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@mayefsky A few months ago I was wondering if this existed and am excited to see that you have built this. As someone who had to fully fund my education and someone who is now able to give back - I see both sides of this equation and its benefits. πŸ˜€ What was your inspiration?
@corleyh Thanks! I built WeFinance after years of doing this offline with friends--I had a great, lucrative job at a big tech company, while my friends were doing startups, going to law school, etc. and paying ridiculous rates basically because they were young with limited credit history, despite the fact that I knew them to be trustworthy people with great career potential and very limited risk. It was a win-win for us then, and I'm happy with all the people we've been able to help on both sides already with WeFinance now, and excited for what we can hopefully do for many, many more.
Maybe I don't get it, but is there no accountability with this since WeFinance isn't a financial institution? It seems like there's nothing that guarantees you'd be paid back.
@alexkehr there's substantial accountability for borrowers--much of their crowdfunded loans come from their own networks, so there's social accountability; the loans are backed by contracts, so there's legal accountability; and repayment is automated, so it's not like borrowers just 'forget' to repay. It's absolutely true that it's not a zero-risk investment. Borrower defaults are possible--but there's nothing magical about being a bank that would change that. The social accountability on top of the legal piece actually positions us better as far as defaults are concerned than traditional banking would, and we've been running test batches of loans for close to a year with no defaults.
@mayefsky Cool, that all makes sense! Just some quick feedback: I think you should explain how it all works on the homepage (maybe above the fold?). Also, some design tweaks that make it look like you're a bigger company could also be really beneficial because it would increase trust to loan money on your site.
@alexkehr Thanks for the feedback!
@mayefsky is there any reason Prosper or Lending Club haven't entered this space yet? Do you think the social aspect is the big differentiation from them?
@amitch5903 Most of the money on existing platforms comes from traditional financial institutions--they're just a way for banks, etc. to access loan demand more quickly. So that leads to several differences: --Banks are most interested in traditional credit metrics, so that's what these platforms ask their borrowers for. Those metrics are less relevant for young borrowers than, say, if they have a job lined up, what degree(s) they have, and whether their friends and family have faith in their ability to repay, but banks really aren't in a position to evaluate that data, and Lending Club isn't really in a position to ask for the social data our lenders already have through their connections. --Our lenders are normal people. Most lenders we've talked to care about the specific individuals they are lending to, and are very happy with the returns they're getting. Banks and institutions don't intrinsically care about the altruistic side, and also have options you and I don't with what to do with their capital. So they tend to go after higher-spread debts than the student loans and other relatively low-risk funding needs we focus on, and existing platforms thus focus on acquiring such borrowers, and then charge substantial service fees (1.1% for borrowers and 1% for lenders in the absolute best case) which make helping the people we help very difficult.
Great product!
Awesome stuff guys...thanks for building and sharing!
#4036th Excited to check out the product! I'm paying almost have my salary to student loans!