2014,theCompanyhad3,006,191
sharesallocatedtotheplanbutnotyetissued.Theoptionstypicallyvestatarateof25%afteroneyearfromthevesting
commencementdateandthenmonthlyoveranadditionalthreeyearperiod.Theoptionsexpiretenyearsfromthegrantdateor,for
terminatedemployees,90daysaftertheemployeesterminationdate.Compensationexpenseforthefairvalueoftheoptionsattheir
grantdateisrecognizedratablyoverthevestingperiod.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

Stockbasedcompensationexpenserelatedtostockoptionsisallocatedtooperatingexpensesintheunauditedconsolidated
statementsofoperationsandfortheninemonthsendedSeptember30,2013and2014wasapproximately$0.3millionand$1.4
million,respectively.
ThefollowingisasummaryofoptionactivityfortheninemonthsendedSeptember30,2014(unaudited):

OutstandingatJanuary1,2014
Granted
Exercised
Forfeited
Expired
OutstandingatSeptember30,2014

Numberof
options

Weighted
Average
Exercise
Price

$ 1.03
19.11

0.73

5.04

1.09
$ 7.51

Weighted
Average
Contractual
Term
(inyears)

Aggregate
Intrinsic
Value

(inthousands)

3,907,485
1,795,283
(625,171)
(84,835)
(7,361)
4,985,401

8.60

85,999

ExercisableatSeptember30,2014

1,397,416

0.95

7.48

33,278

Vestedorexpectedtovest(infuture)asof
September30,2014

4,238,964

7.24

8.54

74,264

Stockbasedcompensationexpenserelatedtostockoptionsisincludedinthefollowinglineitemsintheaccompanying
consolidatedbalancesheetsandunauditedconsolidatedstatementsofoperationsfortheninemonthsendedSeptember30(in
thousands):

Salesandmarketing
Technologyandanalytics
Processingandservicing
Generalandadministrative
Total

2013
(unaudited)

2014
(unaudited)

71
20
15
161
267

325
290
126
706
1,447

TotalcompensationcostrelatedtononvestedawardsnotyetrecognizedasofSeptember30,2014was$15.8millionandwillbe
recognizedoveraweightedaverageperiodofapproximately3.7years.Theaggregateintrinsicvalueofemployeeoptionsexercised
duringtheninemonthsendedSeptember30,2013and2014was$0.5millionand$8.6million,respectively.
StockOptionModification
BecausetheoriginalexercisepriceofstockoptionsgrantedinJanuaryandFebruary2014wassignificantlylessthanthe
estimatedfairvalueoftheCompanyscommonstockonthedateofgrant,inJune2014,theCompanysboardofdirectorsincreased
theexercisepriceofthesestockoptions.Therewere177,000unvestedoptionsmodifiedsuchthattheoriginalexercisepriceof$1.36
persharewasincreasedto$7.42pershare.Asanincentive,impactedoptioneesweregrantedadditionaloptionsfor19,470sharesof
commonstockatanexercisepriceof$7.42.TheCompanymadenootherchangestothetermsoftheoptionsandtherewasno
incrementalincreaseinstockbasedcompensationexpenseasaresultofthemodification.

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NotestoUnauditedConsolidatedFinancialStatements

