November 24, 2013
Lenddo is the first online community in which members engage their social network to establish trustworthiness and gain access to loans and financial services. They are internet entrepreneurs who have rediscovered how to use social networks to manage risk, eliminate fraud and get credit to those who are not able to access credit.
Lenddo was founded in January 2011. The management team consists of Jeff Stewart (CEO), Dan Gertsacov (CEO, Latin America), Richard Eldridge (COO) and Naveen Agnihotri (CTO). The company has received funding of $8 Mn in 2012 through investors including Accel Partners, Blumberg Capital, Omidyar Network, iNovia Capital and Metamorphic Ventures. Lenddo recently raised a further $6 Mn in October 2013 via Kickstart Ventures, Golden Gate Ventures, Toivo Annus.
There are hundreds of thousands of people who are educated, employed, and have made it in the global economy but are unable to get credit or loans. The work of Professor Yunus who founded Grameen bank then became an example to solve this problem of providing credit or loans. Prof Yunus showed that if one involves the community in the demand generation side effects the users ability to borrow. If the users are involved in the underwriting process where people know each other then one can make better, safer and risk free loans. Most importantly is one involves the user in the collections process where the friends can track an user down for payment, it brings about a social enforcement mechanism that is extremely powerful. Today over $50 billion is linked at the bottom of the pyramid using this social lending technique.
If this technique works at the bottom of the pyramid, this should work for the emerging economy middle class who have 10 times more borrowing power. Lenddo had figured out a way to automatically extract character and to measure it on a global scale to determine if the borrower will be able to repay the loan he has borrowed.
Lenddo started out with a 100 people who they had done business with. It let them connect using social networks and to prove who they were. They invited friends who wanted to be references and some of those ended up wanting a loan. Some joined in through Facebook and the others through the Android app. From the 100 users that Lenddo started out with the company has now expanded to hundreds of thousands of users.
This is a video showing how Lenddo works:
Emerging markets have an increasingly important middle class who are still excluded from traditional financial systems, but technology can redefine how this market accesses financial services. Digital inclusion in the financial services space is as much a social responsibility as it is a rapidly growing global opportunity, and Lenddo’s proprietary algorithms and deep market insight are breaking down barriers. We are excited to help the team with our experience and network as they expand in the region and beyond said Minette Navarrete, President, Kickstart Ventures Inc.
When thinking about the future of finance one should look to the media - crowd empowered groups changed the media industry. Similarly crowd empowered groups could change the financial services industry with companies like Lenddo.