LEAN LAUNCHPAD     Unleash the Freedom * Save for the Future                         * Invest with Impact       A social c...
BUSINESS CANVAS – DAY 1                                  •   Develop/Manage Platform                                      ...
Hypothesis 1: Affinity GroupsHypothesis                              Experiment                         ResultPeople will ...
Hypothesis 3: Yield Chasers Hypothesis                            Experiment                          Result Yield investo...
Hypothesis 5: Marketing ChannelsHypothesis                           Experiment                     ResultIs internet a vi...
Customer Archetypes - Borrowers              Tom          Jane           John                                             ...
Economics of the Business Model      Customer Acquisition Cost (CAC) for                                                  ...
BUSINESS CANVAS – DAY 2                                                                                                   ...
BUSINESS CANVAS – DAY 3                                                                                                   ...
BUSINESS CANVAS – DAY 4                                                                                                   ...
BUSINESS CANVAS – DAY 5                                                                                                   ...
Iterate: Next Steps• Research regulations surrounding online peer to peer  lending platforms• Build an MVP• In real life r...
Appendix
Competitor LandscapeCompetitors         Type of borrower           Profit       ROI for lnvestors     Interest paid?      ...
TARGET MARKET - USTarget Addressable Market                                                             Served Available M...
How it Works             About Us                                            Are you struggling to keep up with yourInvest...
PROTOTYPE – WEBSITE                                           How it Works                 About Us                  Hi th...
Competitor Landscape Diagram                                           Kiva                                      Microlend...
Channels       Borrowers                           “Social” Investors       Non-profit organizations            Online: em...
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Team l business model_canvas_day5_v4_rajesh

  1. 1. LEAN LAUNCHPAD Unleash the Freedom * Save for the Future * Invest with Impact A social cause peer-to-peer lending platform that matches indebted, underprivileged consumers with investors to help them pay off their credit card debt Day 1 Day 2 Day 3 Day 4 Total Customers 16 15 12 (customer) 3 (customer) 50 Interviewed 1 (partner) 2 (partners) 1 (channel)Rajesh Koppula * Francesco Pagliarello * Vippy Wong * Paul Niemczyk * Alexis Kwong Alvarez EMBA Global AE EMBA Global AE EMBA Global Asia EMBA NY EMBA Global Asia CONFIDENTIAL
  2. 2. BUSINESS CANVAS – DAY 1 • Develop/Manage Platform Borrowers • Promotion & Marketing Borrowers •Loan Amount - <$500 to $10,000+• Credit Bureaus , Banks, • Risk Management 1.Social/Affinity groups to help Trust Accounts them get out of Consumer Debt. •Credit Type – Underserved, • Reporting Poor, Fair, Good, Excellent• Internet Search Engines 2.Debt Education and Money • Borrower/Investor Analytic saving tools (Later on) •Social Segment – Location, & Education Tools(Later• Investment Funds Relationship with Borrowers, Profession, Education, Age, Stage) School, Groups & Associations. Investors and Partners.• Regulatory bodies – SEC, OCC, etc Investors •Investor Type – Individual, • Physical :IT Infrastructure- Institutional Servers, Software, Datawarehouses , Office & Investors •Return Type – Impact, equipment Maximum Yield 1.Social/Affinity groups to • Intellectual : Brand, help their network come out •Social Segment – Location, Proprietary Knowledge, of Debt 1.Social Media & Groups Profession, Education, Age, Patents and Copyrights, Customer database Alumni, Groups & 2.ROI or Impact Investment 2.Blogs Associations. opportunities • Human resources – Risk, 3.Direct Marketing Technology, Marketing, •Investment Amount - $500 Operations, Legal & 4.Affiliate Marketing $10,000+ Compliance • Percent of Loan Amount • Fixed : Development and Launching Costs , Infrastructure , • Margin on Returns Accounting systems, Trust Accounts, Legal & Marketing • Subscription Fee • Variable : Customer Data Costs , Investment, Reporting, Recovery, Marketing , Operations , Legal & Compliance. • Pay-per-use CONFIDENTIAL • Referrals/Affiliate revenue