11.CommitmentsandContingencies
OperatingLeaseCommitments
OnJanuary23,2014,theCompanysignedaleasetorentadditionalspaceinthesamebuildingofitscorporateheadquartersin
NewYorkCity.TheleaseterminatesinAugust2023andcallsformonthlypaymentsof$61,000,withescalationsbeginninginits
secondyear.Thetermsalsoprovideforatenantallowanceof$0.9millionandrentholidayforthefirstsixteenmonths.Deferredrent
isincludedintheconsolidatedbalancesheetsasacomponentofaccruedexpensesandotherliabilities.
InNovember2011,theCompanyenteredintoanoperatingleaseinNewYorkforitscorporateheadquarters.InMarch2013,the
Companyvacatedthisofficeand,inJuly2013,theCompanyenteredintoasubleaseagreementwithatenant.InSeptember2014,the
Companyagreedwiththelessorontermstoterminatetheleaseagreement.TheCompanyrelievedtherecordedsubleaseliabilityand
accruedtheagreeduponterminationfeeof$0.5million,resultinginanexpenseof$0.3million.
ConcentrationsofCreditRisk
FinancialinstrumentsthatpotentiallysubjecttheCompanytosignificantconcentrationsofcreditriskconsistprincipallyof
cash,cashequivalents,restrictedcashandloans.TheCompanyholdscash,cashequivalentsandrestrictedcashinaccountsat
regulateddomesticfinancialinstitutionsinamountsthatmayexceedFDICinsuredamounts.TheCompanybelievesthese
institutionstobeofhighcreditqualityandhasnotexperiencedanyrelatedlossestodate.
TheCompanyisexposedtodefaultriskonborrowerloansoriginated.TheCompanyperformsevaluationsofborrowers
financialconditionsasneededanddoesnotallowborrowerstohavemorethantwoloansoutstandingatanyonetime.Thereisno
singleborrowerorgroupofborrowersthatcompriseasignificantportionoftheCompanysloanportfolio.
Contingencies
TheCompanymaybesubjecttopendinglegalproceedingsandregulatoryactionsintheordinarycourseofbusiness.The
resultsofsuchproceedingscannotbepredictedwithcertaintybuttheCompanydoesnotanticipatethatthefinaloutcome,ifany,
arisingoutofanysuchmatterwillhaveamaterialadverseeffectonitsbusiness,financialconditionorresultsofoperations.
12.SegmentReporting
Operatingsegmentsaredefinedascomponentsofanenterpriseforwhichdiscretefinancialinformationisavailablethatis
evaluatedregularlybythechiefoperatingdecisionmaker(CODM)forpurposesofallocatingresourcesandevaluatingfinancial
performance.TheCompanysCODMreviewsfinancialinformationpresentedonaconsolidatedbasisforpurposesofallocating
resourcesandevaluatingfinancialperformance.Assuch,theCompanysoperationsconstituteasingleoperatingsegmentandone
reportablesegment.
SubstantiallyallrevenuewasgeneratedandallassetswereheldintheUnitedStatesduringtheperiodspresented.InApril
2014,theCompanybeganoriginatingloanswithCanadiancustomers.AllCanadianactivitythroughtheissuingdateofthese
unauditedconsolidatedfinancialstatementshasbeeninsignificant.

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ONDECKCAPITAL,INC.ANDSUBSIDIARIES
NotestoUnauditedConsolidatedFinancialStatements

13.SubsequentEvents
TheSquare1AgreementwasamendedandrestatedonNovember3,2014increasingthecreditlimitfrom$15millionto$20
million,reducingtheapplicableinterestratefrom5.0%toprimeplus1.25%witha4.5%floorperannumandextendingthe
commitmentterminationdatetoOctober30,2015.
TheCompanyhasevaluatedsubsequenteventsthroughtheissuancedateoftheseunauditedconsolidatedfinancialstatements
anddeterminedthatnoeventsortransactionsmetthedefinitionofasubsequenteventforpurposesofrecognitionordisclosureinthe
unauditedconsolidatedfinancialstatements,otherthanthosepreviouslydisclosed.

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Throughandincluding,2014(the25thdayafterthedateofthisprospectus),alldealerseffectingtransactionsin
thesesecurities,whetherornotparticipatinginthisoffering,mayberequiredtodeliveraprospectus.Thisisinadditiontoa
dealersobligationtodeliveraprospectuswhenactingasanunderwriterandwithrespecttoanunsoldallotmentor
subscription.

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PARTII
INFORMATIONNOTREQUIREDINTHEPROSPECTUS

Item13.

OtherExpensesofIssuanceandDistribution.

Estimatedexpenses,otherthanunderwritingdiscountsandcommissions,payablebytheRegistrantinconnectionwiththesale
ofthecommonstockbeingregisteredunderthisregistrationstatementareasfollows:

SECregistrationfee
NYSEListingfee
Printingandengravingexpenses
Legalfeesandexpenses
Accountingfeesandexpenses
Transferagentandregistrarfeesandexpenses
Miscellaneous
Total

$ 17,430
250,000

*
5,000

*
$
*

Tobefiledbyamendment.

