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January 16th, 2013

Raising Venture Capital: Advices for Online Lenders

Business Intelligence, Decision Automation, Industry Trends, by azelenskaya.



The online lending market is seeing impressive growth. The investment community is keen to meet forward thinking online lenders armed with an advanced technological platform to support borrower pre-screening, underwriting and debt collection.

But even if you’ve come up with most innovative and inspiring concept for an online financing solution, you still have to pay close attention to the following factors in order to effectively approach potential investors.

Identify Your Secret Weapon

Find your way to differentiate your online financing services against competition. For instance, you may employ a sophisticated and highly intellectual loan calculator, innovatively use third party data for borrower evaluation, present enticing features for premium users or provide best user experience through simple and intuitive loan application forms. Numerous startup success stories have proven that the best way to come up with a unique business idea is to start with a problem, preferably with problems that are experienced by yourself or people close to you.

Estimate Your Budget with Maximum Accuracy

Thoroughly calculate costs of marketing as well as tax and legislative expenses. Maximize your technological investments by selecting the most robust loan application processing platform and by using in-house scorecards.

Team Power

The team factor is one of the strongest success factors considered by the investors. According to the experience of Smartmarket.net founders, the essence of a successful startup is not an idea but the ability to bring it to reality.

Investors will evaluate to which extent people in your team are capable of bringing your idea to life. Make sure to accurately select your team, establish a corporate culture and develop an efficient working environment.

PR Plan

You might be convinced that Forbes, Techcrunch, Inc, GigaOM will be excited to spread a word about your business, but reality might prove different.

It is wiser to test and identify the best PR strategy ahead of launch. Set up a “launching soon” webpage, solicit interest and promote your project among niche bloggers. The launching soon website will further prove your determination to make your business a reality in the eyes of the investment community.

What Are Investors Expecting from Founders

Emerging technologies and new business models spur novel forms of online lending businesses. The largest UK peer-to-peer communities Zopa, RateSetter and Funding Circle have already lent GBP 218 million, GBP 29 million and GBP 41 million respectively.

As you have seen, it is much more easy to solicit investments for your project if you understand investors’ expectation towards founders. In his article “What We Look for in Founders” Paul Graham outlines the portrait of an ideal candidate for venture capital. The most important qualities in the eyes of investment community are determination, flexibility, imagination, naughtiness and strong relationship between the founders. Be genuine, rational and accurate, and success will come at your feet!

Author: Anna Zelenskaya | Google+

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