Services

How Fairrates’ problems became IOU Central’s headstart

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IOU Central launched first in Canada. As I already mentioned in my first post on IOU Central they profited from the knowledge input the two founders of danish Fairrates.dk brought with them. Fairrates had problems with fraud cases due to incomplete access to credit histories.

Here are some interesting notes by Bartlomiej Owczarek from Virtuous Cycle taken at a conference in Poland where Fairrates founder Arkadiusz Hajduk, now product manager at IOU Central, gave a presentation:

  • The startup was initially located in Denmark
  • Two guys on a sofa
  • I liked the quote – “expert is a person who committed all possible mistakes in a narrow field of specialty”
  • Idea was inspired by Prosper
  • They didn’t bother with business plans and presentations (note: maybe not so good in the end, given later credit history problem, see below)
  • Nevertheless, they got angel from early on – entrepreneur, house builder
  • Features of their angel – did call from time to time, but otherwise didn’t require much reporting, in retrospect now they would prefer someone more of a “mentor” type
  • They coded for 4 months without office
  • Then they got office, at respectable location (good for customer trust)
  • They coded another 6 months when they had office
  • First version was seen and tested by some 30 people
  • Operating model assumed that they don’t make credit decision or take on risk – all this is on the lender
  • Highlight of the “growth” period – 90 minutes on the front page of a major business portal
  • After launch, lenders turned out not a huge problem; in a first week, one person offered equivalent of ca. PLN 50k
  • However, huge problem with (good) borrowers
  • Also, in Denmark there is no access to credit history (only yes/no credit problems query possible)
  • Side note: banks in Denmark do not care to advertise to people more than 25 years old, because no one ever changes the bank
  • They had two evident fraud cases
  • In the end, business model didn’t fly because of borrower problem (people took wait-and-see approach), resulting in the “decline” phase
  • Luckily, they were approached by people from Canada, who had non-technical capabilities in the area but needed technology platform, and they sold out
  • Angel apparently got 150% of his initial contribution
  • Lessons learned: don’t hesitate to kill your own ideas

(via Prosper Lending Review)

New features at Prosper

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Immediately following up on the previous post on Prosper.com, the list of new features at Prosper is now known. Most notable are:

  • Lenders can turn standing orders into portfolio plans. The interesting part is that lenders can share (publish) their portfolio plans on their member page and other lenders can use it for themselves.
  • Bidding via API. This allows bidding to be delegated to third party applications. Much like the bid snipers and bidding agents it now becomes possible to entrust third party applications to invest money at Prosper. It remains to be seen how lenders will make use of this
  • Referral award for new borrowers raised from 35 US$ to 50 US$. Example button below. If you use that and your loan is funded, I am paid 50 US$.

Business & Personal Loans. Great Rates. Prosper. 

Prosper Days 2008

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The Prosper Days 2008, next week Monday and Tuesday in San Francisco, are the main yearly event by Prosper.com. The schedule covers topics like borrower experiences, managing large portfolios, earning a risk adjusted return, collections. You can still register for 55 US$ (includes all sessions and meals).

Several blogs already speculate if and which new features will be announced at the Prosper Days 2008. Traveler wrote a long post on that yesterday. 

IOU central launches p2p lending in Canada

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IOU central launched the first active p2p lending service in Canada today. Borrowers can request loans from 1,000 to 25,000 CAN$ and select a term between 1 and 36 months. IOU central allows the borrower to specify a minimum amount at which he will accept the loan, should it not fully fund in the 2 weeks listing duration. IOU Central pulls the TransRisk credit score of the borrower, provided by Transunion Canada. According to the press release, lenders can expect to earn interest rates between 5 and 25 percent.

Borrowers pay a closing fee ranging from 1 to 3 percent depending on their credit score. Lenders pay an annual servicing fee of 0.5 percent of the open principal balance. Only Canadian residents can borrow or lend. The borrower needs to have a Trans union credit score.

Borrowers may have several loans, but the total outstanding principal may not exceed 25,000 CAN$.

Lenders earn interest on deposited money (bank prime rate minus 2.5%). Individuals may lend up to 5 million CAN$. Corporations may lend up to 50 million CAN$. Minimum bid amount is 25 CAN$.

Studying the team of IOU Central I noticed Robert Bialek (VP Technology) and Arkadiusz Hajduk (Product Manager), which were the founders of FairRates.dk, a p2p lending service in Denmark, which now is part of IOU Central. An assumption would be that IOU Central acquired (or merged with) the company, to gain the knowledge and experience made.

The IOU Central launch did beat Communitylend in being first in the Canadian market. Communitylend has long announced to launch a Canadian peer to peer lending service, but has not launched yet. 

To discuss IOU central, the lending or borrowing experience or to ask questions on the service you can use Wiseclerk's IOU Central forums.

(Link)

First anniversary of Boober

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A year ago Boober.nl launched as first peer to peer lending service in the Netherlands. While Boober faced some hardship (especially on regulation issues) the first year of Boober can be called a success for the company. So far Boober has funded over 2 million Euro in loans in the Netherlands. Compare this to the 1 million Euro Smava.de has loaned in the much larger German market in the last 10 months.

But not all lenders are satisfied with the results. The PIVN an association of lenders, on Jan. 14th called for an investment stop. The main cause are fee changes. Richard van den Toorn, Secretary of PIVN, told P2P-Banking.com:

It's not going very well with Boober, although they claim otherwise. The
PIVN (association of investors) has indeed given an advice not to invest
in new loans until some of her demands have been met. Reason for giving
such an advice is that Boober changed their payment-policy for the
investors radically, without consulting the PIVN first. It's so much the
height of their fee …, but that they are making sure the
benefits are going to Boober first, leaving the investors [lenders] with the risk of
remaining payments from the borrower. Continue reading →