Item14. IndemnificationofDirectorsandOfficers.
Oncompletionofthisoffering,theRegistrantsamendedandrestatedcertificateofincorporationwillcontainprovisionsthat
eliminate,tothemaximumextentpermittedbytheGeneralCorporationLawoftheStateofDelaware,thepersonalliabilityofthe
Registrantsdirectorsandexecutiveofficersformonetarydamagesforbreachoftheirfiduciarydutiesasdirectorsorofficers.The
RegistrantsamendedandrestatedcertificateofincorporationandbylawswillprovidethattheRegistrantmustindemnifyits
directorsandexecutiveofficersandmayindemnifyitsemployeesandotheragentstothefullestextentpermittedbytheGeneral
CorporationLawoftheStateofDelaware.
Sections145and102(b)(7)oftheGeneralCorporationLawoftheStateofDelawareprovidethatacorporationmayindemnify
anypersonmadeapartytoanactionbyreasonofthefactthatheorshewasadirector,executiveofficer,employeeoragentofthe
corporationorisorwasservingattherequestofacorporationagainstexpenses(includingattorneysfees),judgments,finesand
amountspaidinsettlementactuallyandreasonablyincurredbyhimorherinconnectionwithsuchactionifheorsheactedingood
faithandinamannerheorshereasonablybelievedtobein,ornotopposedto,thebestinterestsofthecorporationand,withrespect
toanycriminalactionorproceeding,hadnoreasonablecausetobelievehisorherconductwasunlawful,exceptthat,inthecaseof
anactionbyorinrightofthecorporation,noindemnificationmaygenerallybemadeinrespectofanyclaimastowhichsuchperson
isadjudgedtobeliabletothecorporation.
TheRegistranthasenteredintoindemnificationagreementswithitsdirectorsandexecutiveofficers,inadditiontothe
indemnificationprovidedforinitsamendedandrestatedcertificateofincorporationandbylaws,andintendstoenterinto
indemnificationagreementswithanynewdirectorsandexecutiveofficersinthefuture.
TheRegistranthaspurchasedandintendstomaintaininsuranceonbehalfofeachandanypersonwhoisorwasadirectoror
officeroftheRegistrantagainstanylossarisingfromanyclaimassertedagainsthimorherandincurredbyhimorherinanysuch
capacity,subjecttocertainexclusions.

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TheUnderwritingAgreement(Exhibit1.1hereto)providesforindemnificationbytheunderwritersoftheRegistrantandits
executiveofficersanddirectors,andbytheRegistrantoftheunderwriters,forcertainliabilities,includingliabilitiesarisingunderthe
SecuritiesAct.
SeealsotheundertakingssetoutinresponsetoItem17herein.

Item15.

RecentSalesofUnregisteredSecurities.

DuringthethreeyearperiodprecedingNovember6,2014,theRegistrantsoldthefollowingunregisteredsecurities:
ConvertiblePromissoryNoteIssuances
InDecember2012,theRegistrantissuedconvertibleseniorunsecurednotesintheaggregateprincipalamountof$8millionina
privateplacement.Werefertothesenotesasthe2012convertiblenotes.The2012convertiblenotesaccruedinterestatarateequalto
6.0%peryear.EachofthesenoteswasconvertedintosharesofourSeriesDpreferredstockinFebruary2013atadiscountof10%to
thepriceofourSeriesDpreferredstockinconnectionwithourSeriesDpreferredstockfinancing.
WarrantIssuancesandExercises
InNovember2011,theRegistrantissuedwarrantstopurchaseatotalof238,863sharesofitscommonstocktosixinvestorsata
weightedaverageexercisepriceof$0.59pershare.Twoofsuchwarrants,representingarighttopurchaseanaggregateof10,338
sharesofcommonstockhavesinceexpiredbytheirterms.
InJuly,September,October,NovemberandDecember2012,theRegistrantissuedwarrantstopurchaseatotalof442,664shares
ofitsSeriesC1preferredstocktotwoaccreditedinvestorsatanexercisepriceof$5.53pershare.
InAugustandOctober2013,andJanuary,SeptemberandOctober2014,theRegistrantissuedwarrantstopurchaseatotalof
1,183,248sharesofitscommonstocktothreeaccreditedinvestorsataweightedaverageexercisepriceof$20.12pershare.
InMarch2014andJune2014,theRegistrantissuedwarrantstopurchaseatotalof15,000sharesofitsSeriesEpreferredstock
totwoaccreditedinvestorsatanexercisepriceof$29.42pershare.
InDecember2011andApril2012,theRegistrantissued25,776sharesofcommonstocktothreeinvestorsuponthecashlessnet
exerciseofthreeoutstandingwarrantsbasedonanexercisepriceof$0.53pershareforanaggregatenetexercisepriceof$13,661.
InAugust,September,OctoberandNovember2014,theRegistrantissued1,629,046sharesofcommonstockto20accredited
investorsupontheexerciseofoutstandingwarrantsbasedonaweightedaveragecashexercisepriceof$0.77pershareforan
aggregatepurchasepriceof$1,255,365.
InAugustandSeptember2014,theRegistrantissued254,220sharesofSeriesBpreferredstocktosixaccreditedinvestorsupon
theexerciseofoutstandingwarrantsbasedonaweightedaverageexercisepriceof$2.95pershareforanaggregatepurchasepriceof
$749,999.
InJuly,AugustandSeptember2014,theRegistrantissued305,164sharesofSeriesC1preferredstocktosevenaccredited
investorsupontheexerciseofoutstandingwarrantsbasedonanexercisepriceof$5.53pershareforanaggregatepurchasepriceof
$1,686,275.

