Shortfalls in Lending and Investing Platforms
And How DropDeck Ties it Together
Investing and lending platforms have revolutionized the ways that venture capitalists, lenders, funders, advisors, angel investors, and how people with many other titles do their work. By it via providing indexable lists, credit scoring, or a place to conduct a transaction, they have been providing the startup field with a plethora of tools to help it grow.
What are lending and investing platforms?
We have compiled a list of many of the lending platforms out there, but we, by no means, want to assume that this list is entirely comprehensive and conclusive. For this section, we would like to focus on the differences between the available platforms so that the overlap becomes apparent enough that we can show how DropDeck unifies experiences from both platforms using one dynamical interface.
These platforms provide a website interface for those sending or seeking funds through a typical loan-based process where interest is paid on top of the principle of the initial loan amount. Some examples of such entities are: Banks (any that provide loans); Lending Club; Upstart; Funding Circle; Lufax; Funding Societies; Innoven Capital; Crowdo; Hero Fin Corp; Prosper; We Lend; China Rapid Finance; Loan Ranger; Finaccel; Avant; and Phoenix Lending. Even though these can be grouped in general as available lending platforms, they do differ in less obvious ways such as the services they provide and how they provide said services.
Similar to the lending platforms, we will provide a list of available investing platforms that differ within the context of investing, but fit into the overall category of financing platforms to serve as an illustration of DropDeck’s potential. Investing platforms focus on some sort of ownership, product, service, or token with growth potential as an incentive for investors to be attracted to fund their company. Our list of example investing platforms online includes: Crunchbase; Mattermark; CB Insights; Pitchbook; Angel List; Funderbeam; Crowdcube; Seedrs; Syndicate Room; Funders Club; Seed Invest; BnkToTheFuture; Deal Matrix; Oddup; F6S; Gust; and Venture 360.
The fundamental differences between the lending platforms and investing platforms is in the users and companies seeking funds. The intention of the investor with respect to how they expect their return is a determining factor. Those who have specific payback requirements, like a percentage of the borrowed money that was given for a specific purpose, over a certain period of time, and paid back in regular increments, is conducive to the experience offered by the lending platforms. However if the funding is for a more generalized purposed and has payback by means of its value, or an amount of ownership in the company, then one would be seeking the services provided by investing platforms.
It is apparent that although these platforms differ in terms of who, precisely, will be using the them, and it may have, in the past, served to differentiate these two services by having two separate providers, but DropDeck has found a way to fill the gaps by sticking all of the possibilities together in one place. In the following section, we will discuss how the differences that we are given all wind up getting solved by one unified mechanism — the DropDeck platform.
Provisions of using these online platforms
Lending Platforms Provisions Summary
Among the 16 provided lending platforms, investors and companies alike will have to have a more detailed look when making an appropriate choice of a company in which it should invest. In summary, nine of the listed platforms offer business loans; most, 14, offer loans without collateral; nine offer innovative techniques for developing and applying credits scores; seven offer retail investments; and only one offers lending via cryptocurrency.
Investing Platforms Provisions Summary
The 18 aforementioned investing platforms also have intrinsic differences regarding what they provide, however, in comparison to the lending platforms, the differences are more straightforward. In summary, seven of them offer listings and data about the companies in their database; eight offer a direct ability for funders to directly fund the company; only one offers an ability for the companies to apply to startup competitions and activities; and four of the companies offer some innovative techniques for developing and applying credit scores.
This can be problematic to funders and companies seeking funds because all of the listed platforms vary in what may seem at a glance to be a minor detail, but turns out to be a big ordeal due to the fact that each of these platforms have their own communities, so the company will need to do more work in reaching more potential funders and platforms that are accepting of what they need.
Deficiencies in available platforms
A quick glance at some market data will provide a fruitful understanding of why an efficiently operating platform is immensely important to startup companies, investing, and lending.
As noted in our whitepaper, the addressable market size for failed startups is approximately $33 billion (USD). In totality, averaged across the distribution of startups, their average cost for building their Deck and finding appropriate investors exceeds $4 billion, while investors spend another $1 billion in finding, analyzing, and evaluating those Decks. These are prices of direct expenses and are not inclusive of time; if we include the opportunity cost of time spent discovering and screening these companies, the total cost to the investors exceeds $3 billion. Finally, we can include the actual invested amount that was lost due to the startup failing and that reaches approximately $24 billion. So if there is a $33 billion market in failed startups, a substantive amount of capital could be saved by improving the system in which the cash is initially distributed.
A more inclusive platform that allows for a wider range of services would also allow for a consolidation in the indexing and searching of startups. This would save a substantial amount of time and money. The time will be better spent looking at evaluations based on stronger trust, and stronger methods that utilize A.I. applications, and thus will be more accurate leading to fewer failures, and more successes. These two upsides compound together and allow for more than saving much of the previously lost $33 billion (because it would incur expansion), and will turn it into larger growth overall (because of a higher rate of success versus failure), and for the few losses that do inevitably happen, they will simply be cheaper losses due to the fact the entire process was streamlined and integrated (cheaper due to it being faster, easier, and more convenient to overall).
DropDeck’s solution to both
What could be viewed as a game of attrition, in that investors must spend billions of dollars and hundreds, or thousands, of work-hours to simply find sufficient information to make a decision, they may generally feel “already invested” and thus provoked to make moves with higher risk to combat those initial costs. In conclusion, this more inclusive platform can convert more losses to gains due to better evaluations, and the losses that do exist are minimized thus lessening the risk of potential funders.
The DropDeck ecosystem provides a platform to lenders and investors thus eliminating the potential problem of needing to use various platforms for various purposes. DropDeck provides unification across all services in both types of funding: business loans; non-collateral loans; innovative credit-scoring; retail investors; cryptocurrency investing; data provisions; direct funding; direction application to third-party events for businesses; and scoring companies based on trust. This grand unification simplifies the entire model of investing while providing the added benefit of consolidating vast amounts of information and putting it all in one place — all to just make everything a lot more simple.
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