06/11/2020 by Wendy Gallagher 0 Comments
A Future of Finance case study: How peer-to-peer lending platform StepLadder raised money, built its platform and went to market
A FUTURE OF FINANCE CASE STUDY
Thursday May 6 2021, 14.00 - 15.00 UK time
StepLadder is a fintech start-up currently embarked on a crowd-funding campaign to fuel its growth as a peer-to-peer borrowing and lending platform for first-time buyers. The company is currently growing its membership by 13 per cent a month and already planning to extend its techniques and technology beyond the housing market. Join the founders at our Future of Finance Case Study at 14.00 London time on Thursday May 6 to find out how they raised the money and built the market, and whether their peer-to-peer platform could help your business grow too.
Not every innovation is a novelty. In fact, one way innovation works is by doing the same things more quickly at lower cost. And what one ingenious start-up has done is rediscover the building societies of Georgian and Victorian England. As their name suggests, building societies were originally clubs of like-minded people that saved to build houses for their members, and wound themselves up once every member was housed.
StepLadder, which officially launched in January 2019, is a modern version of this. It is a peer-to-peer lending platform that matches first-time buyers into “circles” whose members commit to pay a fixed sum every month towards the deposit on their first house. If 20 people save £500 a month, they save £10,000 a month between them. And what StepLadder does is allocate that sum to one member of the circle every month. The allocations continue every month until every member of the circle has received their £10,000.
The obvious riposte is: why not save £500 a month yourself? The answer is that it would take a single saver 20 months to save £10,000, while a random allocation from a “circle” could arrive as early as the first month. Only one member has to wait as long as it would take them to save the same sum themselves. Better still, being a member of a circle imposes a sense of obligation to other members. What StepLadder really provides to members of its circles is the discipline to save.
What it offers other users and investors is a technology that makes peer-to-peer borrowing and lending scalable. A platform built for first-time buyers in the United Kingdom is already serving a large market. Its technology and credit risk management techniques are tested in a highly regulated, legally sophisticated and financially developed market. And the cost of making additional copies of the platform, and reconfiguring them for new markets, is low.
Established banks, challenger banks and digital wallet and payments service providers can add peer-to-peer lending and borrowing capabilities to their repertoire simply by licensing a copy of the technology. And the new markets the platform serves are not restricted to housing either. A peer-to-peer lending platform can be adapted to accelerate the purchase not just of houses but of anything, from a mobile phone to a sofa to a college education to a motor car to Peloton bike.
Providing the platform for others to find the lenders and the savers and do the work is a route to faster – and more profitable – growth. Though StepLadder has raised venture capital (through Seedcamp and the BBVA Anthemis Venture Partnership) the company is funding the next stage of growth via an equity offering on the Seedrs crowdfunding platform.
Crowdfunding platforms have been around so long that it is easy to forget that they too are part of the peer-to-peer promise of FinTech. That allows StepLadder to stay true to its personality even when raising funds. Likewise, StepLadder is not a bank– instead, every member borrows from every other member – and its revenue model hinges not on taking transaction fees from lenders or borrowers but from the mortgage lenders, surveyors and solicitors that choose to work with members of its circles.
To learn more about how StepLadder developed its personality and its business, and raised the funding to grow, join our Future of Finance Case Study at 14.00 London time on 21 April. Founders Lucy Mullins and Matthew Addison will both be there to tell their story and answer your questions. You can register for the online discussion here. Among the topics we will discussing are:
- Who are the main users of Stepladder circles?
- How do circles work?
- How are members of circles credit-checked?
- What is the optimum duration of a peer-to-peer circle?
- What happens when members get into arrears?
- How does Stepladder recruit members?
- What are the pros and cons of VC funding?
- What are the pros and cons of crowd funding?
- How is Stepladder regulated?
- Which markets look most attractive for expansion?
Matt Addison CEO and Co-Founder at StepLadder https://www.linkedin.com/in/matthew-addison-stepla...
Lucy Mullins Co-Founder at StepLadder https://www.linkedin.com/in/lucy-mullins-4b991a29/
Hosted and Moderated by by Dominic Hobson Co-Founder at Future of Finance https://www.linkedin.com/in/dominic-hobson-49b8222...
For more information please contact Wendy Gallagher on firstname.lastname@example.org