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PreferredStockIssuances
OnJanuary26,2012,theRegistrantsold850,556sharesofitsSeriesC1preferredstocktotwoaccreditedinvestorsata
purchasepricepershareof$5.53foraggregategrossproceedsofapproximately$4.7million.
OnFebruary7,2013,andatanadditionalclosingonApril19,2013,theRegistrantsold7,233,878sharesofitsSeriesD
preferredstocktoelevenaccreditedinvestorsatapurchasepricepershareof$8.32foraggregategrossproceedsofapproximately
$60.2million.Aportionoftheproceedsfromthistransactionwasusedfortherepurchaseofsharesofcommonstock,includingthe
repurchasesdescribedinthesectiontitledCertainRelationshipsandRelatedPartyandOtherTransactions.
OnFebruary27,2014,theRegistrantsold2,617,273sharesofitsSeriesEpreferredstocktofourteenaccreditedinvestorsata
purchasepricepershareof$29.42foraggregategrossproceedsofapproximately$77.0million.
AmendedandRestated2007StockIncentivePlanRelatedIssuances
TheRegistranthasgrantedtoitsdirectors,officersandemployeesoptionstopurchase5,272,829sharesofcommonstockunder
itsAmendedandRestated2007StockIncentivePlanwithpershareexercisepricesrangingfrom$0.75to$24.76.
TheRegistrantissuedandsoldanaggregateof1,469,529sharesofitscommonstockupontheexerciseofoptionsissuedto
certainemployees,directorsandconsultantsunderitsAmendedandRestated2007StockIncentivePlanatexercisepricesranging
from$0.53to$1.53,foraggregateconsiderationof$1,001,188.
ThesalesoftheabovesecuritiesweredeemedtobeexemptfromregistrationundertheSecuritiesActinrelianceupon
Section4(a)(2)oftheSecuritiesAct,orRegulationD,RegulationS,orRule701promulgatedundertheSecuritiesActastransactions
byanissuerinaprivateofferingtocertaintypesofinvestors,inanoffshoretransaction,orpursuanttobenefitplansandcontracts
relatingtocompensationasprovidedintheapplicablestatutes,rulesandregulations.

Item16.

ExhibitsandFinancialStatementSchedules.

(a)Exhibits:
WehavefiledtheexhibitslistedontheaccompanyingExhibitIndexofthisregistrationstatement.
(b)FinancialStatementSchedules.
Allotherscheduleshavebeenomittedbecausetheinformationrequiredtobepresentedinthemisnotapplicableorisshownin
theconsolidatedfinancialstatementsorrelatednotes.

Item17.

Undertakings.

TheRegistrantherebyundertakestoprovidetotheunderwritersattheclosingasspecifiedintheunderwritingagreement
certificatesinsuchdenominationsandregisteredinsuchnamesasrequiredbytheunderwriterstopermitpromptdeliverytoeach
purchaser.
InsofarasindemnificationforliabilitiesarisingundertheSecuritiesActof1933,asamended,maybepermittedtodirectors,
officersandcontrollingpersonsoftheRegistrantpursuanttotheforegoingprovisions,or