  3. 3. Hypothesis 1: Affinity GroupsHypothesis Experiment ResultPeople will want to help others in • Interviewed people around • Mixed result in borrowing /their social or affinity groups (e.g. the Columbia University area investing within a networkuniversity alums) come out of • Focus on underprivilegedcredit card debt segmentSpecial affinity amongst ethnic • Interviewed people in ethnic • Yescommunities areas such as China Town and • Mixed on required returns Little Italy • Phone interviews with Indian and Russian communitiesHypothesis 2: Social InvestmentHypothesis Experiment ResultInvestors will be willing to help Found socially minded people and Yesunderprivileged borrowers come asked if they would accept lowerout of debt as a type of social yieldsinvestment, for lower yields thanmarket rates
  4. 4. Hypothesis 3: Yield Chasers Hypothesis Experiment Result Yield investors would be willing to Interviewed people on Wall Street No! accept a lower return for a social causeHypothesis 4: Demand from Borrowers Hypothesis Experiment Result Underprivileged borrowers know • Interviews in Harlem • 66% knew refinancing is an they can refinance their credit option cards at another rate • 42% said they would go to a bank • 50% would go to a website if they trusted it and a higher percentage would go if the rate was significantly lower
  5. 5. Hypothesis 5: Marketing ChannelsHypothesis Experiment ResultIs internet a viable option for Interviewed people in Harlem Internet is a viable option; 50%reaching target borrowers? said they would use the internet. Some suggested direct mail.Non profits are a possible channel Discussion with Robin Hood Yes but need to speak with more Foundation non profits to verify
  6. 6. Customer Archetypes - Borrowers Tom Jane John Nathan ? High Low Social Cause Customer “Story” a) Tom c) John <$35,000 family income Upper middle class with life problem 2 kids Radiologist Shop at Target and JC Penney Middle age Drives a Chevy or used Honda Has a child with cerebral palsy No college education Recently lost his job b) Jane Slipping on payments Single mom with 1-2 kids No college education
  7. 7. Economics of the Business Model Customer Acquisition Cost (CAC) for Total CACs (AdWords and Direct Mail) AdWords – Average CAC for bank to acquire credit card – CAC for Borrowers customer: $30-$80 • Assumption: $100 CAC for AdWords; $198 – Using AdWords of CPC = $1 and assuming CAC for Direct Mail conversion = 1%, CAC = $100 • Avg CAC: (100+198)/2 = $149 – Underprivileged customers loan size range $500- – CAC for Investors $3,000 Average loan size of $1,750 • Assumption: $100 for AdWords – Spread & revenue per average loan 5% = $87 – Total CAC: $249 revenue per loan – Currently not considering cross-sell or up-sell – If want to cover CAC in 12 months, we need to opportunity to borrowers generate revenue $249 per year! • LTV = one-time sale to borrower – Assume loan duration is 3 years: $249*3 = $747Revenue $87 $1,750 avg loan size, 5% spread – Total Loan Size, assuming a 5% spread • $747 / 5% = $14,940CAC $100 To achieve gross profit of 30% •  Problem: Above non-prime
  8. 8. BUSINESS CANVAS – DAY 2 Borrowers • U.S. underprivileged borrowers • Develop/Manage Platform Borrowers with low income, challenging Relationship with Borrowers, stories and high debt-to-income Investors and Partners. • Promotion & Marketing 1.Social/Affinity groups to ratios• Non-profits Underprivileged borrowers Borrowers • Loan Amount - <$500 to• Universities (focus on • Risk Management receive help from investors who • Public transportation ads $10,000+ • Credit Type – Underserved, Poor, Columbia) perceive a social cause to get • Direct mail Fair, Good, Excellent• Philanthropy • Reporting them out of Consumer Credit • Workshops through community • Social Segment – Location, Card Debt centers, churches, non’-profits, organizations booths Profession, Education, Age, School,• Credit Bureaus, Banks, • Borrower/Investor