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[Stripe cofounder.] > Based on the amount of junkmail I get offering my small business loans, I have a hard time believing the "filling a niche no-one else is

by pc 7y ago

[Stripe cofounder.] > Based on the amount of junkmail I get offering my small business loans, I have a hard time believing the "filling a niche no-one else is offering" narrative. Leaving aside questions about how good those lenders actually are to work with, it's still a surprisingly inefficient market. Businesses built on Stripe still report that access to capital is one of the _very top_ limiting factors on their growth. The uptake rates we've seen in the Stripe Capital beta over the past year corroborate this. Our hypothesis is that existing lenders are disproportionately ineffective at detecting and underwriting internet businesses, since they have such different capital and growth dynamics.

bduerst 7y ago
>Our hypothesis is that existing lenders are disproportionately ineffective at detecting and underwriting internet businesses Is that because you have a view into your business customers cash flows, so you think you'll be able to better assess risk than traditional lenders?
- pc 7y ago
  Yes, but much of it is simply taking the problem more seriously. In principle, others could build this by leveraging bank account data. (Or by using Stripe Connect.) We were so struck by the extent of the problem reported by Stripe users, and by how that remained constant over time, that we decided to go tackle it directly.
  - cm2012 7y ago
    You should research as much as possible about ONDK, the 800lb gorilla in SMB lending. They're a public company so the data is in their quarterly reports.
- mbesto 7y ago
  Which is exactly why Square got into it as well: https://squareup.com/us/en/capital https://squareup.com/us/en/capital
edoceo 7y ago
Dude, outside of the SV bubble access to capital is always the top for any small business that believes in themselves. Did you "discover" labor is the second biggest?
- emiliobumachar 7y ago
  They are replying to another comment who had questioned the need for yet another loan service. It's fair to point out the persistent problem of access to capital, even if it's obvious to many.

by pc 7y ago

bduerst 7y ago

>Our hypothesis is that existing lenders are disproportionately ineffective at detecting and underwriting internet businesses Is that because you have a view into your business customers cash flows, so you think you'll be able to better assess risk than traditional lenders?

pc 7y ago
Yes, but much of it is simply taking the problem more seriously. In principle, others could build this by leveraging bank account data. (Or by using Stripe Connect.) We were so struck by the extent of the problem reported by Stripe users, and by how that remained constant over time, that we decided to go tackle it directly.
- cm2012 7y ago
  You should research as much as possible about ONDK, the 800lb gorilla in SMB lending. They're a public company so the data is in their quarterly reports.
mbesto 7y ago
Which is exactly why Square got into it as well: https://squareup.com/us/en/capital https://squareup.com/us/en/capital

edoceo 7y ago

Dude, outside of the SV bubble access to capital is always the top for any small business that believes in themselves. Did you "discover" labor is the second biggest?

emiliobumachar 7y ago
They are replying to another comment who had questioned the need for yet another loan service. It's fair to point out the persistent problem of access to capital, even if it's obvious to many.