Earlier in the year, I decided I wanted to create something that would essentially fit a dual purpose:
1) Combine my interest in disruptive finance with disruption in the publishing world
2) Answer an obvious need for educational materials regarding the subject of marketplace lending.
Indeed, as I continued to dig deep into the development of this whole new industry, I was surprised that one constituency in the equation was not getting its dues – the credit worthy borrower (individual or small business).
See, when one looks at marketplace lending (aka p2p or online lending), you're really look at three moving parts: the lender or investor (those with excess money to put towork); the creditworthy borrower (those looking to take out a loan to finance something); and the “platform” as the new middleman (instead of a bank). The platform brings together both parties, matches them effectively, and takes a “cut” for the effort, resulting in a win-win for all parties involved. Lower rates for the borrower, and higher (fixed income) yields for the lender c.q. investor.
However, as the momentum in the industry continues to build (Lending Club, the 800-pound gorilla, will be public before year's end), we can see more and more press clippings and writings on both the platforms and the (institutional) investor, but very little focus on a key player in the whole equation: the creditworthy borrower.
Yes – you!
Borrowing and Lending – Two Sides of the Coin
P2P lending platforms have been sprouting like weeds, and more and more savvy investors (smart money) have been rushing to the table, ensuring they don't miss out on the action. This drive has been so significant for yield that it suddenly became clear that there is a problem. We do not have enough creditworthy borrowers showing up to fill the need, or there is a lack of knowledge among this core constituency. Hence, my rallying cry: “To Borrow is Human, to Lend Divine”. We do need the two sides of the coin to make things work, so as to continue to scale rapidly. One does not work without the other.
Therefore, as one senior executive of one of the leading platforms continues to stress at every possible opportunity, we need something called EAU: Education, Awareness and Understanding. It is for that reason that I started this magazine – to help fill that gap. This free publication (for now, only on the iOS NewsStand / Apple (APPL) ) is looking to be a “prosumer” oriented niche online magazine, with particular focus on getting “behind the people”, the industry movers and shakers. It’s a personal take on many of the industry leaders and other market participants, experienced firsthand for more than 5 years now, then a time where people thought that Lending Club was some sort of hobby club and Prosper was soon to be no more. And look where we are today.
A Diverse Array of Lending Topics
In my first issue, I have a “potpourri” of things that are of interest:
- In “Thoughts on Marketplace Lending and Lending Club,” John Donovan talks about his past in the business, perched on a front seat – as former COO and employee #2 at Lending Club, his observations are valuable and unique. I’m honored to call him my friend.
- Prosper’s Ron Suber is no stranger to many of us, but still an unrelenting torch bearer for the industry, and we are posting here a replay of one of his more recent presentations called: “From Disruption To Revolution – The Tipping Point”.
- Simon Cunningham is a very perceptive observer and avid industry blogger, and here, we’re republishing one of his more lyrical pieces called: “Why Peer-to-Peer Lending Is Beautiful”. You can find more on his blog.
- Orchard Platform is a key player in the industry’s ecosystem. They are developing the “pipes” through which this new gold is also flowing. As some people have observed – whenever there is a gold rush, it’s better to be in the pickaxe business. David Snitkof elaborates here on the “Borrower Impact of Consumer Marketplace Lending” in a beautiful way.
- Whenever you say finance, legal and lawyers cannot be far off. In Pepper Hamilton’s contribution (IPO’s, Private Placements and CrowdFunding), another one of my friends, Brian Korn, takes us on a tour of the evolving legal and accounting landscape around the JOBS Act with great insight and eloquence.
I have included my own contribution as well, something I wrote earlier in the year for CAPCO’s Journal of Financial Transformation. In my abstract, I finish the paragraph on the sector with: “It is poised for very strong growth and is likely to change the landscape fundamentally in a relatively short time.” Yup. You know where I come from. Heads up, by the way, as I’m looking to publish a follow up article in the same Journal in the spring edition.
The team at Financial Technology Partners is sharing a great Lending Club transaction overview, and I finish the issue with a Calendar of Events and a book review.
Targeting a December 15th publishing date for my second issue, I encourage the reader to download the app already now here or by going to www.whatismarketplacelending.com. And don’t forget to rate the app while at it! Happy reading.