Analytic Groups & Associations & Education Tools(Later 2. Debt Education and Money Trust Accounts Stage) saving tools (Later on) Investors• Internet Search Engines Investors • Male and female college-• Investment Funds • Internet marketing educated investors seeking a• Regulatory bodies – • Direct mail social investment cause SEC, OCC, Consumer • Columbia alums, universities • Philanthropy partner Protection Agency • Investor Type – Individuals, • Physical :IT Infrastructure- Investors events Institutional Corporations Servers, Software, focused on Corporate Social Datawarehouses , Office & 1.Social/Affinity groups Give Responsibility equipment investors an opportunity to • Support from Columbia pursue a social cause by University • Intellectual : Brand, 1. Direct Marketing helping underprivileged • Return Type – Impact, Proprietary Knowledge, 2. Non-profit organizations borrowers to help their Maximum Yield Patents and Copyrights, 3. Dedicated e-commerce network come out of Debt • Social Segment – Location, Customer database 4. Point of sale Profession, Education, Age, 5.Social Media & Groups Alumni, Groups & Associations. • Human resources – Risk, 2. Reasonable ROI or Impact 6.Blogs • Investment Amount Technology, Marketing, Investment opportunities 7.Affiliate Marketing Individuals - <$500 (until trust Operations, Legal & proven) Compliance • Percent of Loan Amount • Fixed : Development and Launching Costs , Infrastructure , • Margin on Returns Accounting systems, Trust Accounts, Legal & Marketing • Subscription Fee • Variable : Customer Data Costs , Investment, Reporting, Recovery, Marketing , Operations , Legal & Compliance. • Pay-per-use CONFIDENTIAL • Referrals/Affiliate revenue
  9. 9. BUSINESS CANVAS – DAY 3 Borrowers • U.S. underprivileged borrowers • Develop/Manage Platform Borrowers with low income, challenging Relationship with Borrowers, stories and high debt-to-income Investors and Partners. • Promotion & Marketing 1.Social/Affinity groups to ratios• Non-profits Underprivileged borrowers Borrowers • Loan Amount - <$500 to• Universities (focus on • Risk Management receive help from investors who • Public transportation ads $10,000+ • Credit Type – Underserved, Poor, Columbia) perceive a social cause to get • Direct mail Fair, Good, Excellent• Philanthropy • Reporting them out of Consumer Credit • Workshops through community • Social Segment – Location, Card Debt centers, churches, non’-profits, organizations booths Profession, Education, Age, School,• Credit Bureaus, Banks, • Borrower/Investor Analytic Groups & Associations & Education Tools(Later 2. Debt Education and Money Trust Accounts Stage) saving tools (Later on) Investors• Internet Search Engines Investors • Male and female college-• Investment Funds • Internet marketing educated investors seeking a• Regulatory bodies – • Direct mail social investment cause SEC, OCC, Consumer • Columbia alums, universities • Philanthropy partner Protection Agency • Investor Type – Individuals, • Physical :IT Infrastructure- Investors events Institutional Corporations Servers, Software, focused on Corporate Social Datawarehouses , Office & 1.Social/Affinity groups Give Responsibility equipment investors an opportunity to • Support from Columbia pursue a social cause by University • Intellectual : Brand, 1. Direct Marketing helping underprivileged • Return Type – Impact, Proprietary Knowledge, 2. Non-profit organizations borrowers to help their Maximum Yield Patents and Copyrights, 3. Dedicated e-commerce network come out of Debt • Social Segment – Location, Customer database 4. Point of sale Profession, Education, Age, 5.Social Media & Groups Alumni, Groups & Associations. • Human resources – Risk, 2. Reasonable ROI or Impact 6.Blogs • Investment Amount Technology, Marketing, Investment opportunities 7.Affiliate Marketing Individuals - <$500 (until trust Operations, Legal & proven) Compliance • Percent of Loan Amount • Fixed : Development and Launching Costs , Infrastructure , • Margin on Returns Accounting systems, Trust Accounts, Legal & Marketing • Subscription Fee • Variable : Customer Data Costs , Investment, Reporting, Recovery, Marketing , Operations , Legal & Compliance. • Pay-per-use CONFIDENTIAL • Referrals/Affiliate revenue
