The "no longer acceptable" startup

• Axios has obtained a letter sent to shareholders, in which CEO Anu Shultes said that payday loans "are no longer acceptable solutions to critical stakeholders in our business and the community at large."
• Since its 2012 founding, the Oakland-based company had originated more than $2 billion in consumer loans.

What happened: Payday lending has always been controversial. Advocates argue that it creates financial optionality for the unbanked and disenfranchised, while critics believe that it's too often predatory.

• LendUp itself acknowledged the pitfalls of traditional payday lending, particularly once Google banned payday loan ads in 2016, claiming that its tech-enabled solutions were more consumer-friendly. Nonetheless, it was fined by regulators for payday lending violations.
• Since then, the industry has been under a regulatory maelstrom. President Obama instituted new consumer protections that President Trump last year rescinded, only to have the Trump move overturned in June by Congress.

Corp history: LendUp began to show cracks in 2018, when it spun off a credit card unit that's now known as Mission Lane. Its founding CEO departed soon after, succeeded by Shultes.

• Late last year it launched a "a digital banking and financial health platform" called Ahead Financials.

• It would seem that original LendUp investors are basically left with stub equity in Mission Lane — which has since raised lots of funding, including follow-ons from some LendUp backers — and whatever comes of Ahead, which is technically a subsidiary of LendUp Global.
• No LendUp investors contacted by Axios were willing to comment for this story. LendUp CEO Shultes also declined an interview request.

The bottom line: Venture capital has become more liberal in its definition of "acceptable" investments, as evidenced by deal activity in sectors like cannabis and gambling. But the pendulum sometimes swings the other way, knocking LendUp into an attempted pivot.