Posts Tagged ‘Peer to peer lending’

Crowdfunding

August 3, 2012

Crowd funding (CF) activities can be divided into three basic types: 1, equity, where the company attracts investors via the sales of shares, 2, donation and reward, where lenders are basically contributing for goodwill, and 3, peer to peer lending (p2p), where the company goes into debt to its investors.

Some CF platforms specialize in certain types of companies, projects or fund raising activities, while others have no niche and allow CF for anything. 15 of the top 40 sites require fundraisers to meet a pre-stated funding goal before the raised funds will be released, in an ‘all or nothing’ distribution scheme. Four sites distribute any funds that are raised regardless of the project’s goals, and the borrower keeps any money raised; and five of the CF platforms use some form of hybrid structure where funds distribution can go either way. Sites that allow users to keep any funds raised are especially popular.

Equity sites in the UK have been active for years. While the law allowing equity CF in the US was passed this April, the SEC has 270 days from the date of passage to write the regulations, and un-accredited investors cannot participate in equity CF on US sites prior to these regulations. Here is a summary of the more important sites alphabetically for K – Q.

Kickstarter. CF Type: Donation. Niche: loosely defined. $-Distribution: All or nothing. Summary: recognized as the #1 player in their segment. Kickstarter does not provide ACH management.

Kiva. CF Type: p2p. Niche: projects in developing countries. $-Distribution: borrower keeps any money raised. Summary: Launched in 2005, claims to be first mover in microlending for entrepreneurial projects. Funding Circle also claims this. Either way, Kiva is an important competitor in p2p.

Launchpad.com. CF Type: Equity. Niche: early stage angel capital for innovative technologies and life sciences. Summary: SEO is terrible.

Lendingclub. CF Type: p2p. Niche: personal and business loans. Summary: first to register with SEC and offer a secondary market for p2p loans, important competitor in the p2p space. Borrowers need $70K salary, 660 FICO, and clean record for 12 months prior. Lendingclub actually carries the notes. Nice stats page. There is no transparency between lenders and borrowers.

Medstarter. CF Type: Donation. Niche: Healthcare. $ Distribution: All or nothing. Summary: their niche is one specifically excluded on Kickstarter. In beta. Boring UX.

Microventures. CF Type: Equity & p2p. Niche: connecting angels with tech startups. Distribution: All or nothing. Summary: Registered broker-dealer; required to perform due diligence handling investor relations. Average raise is $150K. 4K investors, $4M in funded transactions (not necessarily a lot in comparison to some other sites).

OnSetStart. CF Type: Donation but positioned to do Equity. Niche: None. Distribution: All or nothing.   Summary: Project creators keep 100% ownership over their work. Tools for funding projects. Member of NCFA. Traffic is supposedly growing quickly but the site appears to have almost no activity. Rated online as very easy to use but site navigation is actually quite awkward.

Peerbackers. CF Type: Donations. Niche: None. $ Distribution: all or nothing with a twist; if project has not met its funding goal but the project owner can still deliver the promised rewards, then the amount raised will be released to them. Summary: interesting menu options for finding projects on the site. They have received good media attention.

Peoples VC. CF Type: Equity. Niche: Hard to tell. Summary: marketplace functionality, well designed calculator, strong integration tools, “Crowdvestor” education course. Peoples VC has some very sharp people on their team. One of the top US equity sites, also receiving good media attention.

Petridish.org. CF Type: Donations. Niche: scientific research. $-Distribution: All or nothing. Summary: small projects, median range $10-15K size. Average donation is $70 (comparable with Kickstarter). Killer graphics on website. In beta. Good media coverage.

Prosper. CF type: p2p. Niche: personal needs. Summary: investor oriented- site has a schedule with about 38 rates from AA to HR; Quick Invest feature; developer tools and data mining resources. Info on the procedures is broken down into categories and well presented. With $370 million in personal loans funded ( 3X more than Kickstarter ) they are one of the top CF sites.

Quirky. CF type: co-creation; kind of a fourth category of CF. Niche: inventors and nerds. Summary: the site evaluates product ideas, picks winners, manufactures those products, and sells them on and offsite, taking about a 2/3 cut of the revenue. Members earn money right through the site. Members vote on inventions and ideas with the most potential, while playing a legit pricing game fashioned along the lines of the Price is Right. Link layout and functional naming on the site is quirky, but graphics are good. Unique player in the co-creation segment, receives major media coverage, and maintaining several partnerships with over a dozen household name retailers.

Advertisements