  10. 10. BUSINESS CANVAS – DAY 4 Borrowers • U.S. urban underprivileged Borrowers borrowers • Public transportation ads - with low income (or) Borrowers • Direct mail - challenging stories and or • Workshops through community - high debt-to-income ratios • Develop/Manage Platform centers, churches, non’-profits,• Non-profits 1.Underprivileged and “Problem • Credit Type • Promotion & Marketing booths Story” borrowers receive help - Underserved - Robin Hood(if • Risk Management - Poor interests align • Reporting from investors who perceive a Investors - Fair • social cause to get them out of • Internet marketing• Community Borrower/Investor Analytic - Lower Middle Class (Avoid Credit Card Debt with lower Organizations & Education Tools(Later interest rate loans • Direct mail Highest Credit Risk) Stage) -Neighborhood Trust • Philanthropy partner - Upper Middle Class• Department of events Consumer Affairs Investors• Universities (focus on • Male and predominantly Columbia) female• Philanthropy 1.Non Profit • college-educated investors organizations Investors 2.Community Organizations seeking a social investment • Physical :IT Infrastructure- 3.Ads and Publicity:free• Credit Bureaus, Banks, cause Servers, Software, 4.Public Transportation • Columbia alums, Trust Accounts, Datawarehouses , Office & 1.Give investors an 5.Community Papers 6.Loan Counselling Centers • Other universities alums Internet Search Engines equipment opportunity to pursue a social 7.Grocery -Family Dollar, Walmart,etc • Investor Type – Individuals,• Investment Funds cause by helping 8.Online Marketing:Email Marketing, Corporations focused on CSR• Regulatory bodies – • Intellectual : Brand, underprivileged and “Problem 9. Web Searches,Adwords,blogs & forums •Casual investors SEC, OCC, Consumer Proprietary Knowledge, Story” borrowers come out of 10.Partnerships with finance advisors • Bank products users Patents and Copyrights, Protection Agency Debt 1.Direct Marketing (deposits, CDs) Customer database 2.Non-profit organizations • Ethnic investors with ethnic 2. Higher ROI than traditional 3.Dedicated e-commerce affiliation (on hold) • Human resources – Risk, investment products 4.Point of sale • Investment Amount Technology, Marketing, 5.Press (WSJ) Individuals - <$500 (until trust Operations, Legal & 6.Key influencers, word of mouth proven) Compliance • Fixed : Development and Launching Costs , Infrastructure , Accounting systems, Trust Accounts, Legal & Marketing • Percent of Loan Spread (3-5%) • Margin on Returns • Variable : Acquisition, Customer Data Costs , Investment, • Subscription Fee Reporting, Recovery, Marketing , Operations , Legal & • Pay-per-use Compliance. • Referrals/Affiliate revenue CONFIDENTIAL
  11. 11. BUSINESS CANVAS – DAY 5 Borrowers Borrowers • U.S. underprivileged borrowers • Public transportation ads - with low income (or) Borrowers • Direct mail - challenging stories or • Workshops through community - high debt-to-income ratios • Develop/Manage Platform centers, churches, non’-profits,• Non-profits 1.Underprivileged and • Credit Type • Promotion & Marketing booths “Problem Story” borrowers - Poor - Robin Hood(if • Risk Management - Fair interests align • Reporting receive help from investors who Investors perceive a social cause to get - Lower Middle Class (Avoid• Community • Borrower/Investor Analytic • Internet marketing Highest Credit Risk) them out of Credit Card Debt Organizations & Education Tools(Later with lower interest rate loans • Direct mail - Upper Middle Class Stage) -Neighborhood Trust • Philanthropy partner• Department of events Consumer Affairs Investors• Universities (focus on • Male and predominantly Columbia) female• Philanthropy 1.Non Profit • college-educated investors organizations Investors 2.Community Organizations seeking a social investment • Physical :IT Infrastructure- 3.Ads and Publicity: free• Credit Bureaus, Banks, cause Servers, Software, 4.Public Transportation • Columbia alums, Trust Accounts, Datawarehouses , Office & 1.Give investors an 5.Community Papers 6.Loan Counseling Centers • Other universities alums Internet Search Engines equipment opportunity to pursue a social 7.Grocery -Family Dollar, Walmart,etc • Investor Type – Individuals,• Investment