Canada

Breaking news: IOU Central suspended by regulator

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After being offline for several hours, Canadian IOUCentral.ca is now online again, but with limited functionality. That means that currently no loan listing and bidding is possible.

From the website:

Why Is IOU Central Operating With Limited Functionalities?
IOU Central is now operating with limited functionality while we resolve a regulatory matter. IOU Central is acting in a very new area. We are the first in Canada, although similar models are operating under similar regulatory environments in the US and the UK. We are modeled on those innovative enterprises. We are committed to working with all the relevant regulatory bodies in order for us to continue to offer this service to borrowers and lenders. We will take all measures necessary to ensure we are working in full compliance with all regulations.

When Will IOU Central Be Fully Operational?
We will notify all our users by email when the site is fully operational. If you are not already a user, you may register with us and we will notify you by email when the site is fully operational.

 

How Fairrates’ problems became IOU Central’s headstart

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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)

IOU central launches p2p lending in Canada

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IOU central launched the first active p2p lending service in Canada today. Borrowers can request loans from 1,000 to 25,000 CAN$ and select a term between 1 and 36 months. IOU central allows the borrower to specify a minimum amount at which he will accept the loan, should it not fully fund in the 2 weeks listing duration. IOU Central pulls the TransRisk credit score of the borrower, provided by Transunion Canada. According to the press release, lenders can expect to earn interest rates between 5 and 25 percent.

Borrowers pay a closing fee ranging from 1 to 3 percent depending on their credit score. Lenders pay an annual servicing fee of 0.5 percent of the open principal balance. Only Canadian residents can borrow or lend. The borrower needs to have a Trans union credit score.

Borrowers may have several loans, but the total outstanding principal may not exceed 25,000 CAN$.

Lenders earn interest on deposited money (bank prime rate minus 2.5%). Individuals may lend up to 5 million CAN$. Corporations may lend up to 50 million CAN$. Minimum bid amount is 25 CAN$.

Studying the team of IOU Central I noticed Robert Bialek (VP Technology) and Arkadiusz Hajduk (Product Manager), which were the founders of FairRates.dk, a p2p lending service in Denmark, which now is part of IOU Central. An assumption would be that IOU Central acquired (or merged with) the company, to gain the knowledge and experience made.

The IOU Central launch did beat Communitylend in being first in the Canadian market. Communitylend has long announced to launch a Canadian peer to peer lending service, but has not launched yet. 

To discuss IOU central, the lending or borrowing experience or to ask questions on the service you can use Wiseclerk's IOU Central forums.

(Link)

Canadian CommunityLend receives $2.5M VC funding

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CommunitylendCommunityLend.com, which strives to be the first peer to peer lending service launching in Canada, has secured 2.5 million dollar venture capital. Furthermore CommunityLend announced winning Barry Campbell, former MP and Secretary to the Minister of Finance and Jim Jones, CEO of GMAC Residential Capital as additional directors.

In an email Co-Founder and CTO Colin Henderson told P2P-Banking.com: "… We have relaunched our site, as we move towards launch in early 08.  The key aspects of this milestone for us, is securing our funding, appointment of our management team, and appointing our Board of Directors. From here we will move towards launch in early 08. "

Quoted from the CommunityLend website:

Share in the Rewards of Investing in People

The unsecured consumer loan marketplace in Canada exceeds $100 Billion in volume every year and generates interest payments on those loans exceeding $15 Billion annually. By definition, “unsecured” loans are often small loans used for purposes like funding a wedding or paying off high interest credit card debt and for which the lender has not taken security to support the loan.

Today in Canada, this very profitable industry is also a very closed industry, with only a handful of major companies involved. This means that a very small list of banks and credit cards companies are literally today the sole beneficiaries of one of this country’s most profitable industries.

CommunityLend intends to democratize lending in Canada by opening up this billion dollar industry to other Lenders interested in participating. Share the wealth, we like to say!

 

CommunityLend to offer p2p lending in Canada

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CommunityLend.com has announced the start of p2p lending in Canada on the site in fall 2007 enabling person to person lending without a bank as the middlemen, thereby eliminating banking fees. It promises lenders higher returns and borrowers lower interest rates and flexible payment options on loans. It aims to 'revolutionize the way lending works in Canada'. 

Earlier it will launch a working pre-view which allow users to test drive the site without using real money. CommunityLend expects useful user feedback during this work preview which it plans to use to enhance the site until the launch date.

CommunityLend is driven by an impressive team which includes Michael Garrity (Founder and President), ex-Bank of Montreal exec and BankWatch blogger Colin Henderson and John Philip Green, currently Director of Engineering at Affinity Labs and Co-Founder of of Savvica and Rapleaf.

CommunityLend profits as it can pick the best form the existing models (Prosper, Zopa). It will not just replicate one site. Few is known about the plans, but the announcement states that Community Lend will include auctions and groups (as does Prosper) as well as selectable paypack periods (as does Zopa).

Sources: p2p-kredite.com and others

P.S.: If you blog about this a link back here would be appreciated. Thank you!

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Communitylend preview