Wednesday, October 21, 2009

Financial Start-ups Form ‘Coalition for New Credit Models’

Washington, D.C. – October 20, 2009 Amid historic regulatory reforms being considered by the new administration and lawmakers on Capitol Hill, the Coalition for New Credit Models announced its formal launch today as its representatives descended upon Washington. The Coalition is made up of non-profit, for-profit, and social enterprises using new technologies, products and business models to provide credit and information to millions of consumers and small and midsized businesses. These models serve as innovative alternatives to existing banking and financial institutions and are backed by venture and social capital to stimulate the economy, shore up financial markets, and enhance local communities. They have a special focus on bringing transparency, fairness, durability, and accountability to consumers and to our credit markets.

Chris Larsen, Chief Executive Officer and Co-founder of Prosper, America’s largest peer-to-peer lending marketplace, said, “This country has been in an energy crisis for years and we are now in a financial crisis. America’s economic future depends on new and alternative credit models being embraced in the same way green technologies are being nurtured by policy leaders to help solve the energy crisis. We are at risk of being suffocated by rigid regulations that threaten rather than embrace new technologies and models.”

The current regulatory environment has stifled many entrepreneurs in this nascent industry, and it is clearly time for new policies and fresh thinking from lawmakers and regulators. At a time when the credit crisis and recession have adversely affected consumers, families, small and mid-market businesses, Coalition members have created alternatives and innovations that will make the country less dependent on any single point of failure, or institutions that are too big or too interconnected to fail.

James Gutierrez, Chief Executive Officer of Progreso Financiero, said, "Without new innovators providing better options, millions of Americans will be left out, far away from the American Dream and stuck with predatory choices, simply because they lack established credit history. We believe government can do more to provide greater access and financial inclusion to all consumers, especially the underbanked, and help cultivate new models that do so on responsible terms."

Nicolas Perkin, President of The Receivables Exchange, said, “Now more than ever, America’s businesses should have unfettered access to alternative and reliable sources of capital to meet their business financing needs. As the economy regains momentum and technology continues to accelerate the pace at which business is conducted around the world, only innovation and an uncompromised focus on transparency and responsible financing models will drive sustainable growth and prevent businesses from being reliant on a single source of funding, and thereby exposed to unnecessary risk.”

The Coalition for New Credit Models recommends that Congress and the administration:

1. Adopt legislation classifying person-to-person lending as a consumer banking service, not a securities offering.

2. Create a liquidity fund to provide capital for companies making small consumer loans to underbanked individuals.

3. Establish a federal backstop for small and mid-sized businesses to provide access to working capital through electronic marketplaces.

4. Enable the emergence of a robust U.S.-based private company stock market to provide the exit path necessary to attract investment capital back to this country, bolstering domestic small businesses, innovation and job growth.

5. Create a Start Up Liaison at Treasury Department or within banking regulators to guide and fast-track the development of new financial products by start-up companies and organizations seeking to innovate the way consumers and businesses raise and access capital.

Background on Coalition Members:

  • Credit Karma (San Francisco, CA) is the consumer’s advocate for demystifying credit, is the only Web site that provides consumers free access to their credit score, and has a range of tools and information resources to help them monitor and manage the credit aspect of their financial health. Credit Karma’s goal is to help consumers easily digest the contents of their credit report and understand what makes up their credit score. Credit Karma works with a range of partners, including mortgage lenders, credit card providers, banks, and wireless providers.
  • Loanio, Inc. (Nanuet, NY) is an Internet-based peer-to-peer lending platform where individuals can request personal loans that are funded by other individual (or corporate) investors. Interest rates on loans are set by auction, where lenders/investors bid on loan requests that they find attractive. Through patent pending features such as Platinum Verification and Co-borrowing, Loanio’s goal is to provide access to a significantly underserved borrower market and stronger security for its lenders/investors. Loanio, Inc. suspended its business activities in November 2008 and is currently registering its securities with the SEC.
  • ProFounder (Palo Alto, CA) is a platform where entrepreneurs raise seed funding from their social network and affiliates through a legally compliant and dynamic process; and individuals invest small amounts of money in companies in exchange for ownership. ProFounder is co-founded by Jessica Jackley, Evan Reas, and Dana Mauriello. Jackley is Co-Founder and former Chief Marketing Officer of, the world's first peer-to-peer microloan website which has made almost $100M in loans since its inception at the end of 2005.
  • Progreso Financiero (Mountain View, CA) is the leading provider of consumer friendly loans to underbanked Hispanic families in America. Progreso has developed a proprietary credit score based on over 25,000 initial loans, and in turn, can lend money at fair rates and lower losses to families who lack FICO scores and traditional banking relationships. Progreso's mission is to help its customers build a credit history and fully realize the American Dream, and to provide ground floor innovation that helps move the underbanked up the financial services ladder. With over 100 employees and $26 million in venture capital, Progreso is rapidly expanding throughout the Southwest, and aims to serve over 1 million underbanked families with credit, debit, savings and other mainstream products by 2012.
  • Prosper (San Francisco, CA) is America’s largest peer-to-peer lending marketplace. Since its launch in February 2006, over 850,000 Americans have joined the community and $180 million in loans have been facilitated. Prosper is an auction-based platform, where borrowers set the maximum rate they’re willing to pay, and individual and institution investors bid at or below the rate set by the borrower. In October 2008, Prosper halted its marketplace and entered a quiet period as part of the process of registering with the SEC. Nine months later, in July 2009, Prosper’s registration statement with the SEC was declared effective. Notes offered by Prospectus.
  • The Receivables Exchange (New Orleans, LA) is a real-time, online competitive marketplace for accounts receivable that gives small and medium-sized businesses the ability to generate cash flow quickly and as competitively as possible. The Receivables Exchange allows businesses to sell their receivables to a global network of institutional investors and access working capital in as little as 24 hours. When you consider the typical remittance term of 48 days, or as much as 180 days, The Receivables Exchange is a welcome financial tool for small and mid-sized businesses.
  • SecondMarket (New York, NY) is the largest centralized marketplace for illiquid assets, including auction-rate securities, bankruptcy claims, collateralized debt obligations, limited partnership interests, private company stock, residential and commercial mortgage-backed securities, warrants/restricted securities in public companies, and whole loans. SecondMarket’s online trading platform has more than 4,000 participants, including global financial institutions, hedge funds, private equity firms, mutual funds, corporations and other institutional and accredited investors that collectively manage over $1 trillion in assets available for investment.

Wednesday, October 14, 2009

Some news from SmartHippo

We covered SmartHippo back during Finovate Startup, but wanted to update our readers on some exciting developments at their firm. Please see the attached press releases for more info.

SmartHippo names former LendingTree GM Lori Collins CEO
Previously grew revenues from $7 million to half a billion over seven years
SAN FRANCISCO, CA AND MONTREAL, CANADA -- October 14, 2009 -- SmartHippo,
the first web site that let consumers use the power of the community to shop for
financial products, announced today it has named Lori Collins as its new CEO.
“Weʼre very excited by Loriʼs unique experience in both the web and finance sectors,”
said Founder George Favvas, who will continue his involvement in the company as VP
Corporate Strategy. “Iʼm confident that with Lori at the helm we are well positioned for
our next phase of revenue growth.”
As General Manager of the LendingTree Exchange, Collins was responsible for sales,
relationship management, and product management for the LendingTree lender
network. She was part of the executive team which increased revenues from $7 million
to $476 million over seven years.
“SmartHippo has a very compelling business model,” Collins said. “Community-driven
product comparisons have become the norm in other industries, and Iʼm excited to be a
part of the company that is bringing these innovations to the financial space.”
Unlike intermediary web sites which match consumers with lenders based on business
relationships, SmartHippo is an open, transparent marketplace where consumers help
each other find the best financial products. They can ask questions, compare rates and
share reviews and experiences with other consumers and make a more informed
decision. Lenders and brokers participate by answering questions and posting rates,
and consumer feedback keeps them in check.
In another announcement today, SmartHippo announced it is expanding into the
Spanish market with the launch of in partnership with Financialred

About SmartHippo is the first-ever website that uses the power of community to help
consumers find the best mortgage rates and save money. SmartHippo allows any
individual to post information and feedback on the rate they received, and to compare
rates with other members of the community with similar profiles. Members of
SmartHippo can see real rates reported by real consumers, and sort through banks
based on feedback posted by other members of the community. The company is
privately held with offices in San Francisco and Montreal.
George Favvas
Founder and VP Corporate Strategy
george (at)
(514) 242-5730
Media advisory: Lori Collins will be delivering the closing keynote at Startup Camp
Montreal tomorrow, October 15th. The event takes place at the Society for Arts and
Technology, 1195 Saint-Laurent boulevard, Montreal from 6pm to 11pm. Admission is
free. For info see:


