Lenddo Sells Microloans in Philippines, Eyes Expansion to World’s Emerging Middle Class
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made it practical for lending to go back to its roots.” Prospective borrowers are still evaluated on financial factors such as annual income, but Lenddo also takes into account their connections when deciding who should be awarded loans. Lenddo administers the loans, which are provided by financial institutions in the local markets.
This summer has provided Lenddo with its biggest audience yet in the financial-services industry, thanks to the FinTech Innovation Lab, a 12-week program sponsored by the New York City Investment Fund and Accenture. Lenddo was one of 90 startups that applied for the program, and was one of only six to win a spot. During the program, Stewart and his co-workers gathered advice from experts at 10 global finance giants, including Bank of America, Barclays Capital, and Goldman Sachs. “We got to harden our plan against some of the brightest minds in financial services,” says Stewart, whose previous experience included founding online printing company Mimeo.com.
Lenddo also got $25,000 in seed funding from the FinTech program. Stewart plans to go looking for an institutional funding round next year.
In the meantime, Stewart and his staff of 11 are boosting their platform and talking to lenders, with the goal of expanding to four or five new countries in the coming year. Indonesia, Brazil, India, and China are high on the wish list, Stewart says. “A lot of people are moving into the middle classes in those countries,” he says.
Stewart says more than a thousand people have signed up for Lenddo—most of whom are working on building up their reputation score rather than immediately applying for loans. When he was pitching an audience of VCs at the end of the FinTech program on July 22, Stewart described the site as “a Farmville-like app where people can interact with their credit reputations.” It’s not like credit agencies in the U.S., which make it difficult for everyday consumers to track their credit scores and get information about what’s influencing them, Stewart says. “We tried to make it fun,” he says. “Our members can see their credit information in real time and understand how to influence it. We don’t look at a couple of transactions they made in the past. We look at their entire social graph.”
According to a running tally on the company’s site, Lenddo’s membership is growing 19 percent a week, and its loan portfolio is growing 25 percent a week. The average loan size is 20,840 Philippine pesos, or $493. About half the loans are for education, with most of the remainder going towards health care, relocations, and home improvements. “There are people in school who would not be in school if it were not for Lenddo,” Stewart says. “We feel good about that.” Lenddo’s revenues come from fees it charges the lenders, Stewart says.
It’s too early to predict whether Lenddo’s social-based selection process will really distinguish the good borrowers from the likely-to-default ones. But Stewart’s optimism is evident in his propensity to quote Mark Zuckerberg, Facebook’s CEO. “Zuckerberg says social media will change every industry,” Stewart says. “I believe it will change financial services.”