I’m not a huge fan of banks. While they’re (currently a necessary evil) – it’s hard not to think that they’re generally just a middle man taking a (substantial) cut for no real benefit. I mean if they provided a great service and made our lives easier we wouldn’t mind paying their price – but generally they’re as wedded to the 1.0 world as you can imagine.
It’s for this reason that peer to peer lending and micro-finance appeals to me. Micro-finance allows (generally Third World) entrepreneurs who would normally be unable to borrow anything, to utilise small amount of money from "financiers". The reports I’ve heard from the likes of Kiva indicate super low default rates, along with the satisfcation to be gained from helping someone claw their way out of poverty.
Peer-to-peer lending however is more directly a threat to banks as it seeks to facilitate the partnering of willing lenders with wanting borrowers. A lender states the amount they wish to lend and the rate they’ll lend it at, while the borrower does likewise. The peer-to-peer agency takes a small percentage of the transaction. Of course the vested interests (banks) and their supposedly neutral but actually supportive agents (central banks) do everything they can to make it hard for peer-to-peer set ups to get off the ground.
Local start up Nexx is one such peer-to-peer facilitator – it’s great to read that they’ve just raised 600k in angel funding that will see them through the regulatory and initial go-to-market stages for their business.
I’m sure there will be many hurdles to jump just in getting approval – but hand in there guys, unlike a huge majority of start-ups, your one is really doing good by doing well.
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