SmartHippo expands into Spain with launch of
Joint venture with Financialred Networks poised to become leading player in market
SAN FRANCISCO, CA and MADRID, SPAIN -- October 14, 2009 -- SmartHippo, the
first web site that let consumers use the power of the community to shop for financial
products, announced today a strategic partnership with Financialred Networks which will
see the launch of in the Spanish market.
Under the terms of the agreement, Financialred has acquired an exclusive license to
market the SmartHippo brand and technology platform in Spain.
“The web finance space is in its infancy in Spain and we believe we have an opportunity
to rapidly establish HipoListo as the dominant player in a market of 50 million
consumers” said Jesus Perez, Chief Strategy Officer of FinancialRed. “By leveraging
the SmartHippo platform we were able to significantly reduce our time to market.”
As part of the partnership, SmartHippo will manage the software platform while
Financialred focuses on localization and sales and marketing. As of todayʼs launch, mortgage vertical, with other verticals planned for early 2010, he added.
“Weʼre thrilled to be a partner in bringing the first social financial comparison shopping
engine to Spain,” said Lori Collins, CEO of SmartHippo. “Our partnership with
Financialred signifies our commitment to work with and drive profitability to media
companies with existing user bases.”
Separately today, SmartHippo announced that Collins, formerly GM at LendingTree, has
joined the company as its new CEO, taking over from George Favvas, who will remain
onboard as Founder and VP Corporate Strategy.

About SmartHippo is the first-ever website that uses the power of community to help
consumers find the best mortgage rates and save money. SmartHippo allows any
individual to post information and feedback on the rate they received, and to compare
rates with other members of the community with similar profiles. Members of
SmartHippo can see real rates reported by real consumers, and sort through banks
based on feedback posted by other members of the community. The company is
privately held with offices in San Francisco and Montreal.

Tuesday, October 6, 2009


The following is a press release from People Capital, posted exactly as sent to Prosper Lending Review.

New Web Tool Allows Student and College Planning Consultants to Compare College Options

NEW YORK – People Capital (, a Web resource for college students to obtain student loans via an online lending exchange, has launched the Human Capital Score™ College Planning Tool ( The new Web tool is designed for students (and college planning consultants) who want to use the Human Capital Score to compare multiple projected income scenarios based on colleges they are considering attending.

The Human Capital Score College Planning Tool is a Web based college scenario planner that is targeted for students who are planning to go to college and need help measuring the economic value of various schools they are considering. Namely, the tool can help students decide whether it is worth the money spent to go to one school as compared to another, based on the income potential from the academic choices they make. The planning tool works when a user inputs key data about themselves (GPA, SAT scores, planned college major) and the various schools they are considering. The tool then calculates the data and presents a graph and chart documenting results of several scenarios (up to five maximum) of the user’s potential income 10 years after graduation, allowing the user to compare the results between colleges she is considering. This tool can also be used by college planning consultants and high school guidance counselors with a professional version available for their consulting needs.

The Human Capital Score College Planning Tool is predicated on the Human Capital Score, a Web calculator developed and launched earlier this year by People Capital. Built on research developed at The Wharton School of the University of Pennsylvania Insurance Department, the Human Capital Score helps students assess their student loan risk by using academic merit data such as GPA, standardized test scores, college and major, along with traditional demographics data and metrics, to give insight into their future earnings potential.

“Since launching the Human Capital Score earlier this year, we have received feedback from users who found the tool helpful and insightful, but thought that the ability to compare various college scenarios would be an added benefit,” said Thomas Shelton, founder and CEO of People Capital. “The Human Capital Score College Planning Tool now adds this level of functionality; as students can use it to create multiple scenarios to help them better evaluate their loan risk, future potential earning income and possibly the college or university they will spend the next several years at.”

The Human Capital Score College Planning Tool is available in three tiers of pricing:

· $19.95 – Compare and contrast up to two scenarios at a time, for one time use only

· $29.95 – Compare and contrast up to five scenarios at a time, for one time use only

· $199.95 – Compare and contrast up to five scenarios at a time for six months with unlimited usage

About People Capital

People Capital ( was founded by a team of world-class talent with backgrounds in student loans, consumer finance, credit ratings and new media in order to develop the next generation of credit risk management and funding for student loans. Its lending platform allows students to finance their college educations through improved access to private student loans. Its patent-pending Human Capital Score™ ( measures students without credit history by using academic and credit data to model future individual income levels, and therefore their future ability to pay off the loan.

Monday, September 21, 2009

Green Sherpa Flexes For Competition With Mint/Quicken

A few days ago I had the opportunity to talk with Erin Lozano, the COO and founder of Green Sherpa about how the company has changed since the launch a year ago.