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otherwise,theRegistranthasbeenadvisedthatintheopinionoftheSecuritiesandExchangeCommissionsuchindemnificationis
againstpublicpolicyasexpressedintheSecuritiesActof1933,asamended,andis,therefore,unenforceable.Intheeventthataclaim
forindemnificationagainstsuchliabilities(otherthanthepaymentbytheRegistrantofexpensesincurredorpaidbyadirector,
officerorcontrollingpersonoftheRegistrantinthesuccessfuldefenseofanyaction,suitorproceeding)isassertedbysuchdirector,
officerorcontrollingpersoninconnectionwiththesecuritiesbeingregistered,theRegistrantwill,unlessintheopinionofits
counselthematterhasbeensettledbycontrollingprecedent,submittoacourtofappropriatejurisdictionthequestionwhethersuch
indemnificationbyitisagainstpublicpolicyasexpressedintheSecuritiesActof1933,asamended,andwillbegovernedbythe
finaladjudicationofsuchissue.
TheRegistrantherebyundertakesthat:
(1)ForpurposesofdetermininganyliabilityundertheSecuritiesActof1933,asamended,theinformationomittedfromaform
ofprospectusfiledaspartofthisregistrationstatementinrelianceuponRule430Aandcontainedintheformofprospectusfiledby
theRegistrantpursuanttoRule424(b)(1)or(4)or497(h)undertheSecuritiesActof1933,asamended,shallbedeemedtobepartof
thisregistrationstatementasofthetimeitwasdeclaredeffective.
(2)ForthepurposeofdetermininganyliabilityundertheSecuritiesActof1933,asamended,eachposteffectiveamendment
thatcontainsaformofprospectusshallbedeemedtobeanewregistrationstatementrelatingtothesecuritiesofferedtherein,andthe
offeringofsuchsecuritiesatthattimeshallbedeemedtobetheinitialbonafideofferingthereof.

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SIGNATURES
PursuanttotherequirementsoftheSecuritiesActof1933,theregistranthasdulycausedthisregistrationstatementtobesignedonits
behalfbytheundersigned,thereuntodulyauthorized,intheCityofNewYork,StateofNewYork,onNovember10,2014.

ONDECKCAPITAL,INC.
By: /s/NoahBreslow
NoahBreslow
ChairmanandChiefExecutiveOfficer
POWEROFATTORNEY
KNOWALLPERSONSBYTHESEPRESENT,thateachpersonwhosesignatureappearsbelowconstitutesandappointsNoah
Breslow,HowardKatzenbergandCoryKampfer,jointlyandseverally,ashisorhertrueandlawfulattorneysinfactandagents,with
fullpowerofsubstitutionandresubstitution,forhimorherandinhisorhername,placeandstead,inanyandallcapacities,tosign
theregistrationstatementonFormS1ofOnDeckCapital,Inc.andanyorallamendments(includingposteffectiveamendments)
theretoandanynewregistrationstatementwithrespecttotheofferingcontemplatedtherebyfiledpursuanttoRule462(b)ofthe
SecuritiesAct,andtofilethesame,withallexhibitsthereto,andotherdocumentsinconnectiontherewith,withtheSecuritiesand
ExchangeCommission,grantinguntosaidattorneysinfactandagentsfullpowerandauthoritytodoandperformeachandeveryact
andthingrequisiteornecessarytobedoneinandaboutthepremisesherebyratifyingandconfirmingallthatsaidattorneysinfact
andagents,orhis,ortheirsubstituteorsubstitutes,maylawfullydoorcausetobedonebyvirtuehereof.
PursuanttotherequirementsoftheSecuritiesActof1933,thisregistrationstatementhasbeensignedbythefollowingpersons
inthecapacitiesindicatedbelow:

Signature

Title

/s/NoahBreslow
NoahBreslow

ChiefExecutiveOfficerandDirector
(PrincipalExecutiveOfficer)

/s/HowardKatzenberg
HowardKatzenberg

ChiefFinancialOfficer(PrincipalFinancial
Officer)

/s/DavidHartwig
DavidHartwig

/s/J.SanfordMiller
J.SanfordMiller

/s/JamesD.Robinson
JamesD.RobinsonIII

/s/JaneJ.Thompson
JaneJ.Thompson

Date

November10,2014

November10,2014

Director

November10,2014

Director

November10,2014

Director

November10,2014

Director

November10,2014

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Signature

/s/RonaldF.Verni
RonaldF.Verni
/s/NeilE.Wolfson
NeilE.Wolfson

Title

Director

Date

November10,2014

Director

November10,2014

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EXHIBITINDEX

Exhibit
Number

Description

1.1

FormofUnderwritingAgreement.

