In Japan, Exchange Corporation K.K., which runs the p2p lending marketplace Aqush, raised an undisclosed amount from Silicon Valley venture capital fund 500 Startups.
According to today’s press release on average lenders on the Aqush p2p lending marketplace have invested 3,750 US$ with a ROI of 7.6% net of bad debt and fees.
Via: Asiajin
Quakle.co.uk launched in summer as a rare bird in p2p lending. Instead of using credit rating data to gauge the borrowers Quakle set out to base its rating on social connections tied online. Quote from then: “The trustworthiness of the borrowers is assessed by the lenders only. Quakle believes that social bonds strengthen confidence and make borrowers more likely to repay. In addition we are convinced that getting dozens of people to trust you is, at least, as much difficult as building yourself a high credit score. It is then the responsibility of a lender to choose whether to lend money to borrowers who are active members of user groups and have a good social rating.”
Recently Quakle reconsidered and adapted its approach. Now the site uses Experian data to credit score the borrowers. Director Josselyn Digny told P2P-Banking.com: “We changed the information collected on borrowers after we’ve got some feedback from lenders and potential lenders that they would not lend out money to borrowers if their credit history was not reviewed at all“.
A recent press release phrases the new message: “Quakle, the online peer-to-peer lending community, allows people to lend money to each other in a friendly and structured way, while cutting out the banks. Quakle credit checks its borrowers but is different from other peer-to-peer lending websites in that members also have a ‘reputation score’. This score is based on their individual behaviour and that of any group they may be part of within the site. This peer group system encourages people to be financially responsible.”
The company still suffers from a shortage of lenders and offers a 30 GBP reward on first bid for new lenders as registration incentive. Furthermore there are no fees for lenders. 
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Prosper.com adds 1 and 5 year loan terms. So far only 3 year loans were available on the p2p lending platform.
Smava in the time from September, 15th 2010 to October, 15th 2010 offered subsidized loans to new customers (borrowers). The offer was limited to loan amounts up to 2,500 Euro and only available for 36 months loan terms.
Eligible borrowers could take out a loan at an APR of 2.99%. Since lenders received “normal” rates (typically between 5 and 13% nominal depending on credit grades) Smava subsidizes the difference. Over the duration of 36 months this will cost Smava about 150 to 300 Euro per loan.
According to Wiseclerk stats about 150 loans with a total volume of 350,000 Euro closed at the reduced rate.
Reasons for this marketing promo
Smava did not comment about the motives behind this offer. While the resulting CPO of this offer is higher then with other marketing channels, Smava could have speculated that the press picks the special offer and that the traffic from the generated press coverage leads to additional loan requests that are not eligible for the offer. Furthermore the rate of 2.99% APR could place Smava prominently ranked on loan price comparison sites.
Results
In my opinion this offer had low success. Judging by economic facts it might be considered a failure. Little additional press coverage was generated by this special offer. The total loan volume funded per month did not rise compared to previous months. The offer might aid the positive image of the Smava brand though.
Kimaventures has announced investing in Pret d’union, a p2p lending company in France, which according to it’s website, aims to launch in 2011. Unconfirmed sources state that the funding round raised 500,000 Euro – no information which investors participated apart from Kivaventures is available.
CEO Charles Egly is a former banker at BNP Paribas. While the business model was drafted in September 2008, the company was founded in October 2009 and received regulatory approval in December 2009.
Earlier this year French p2p lending service Friendsclear raised 522,000 Euro from several investors including Arkeon Finance.
EDIT: Additional information provided by CEO Charles Egly:
– as of today, Prêt d’Union raised ca. 1 M€ from Business Angels and Kima Ventures.
– in december 2009 Prêt d’union filed a propectus to get a credit institution licence. Prêt d’Union has not yet received the licence and is still in discussion with the Bank of France.
British P2P lending site Ratesetter.com launched recently. Ratesetter uses market approach dominant in the UK (rather then individual listing).
A novel approach is the “Rolling Monthly Loan” Ratesetter introduces:
One of the two types of loan RateSetter offers. For a borrower, this is a bit like borrowing with a credit card. At the end of the month, they pay the interest and a minimum repayment amount. The balance of the loan is then rolled into a new contract (with a new lender). Lenders only lend their money for one month at a time. They lend their money again at the end of the month, but to a new borrower with a new contract.
This is an interesting concept. For lenders it solves the problem with other p2p lending markets (unless they have a secondary market) that they cannot cash early. For borrowers this comes with mixed blessings. While the rolling monthly loan comes with lower rates than a credit card, the rate will change each month (for better or worse).
I do wonder what happens should the lender demand dry out? How will Ratesetter refinance the Rolling Monthly Loans then?
Provision Fund
Ratesetter builds a fund as partial shield against bad debt:
Money invested in shares and corporate bonds isn’t covered by the Financial Services Compensation Scheme. Money lent with RateSetter isn’t either, but we’ve set up a Provision Fund to reduce the risks to lenders. Borrowers pay an amount each month into the Provision Fund based on their creditworthiness. The fund is managed by RateSetter so a lender can be compensated if their borrower doesn’t pay their loan on time. All payments from the Provision Fund to the lender are entirely discretionary – we can’t guarantee to compensate lenders from the fund and it isn’t an insurance product. If RateSetter builds up a surplus in the Provision Fund (if we’ve been overly conservative) RateSetter pays bonuses to its lenders (this is paid annually based on how much money they’ve lent over the year).
The height of the payment into this fund (called credit rate) is dependent on the credit score of the borrower. The website quotes a 1% credit rate as example. The Provision Fund by Ratesetter is the second construct to diminish risks from defaults to lenders after the Anleger-Pool concept by Smava (see articles on Anleger-Pool).
I see two downsides to the Provision Fund concept:
The market view shows, that Ratesetter matched funds currently at about 6.3% APR for the rolling monthly and at 8.6% for the 36 month loans.
Ratesetter charges borrowers a 115 GBP upfront fee (for the 36 months loans); 5 GBP per month for the monthly loans and lenders 10% of the interest they earn.
The company was founded by Rhydian Lewis (CEO) and Peter Behrens (COO).