P2P-Banking.com

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)

MyC4.com switched today from closed beta to public beta. Now it is possible to browse the site without registering. For example click on one of the opportunities on the left of the screen and you get a good idea of the concept.

MyC4 allows lenders to do microlending to entrepreneurs in Africa. Lenders do get paid interest. Check the previous P2P-Banking coverage of MyC4.

Danish startup C4 World on it's platform MyC4 allows lenders to finance micro loans to African entrepreneurs (Afripreneurs). P2P briefly featured the MyC4 plans earlier. The goal is to "eradict poverty through business". The service is currently in beta, but signing up and lending at MyC4 is already possible.

MyC4 differs in its approach from Kiva: At MyC4 lenders do earn interest on the loans. Currently interest rates of 20-24% are typical with loan terms of 6 or 12 month.

P2P-Banking.com joined the Beta as a MyC4 Builder. The gathered experiences are published in an exclusive P2P-Banking.com review of MyC4:
http://www.wiseclerk.com/myc4-p2p-banking-review.pdf (0,4 MB, 3 pages)

Today I received an email from Arkadiusz Hadjuk of Fairrates.dk informing me, that his company started to offer p2p lending in Denmark. Most of the following information was supplied by him.

At Fairrates.dk:

• There are individual listings, both lending and borrowing
• There are no groups
• There is auction bidding down interest rates, both lending and borrowing
• In case of non-payment (for over 1 month) a lender is assisted with
  a collection procedure
• Minimum loan is 1000 DKK (approx. 135 Euro; approx $100)
• There is no maximum a lender can lend
• Maximum per loan is 50.000 DKK (approx. 6700 Euro; approx. $5100)
• Borrower can request minimum 1000 DKK
• Borrower can request maximum 50000 DKK until his income information
  is verified – then the limit is lifted up
• Minimum bid is 1000 DKK
• Only people over 18 years old with Danish CPR number and Danish bank
  account can lend/borrow
• No interest on unlend deposits
• Simple fee structure (borrower pays 1% of loan amount)
• Risk assessment is based on information and documentation provided
  by borrowers.

I did technorati and Google searches for additional information. Since I don't speak Danish I could not find much additional information, only a profile of Arkadiusz Hadjuk and a CV of Robert Pawel Bialek (CEO).

Judging by forum activity at Fairrates.dk there is not much traffic yet.