3.1

AmendedandRestatedCertificateofIncorporationoftheRegistrant,ascurrentlyineffect.

FormofAmendedandRestatedCertificateofIncorporationoftheRegistrant,tobeineffectuponthecompletionofthis
offering.

3.3

AmendedandRestatedBylawsoftheRegistrant,ascurrentlyineffect.

3.4

FormofAmendedandRestatedBylawsoftheRegistrant,tobeineffectuponthecompletionofthisoffering.

4.1

Formofcommonstockcertificate.

NinthAmendedandRestatedInvestorsRightsAgreement,datedMarch13,2014,byandamongtheRegistrantand
certainofitsstockholders.

4.3

FormofwarranttopurchaseSeriesBpreferredstock.

4.4

FormofwarranttopurchaseSeriesC1preferredstock.

4.5

FormofwarranttopurchaseSeriesEpreferredstock.

4.6

Formofwarranttopurchasecommonstock.

5.1

FormofOpinionofWilsonSonsiniGoodrich&Rosati,ProfessionalCorporation.

10.1+

FormofIndemnificationAgreementbetweentheRegistrantandeachofitsdirectorsandexecutiveofficers.

10.2+

AmendedandRestated2007StockIncentivePlanandformsofagreementsthereunder.

10.3+

2014EquityIncentivePlanandformsofagreementsthereunder.

10.4+

2014EmployeeStockPurchasePlanandformofagreementthereunder.

10.5+

EmployeeBonusPlan.

10.6+

OutsideDirectorCompensationPolicy.

10.7+

ConfirmatoryEmploymentOfferLetterbetweentheRegistrantandNoahBreslowdatedOctober30,2014.

10.8+

ConfirmatoryEmploymentOfferLetterbetweentheRegistrantandJamesHobsondatedNovember7,2014.

10.9+

ConfirmatoryEmploymentOfferLetterbetweentheRegistrantandHowardKatzenbergdatedNovember3,2014.

3.2

4.2

10.10+

FormofChangeinControlandSeveranceAgreementbetweentheRegistrantandNoahBreslow.

10.11+

FormofChangeinControlandSeveranceAgreementbetweentheRegistrantandotherexecutiveofficers.

10.12

Lease,datedSeptember25,2012,byandbetweentheRegistrantand1400BroadwayAssociatesL.L.C.

AmendedandRestatedLoanandSecurityAgreement,datedNovember3,2014,byandbetweentheRegistrantand
Square1Bank.

10.13
10.14

10.15

AmendedandRestatedCreditAgreement,datedSeptember15,2014,byandamongOnDeckAccountReceivables
Trust20131LLC,DeutscheBankAG,NewYorkBranch,DeutscheBankTrustCompanyAmericasandDeutsche
BankSecuritiesInc.

SecondAmendedandRestatedLoanandSecurityAgreement,datedMarch21,2011,byandamongSmallBusiness
AssetFund2009LLC,eachLenderpartytheretofromtimetotimeandDeutscheBankTrustCompanyAmericas,as
amendedJanuary10,2014.

AmendedandRestatedCreditAgreement,datedOctober17,2014,byandamongOnDeckAssetCompany,LLC,each
Lenderpartytheretofromtimetotime,ODBLIV,LLCandDeutscheBankTrustCompanyAmericas.

BaseIndenture,datedMay8,2014,byandbetweenOnDeckAssetSecuritizationTrustLLCandDeutscheBankTrust
CompanyAmericas.

10.16
10.17

TableofContents
Exhibit
Number

10.18

Description

Series20141Supplement,datedMay8,2014,byandbetweenOnDeckAssetSecuritizationTrustLLCandDeutsche
BankTrustCompanyAmericas.

CreditAgreement,datedAugust15,2014,byandamongOnDeckAssetPool,LLC,JefferiesMortgageFunding,LLC
andDeutscheBankTrustCompanyAmericas.

10.19
10.20

FormofManagedApplicantCommissionAgreementbetweentheRegistrantanditsfundingadvisors.

21.1

ListofsubsidiariesoftheRegistrant.

23.1

ConsentofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm.

23.2

ConsentofWilsonSonsiniGoodrich&Rosati,ProfessionalCorporation(includedinExhibit5.1).

24.1

PowerofAttorney(seepageII5tothisregistrationstatementonFormS1).

Indicatesamanagementcontractorcompensatoryplan.