What does explain them is at the heart of their business and that of many other fin-tech lenders: prediction and collection.
Tech-savvy lenders are uniquely positioned to fill this void by leveraging technology and data to reduce the costs of lending, while improving the borrowing experience for Americans using these products.
And, in the case of some of the more tech-savvy lenders, like On Deck and CANN, Lendio has built a set of services and API tools that integrate with their underwriting platforms.
Most of those customers, especially in the U.S. (more specifically Los Angeles) where the company is making its initial push, either have to pay cash up front for their smartphone, or they are forced to turn to the tech equivalent of payday lenders who require up to 500% interest on their loans to buy a smartphone.
The sector also needs to match the quick and easy, hi-tech offerings of other lenders, he added.
As we at Bessemer Venture Partners have evaluated these businesses as potential venture investments over the past several years, we struggled across a few key fronts when trying to justify the lofty valuations of these tech-enabled, non-bank lenders.
According to the company's website its automated valuation model (AVM) is used by 16 of the top 20 UK mortgage lenders, with the tech being used to generate more than 20M property valuations per year.
And hipsters and artisans aren't the only ones moving in: firms such as Blue Cross/Blue Shield; Quicken Loans, an online-mortgage lender; GalaxE.Solutions, a tech firm; and the insurance company Title Source have also recently arrived.
Here's another indicator: The stock of Silicon Valley Bancshares — a niche lender to the tech industry both locally and in other areas of the U.S. — collapsed from a high of $39 to below $15.
"We've always said that we'd like Funding Circle to be a listed business, in line with the things that we care about deeply like transparency and being a tech platform versus being a lender ourselves," he said then.
"We've always said that we'd like Funding Circle to be a listed business, in line with the things that we care about deeply like transparency and being a tech platform versus being a lender ourselves".
