Some of the leading crowdfunders fall into different categories like Equity, Donation, Reward and Debt (a.k.a. micro finance and peer-to-peer lending). That last group is critical. Here is my take on top 10 up-and-coming crowdfunders for debt players.
1. Lending Club
Lends up to $33,000 towards consumer debt and has scaled to the point that they were handling over $125 million per month in loans as of February. They are on a trajectory to $1.5 billion in crowdfunding loans for this year. They have also brought into their board former CEO of Morgan Stanley John Mack and former Treasury Secretary Larry Summers.
Using intermediaries from local and regional lending companies and organizations, Kiva offers crowdfunding in developing countries. Crowdfunders or lenders can pitch in $25 each and a local microfinance institution (MFI) facilitates the loan. Kiva is the first global lending platform and is currently the leader for p2p crowdfunding in developing countries.
With 1.6 million members and $400,000,000 in funded loans, Prosper is an industry leader. Prosper can provide loans ranging from $2,000 to $25,000 and for as little as $25 you can be a crowdfunder or investor.
This London-based P2P lender offers loans of up to £10,000 where individual borrowers deal directly with lenders. Zopa categorizes borrowers based on their credit grades and lenders can offer terms and amount of money based on the category of the borrower.
A Cincinnati crowdfunding platform, SoMoLend provides a fully transparent peer-to-peer lending program which allows investors to have a closer look at the borrower’s business before agreeing to finance the loan. SoMoLend utilizes the power of social networking by allowing entrepreneurs to raise funds from friends, relatives, neighbors and even current customers and local banks. It is the strongest newcomer on this list.
It’s one of the biggest crowdfunding platforms in the U.K. It is a marketplace where lenders can spread their investments between different borrowers or small businesses in the UK to lower the risk and increase their ROI. Funding Circle ties up with U.K.’s leading credit agencies and underwriters to facilitate lending transactions. Small business can seek loans ranging from £5 – £50k from multiple crowdfunders.
It’s a New Orleans peer-to-peer lending for small businesses. Just like other p2p lenders, Rebirth Financial eliminates the additional costs of banks and other financial institutions serving as middlemen in the lending transaction.
People Capital is a revolutionary peer-to-peer lending platform for students. It utilizes the advantages of crowdfunding in finding lenders to help finance the borrowers, which in this case are students looking for student loans. People Capital uses a patent pending assessment system called Human Capital Score which features combinations of metrics like GPA and test scores to determine the borrower’s (students) potentials and creditworthiness.
A “personalized” debt peer-to-peer lending platforms, LendFriend provides a platform for crowdfunding by allowing lenders to borrow funds from people they already know. One of its services is a Loan Creation Platform which lets you draft a proposal and pitch it to your friends in your social network. You can set date of payment. LendFriend’s platform also follows banking rules and other regulations seen in traditional p2p lending.
Another U.K.-based peer-to-peer crowdfunding platform which allows borrowers and lenders to transact directly and eliminates the need for a banking system and other financial agencies. FundingKnight has a membership minimum of £500 and can lend up to £100,000 to small businesses planning to expand. FundingKnight is a member of the fraud prevention agency CIFAS.
I’d like your thoughts on the top 20. Who should be on this list? You can comment here or reach out to me at David@LDJCapital.com directly.