Lenddo Sells Microloans in Philippines, Eyes Expansion to World’s Emerging Middle Class
As a serial tech entrepreneur, Jeffrey Stewart has spent a lot of time working with outsourcing companies in developing countries, such as the Philippines. And he was always struck by a common complaint he heard from his workers in those countries. “They couldn’t access loans,” Stewart says. So earlier this year, he and fellow entrepreneur Richard Eldridge founded Lenddo, a New York-based company that seeks to administer microloans to working middle-class folks in the developing world. The Philippines became their first market, and they doled out their first loan in March.
Lenddo is anything but a bank, however. It’s actually more of a matchmaker for borrowers and lenders, with a platform that relies heavily on social media. There’s a reason for that: People in developing countries don’t trust traditional lenders, Stewart says. But they do trust Facebook. “We believed social dynamics could create a good environment for lending.”
Here’s how it works: Lenddo invites people to sign up for the site. Members can then invite co-workers and acquaintances to join, and connect with them on the site by asking them to be their “Lenddo friend.” The more friends they amass, the more points they earn towards their Lenddo reputation score—a metric Lenddo uses to determine a borrower’s credit-worthiness. Reputation, therefore, becomes a substitute for the traditional credit score, which doesn’t exist in the developing world, Stewart says.
Stewart and Eldridge hit on their business model by studying lending behaviors over the last thousand or so years. The ability to get a loan, Stewart notes, “used to be about your standing in the community. You went to church to find out whether someone was a good borrower. Then sometime in the ’40s or ’50s we moved away from that. What social networks have done is … Next Page »
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