Green Sherpa ended its Beta program in August and launched its full subscription services. They now support more than 10,000 financial institutions and in addition to those already serviced by Yodlee, also can manually establish connections to their customers’ banks—a service the competition isn’t offering. They’ve also added more cash-flow planning tools and goal-tracking tools for users and are getting ready to debut a few more new tools in the next 60 days (though I don’t get to report on those...yet.).

Green Sherpa is one of the only hybrid aggregating services as they can combine automated aggregation as well as set up individual connections. Green Sherpa worked to establish additional layers of security beyond what is offered by their aggregation provider. They’re also one of just a handful of software-as-a-service (SaaS) or “cloud” software providers that is charging a fee for an online-only product in the personal financial management field.

The company is lean and mean, with six employees and a ridiculously low breakeven point of only 5,000 subscribers, but their personal touch and low price (US $7.95 a month or $5.95 for pre-paying a year) sets them apart from other companies who provide software. Greens Sherpa is striving to provide its customers with an intimate snapshot of their own financial progress and future, not data on a dashboard.

Green Sherpa eliminates the manual data of Excel and Quicken, but also allows customers to download their own data to save, archive and manipulate, even if they choose to cancel the service.

The company also has an active advisory team including former leadership from Commission Junction.

Green Sherpa rolled out an affiliate program this month, which is fully operated on their site, not served through an ad company.

I asked Lozano about how the marketplace has changed since we spoke last in March. She explained that Mint and Quicken have released features that are becoming more forward-looking, and hence now more competing in the same space. Following the recent announcement that Mint would be moving under the Intuit brand, Lozano surprisingly said this is good news to her. “We think that this validates the web based personal financial management space which will be good for all remaining players in the market, including Green Sherpa” she said via email in a follow up conversation.

One thing that hasn’t changed is Green Sherpa’s commitment to a valuable forward-looking product, zero conflict of interest (not advertising/selling to subscribers) and complete privacy to users.

Green Sherpa has changed in one way—temporarily suspending subscriptions, giving users a 90 day free trial period to use the service. Existing subscribers will receive an additional 90 days free. The official company announcement to subscribers is expected out this week.

Jessica Ward is a freelance writer in Seattle, writing on family and personal finance. You can also find her online at or

Tuesday, September 15, 2009

A Note on Note Trading

Peer to Peer lending has been around via and for a while now, but another option that is less prominent is after-market note trading on these sites.

There are many advantages to after-market note trading. For sellers, this means having some liquidity in your investment—being able to cash out before the loan fully matures—shortening a three year loan into one or two years or even less time.

For buyers, the advantage is being able to see some repayment history on the loan. If you’re unsure about jumping into peer to peer loans, this might be a good way to go.

Also, for prospective buyers on Prosper, a note is a loan that has already funded, so you don’t have to wait for an auction or funding period. Your note will be earning interest and expecting payment much faster. uses Folio Investing as their note trading partner, and charges sellers a 1% transaction fee. uses Foliofn and also charges a 1% seller fee.

Prospective note buyers should remember that they’re not circumnavigating the investor account maintenance fees at 1% at both Prosper and Lending Club—regardless of if you bought the loan at issuance or the note later in the after-market, if the money is owed to you, the maintenance fees are charged to you.

Also, at Prosper the note trading platform only applies to notes issued after July 13th of 2009. At Lending Club your notes can be a little older if you want to re-sell them. The Lending Club platform extends to notes issued back to October 12, 2008.

Overall, the note trading process is fairly smooth. You usually have to digitally “sign” an agreement with the trading platform but otherwise the sites are smoothly integrated. You don’t have to open another account or fund another account—your funds will move fairly seamlessly between your Prosper or Lending Club and the designated note trading platform account whether you’re buying or selling the notes.

If you've done any note trading, I'd love to hear your feedback and comments. I haven't tried this system myself yet, but may consider it in the future.

Jessica Ward is a freelance writer based in Seattle. She writes on family, business and money.

Monday, September 14, 2009

Mint Selling to Intuit for $170 Million, the leader in online personal financial management has just signed an agreement to be purchased by Intuit (makers of Quicken, QuickBooks and TurboTax) for an amount disclosed as “approximately $170 Million” in an Intuit press release.

Intuit’s Quicken Online is a competing free service to and users of both services may be wondering “will Quicken Online/Mint remain free?”

Josh Smith, of Wallet Pop cleared that up for everyone in a story released today, quoting Scott Gulbransen of Intuit who assures users that both services are expected to remain free. CEO and founder Aaron Patzer will be joining Intuit as the General Manager of the Personal Finance group where he will be responsible for “online, desktop and mobile consumer personal finance offerings” for the company.

