A couple days ago we wrote about IOU Central and how they beat CommunityLend to become the first P2P lending marketplace in Canada. IOU Central seemly came out of nowhere. We wrote about CommunityLend last June and then again in December when they secured $2.5 million in funding but had not heard about IOU Central. In Netbank's post about IOU Central Jim Bruene also wrote, "We were surprised to learn today that someone beat Community Lend to market."IOU Central was able to beat CommunityLend to market by purchasing a P2P lending startup from Denmark called Fairrates. Fairrates was built in 10 months by Arkadiusz Hajduk and opened in April 2007. They had lenders willing to invest but had a problem finding and vetting good borrowers. In Denmark there is no access to credit history and Fairrates was hit with a couple fraud cases. Hajduk is now the Product Manager for IOU Central and he spoke at a conference for entrepreneuers in Poland this week. Bartlomiej Owczarek from Virtuous cycle published his notes from Hajduk's speech reprinted here:
Presentation of Arkadiusz Hajduk about his P2P startup (IOU Central):- 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
Virtuous cycle also had notes about a couple other P2P lending startups who were also at the conference - Finansowo, Monetto, and Kokos. They all hope to become the P2P lending platform for Poland. Of the three, Kokos is already active. Wiseclerk published an interview with Kokos a couple weeks ago. Finansowo will be launching within a week and Monetto is also close to launch.