Patzer reported on the blog that the sale is good news for Mint users who will gain from Intuit’s size and status as a leader in financial software citing that “by joining Intuit, we can accelerate our ability to add more fantastic new product functionality into both Quicken and Mint."

The transaction is expected to close by the end of the year.

Since launching two years ago, has garnered 1.5 million users and is tracking $200 billion in transactions according to an Intuit press release.

Intuit was founded in 1983 and had an annual revenue of $3.2 billion in FY 2009. They have 7,800 employees worldwide according to their press release.

Intuit Press Release blog Post

Jessica Ward is a freelance writer based in Seattle. She also blogs at The Penny-Wi$e Family and

Tuesday, September 1, 2009

Lending Club Reaches Another Milestone

Lending Club began issuing loans in September 2007, and has just reached the $50 million loaned mark. Loan demand has surpassed $500 million (yes, folks, that’s half a billion—we’re almost talking government sized dollars here!).

Underwriting has kept Lending Club to issuing just the $50 million in loans, and investors have received a 9.64% net annualized returns (that’s doing the math after fees and bad loans are taken out).

This does make Lending Club the “biggest fish” in the P2P sea right now.

So far in August, Lending Club has issued $3.1 million in loans.

Author's note: This post replaces a post from yesterday which included a factual error. Apologies for the duplication.

Friday, August 28, 2009

Many Changes at Mint.Com

Earlier this month received another $14 million in series C funding. This round was led by DAG Ventures, and includes Founders Fund. Already investing in Mint are Benchmark Capital, Shasta Ventures, First Round Capital, and Sherpalo Ventures. doesn’t disclose it’s revenues, but Aaron Patzer, CEO told TechCrunch earlier this month that revenue is up over eight times year over year.

Mint has 1.4 Million registered users, tracking $175 billion in transactions and $47 billion in assets.

Also this month, Mint has offered a new improved Web site to its users. Improvements include better graphing and trending tools as well as the ability to budget for income as well as expenses—which will better help users to project cash flow. Mint now has sixteen graphs that can show you the way around your personal finances.

The budgeting tools have also improved to include an “everything else” category (showing your spending in non-budgeted categories). Also, amounts can be rolled over in Mint from one month to the next. Refreshing indeed!

I’m especially enjoying the new traffic-signal type alert system that shows my budget categories as “All Good,” “Slow Down” and “Over Budget,” in the appropriate red, yellow or green, but responses on the Mint Blog are showing that many readers want the old “bar system” graphic returned (yes, it is helpful, so I can’t blame them).

The iPhone app came out a while ago, but there isn’t one yet for us Blackberry users, I’m hoping that will come soon.

Also, Mint is wisely beginning to utilize some of the vast amounts of consumer data that is available. Since membership is anonymous Mint users like myself don’t have to feel outraged, but companies can study consumerism trends from the data accumulated by Mint. This use will likely help to keep Mint free to users, and profitable, the elusive golden egg that seems to prove so troublesome for so many of these internet finance startups.

Jessica Ward is a freelance writer based in Seattle, Wash. She writes on money, family and life at The Pennywise Family and DebtKid.

Thursday, August 27, 2009

Spoke too soon?

I've had several corrections today about my earlier post today regarding Loanio.

I took their recent S-1 Amendment showing that they'd sold the code for cash as an exit strategy but some readers think that this is a reasonable strategy to maintain operations during a quiet period. Fair enough, I just can't understand what would happen when the quiet period ends, and they don't have the original code. Then what? Perhaps they've got a coder would could write a new one? Perhaps sell the entire operations? There are more opportunities than I'd initally estimated, and thanks for filling me in.

That said, that's my problem, and not Loanio's, and I don't want to lead anyone astray, so I'll retract my suspicions that they may be gone. Sadly, the quiet period leaves them unable to let us know what really is going on, so we'll just have to wait and keep watching.

My apologies for the hype/suspicions, and thanks to all the dedicated readers who took the time to set me straight either in comments or via email.


Another One Bites The Dust. Loanio Has Sold Code for Cash.

American peer-to-peer lending platform Loanio appears to be vanishing as well.

The company, which originally launched in October 2008 has only issued seven loans, one if which is now thirty days past due.

The latest amendment to their S-1 filing (August 14) discloses that they’ve permanently licensed their source code to an unnamed corporation. The code was sold for $375,000, of which $100,000 was the down payment, and the remainder will be paid over 18 months. The blog notes that the Loanio engineering team has shrunk from five full time engineers to three part timers since their last filing with the SEC.
Jessica Ward is a freelance writer and blogger from Seattle. She blogs on family and frugality at The Pennywise Family and DebtKid.