Funds cause by helping 8.Online Marketing: Email Marketing, Corporations focused on CSR• Regulatory bodies – • Intellectual : Brand, underprivileged and 9. Web Searches, Adwords, blogs & forums •Casual investors Proprietary Knowledge, SEC, OCC, Consumer “Problem Story” borrowers 10.Partnerships with finance advisors • Bank products users Patents and Copyrights, Protection Agency come out of Debt 1.Direct Marketing (deposits, CDs) Customer database 2.Non-profit organizations • Ethnic investors with ethnic 2. Higher ROI than traditional 3.Dedicated e-commerce affiliation (on hold) • Human resources – Risk, investment products 4.Point of sale • Investment Amount Technology, Marketing, 5.Press Individuals - <$500 (until trust Operations, Legal & 6.Key influencers, word of mouth proven) Compliance • Fixed : Development and Launching Costs , Infrastructure , Accounting systems, Trust Accounts, Legal & Marketing • Loan Spread (3-5%) • Variable : Acquisition, Customer Data Costs , Investment, • Subscription Fee Reporting, Recovery, Marketing , Operations , Legal & • Referrals/Affiliate revenue Compliance. CONFIDENTIAL
  12. 12. Iterate: Next Steps• Research regulations surrounding online peer to peer lending platforms• Build an MVP• In real life research of customer acquisition costs using different marketing channels for both borrowers and investors• Continue to test customer segments, for example, social and ethnic affiliations
  13. 13. Appendix
  14. 14. Competitor LandscapeCompetitors Type of borrower Profit ROI for lnvestors Interest paid? making?Kiva Small businesses and ppl Non profit No ROI No interest paid to without access to banks lenders, only interest paid to field partners to cover OpExLending Club (LC) Prime borrowers with Profit High returns from Lower rates than banks FICO score >660. Most making 6% to 18% and credit cards stringent requirements.Prosper FICO score >640. Better Profit High returns from Lower rates than banks option for borrowers making 6% to 18% but may and credit cards than Lending Club. have higher returns due to higher risk.Lending Tree Loan broker that matches borrowers to lending institutions. Lenders pay to compete for business; borrowers don’t pay.LoanSprite Low Income, High Debt- Profit -Low/reasonable Lower rates than banks to-Income, Non-Prime, making returns due to and credit cards, segment. social cause. potentially lower than LC -Similar/higher and Prosper repayment rates
  15. 15. TARGET MARKET - USTarget Addressable Market Served Available Market• Total US Revolving Debt (98% •Non-Prime– 40%, $362.9BnCC) – $864.2 Billion.•% of households – 46.7% Served Available Market•Average CC Debt- $7,768 •Assuming 50% “Problem Story” Archetypes ->•42% population < 700 FICO “181.45Bn” LoanSprite •Assuming 0.25% Market Share in 3 years ~ $453MM •Assuming 3% -6% Gross Margin => $54.4MM – 108.8MMhttp://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/Source: FRBNY Consumer Credit Panel
  16. 16. How it Works About Us Are you struggling to keep up with yourInvest smartly in a good cause. Help low credit card payments? We offer help to income individuals to a debt free life, low income individuals with a low with reasonable return on investment. interest loan to pay off your debts. Start helping today! Get help now! PROTOTYPE – WEBSITE
  17. 17. PROTOTYPE – WEBSITE How it Works About Us Hi there, I am originally from Latvia, and I have been in the US for 5Anonymous years. I built up my debt with my credit card when my baby Jasmine was born and now I am struggling to keep up with the payments. Ifrom Queens, NY need help now since Jasmine is starting school next month. I want to be and stay debt free. $3,000 4 Years 10% Loan Amount Lender yield Sprite rating $2,300 funded, $700 left $ Help her now!
  18. 18. Competitor Landscape Diagram Kiva Microlending LoanSprite Non-profit Social cause Sub prime Low rates No credit history Sub prime Multi-national Near prime No social cause Prime borrowers Prosper Lending Club Pro borrowers Pro Investors
  19. 19. Channels Borrowers “Social” Investors Non-profit organizations Online: email marketing, web searches, blogs and Adwords Community organizations Social marketing Advertising and Publicity: free Advertising and Publicity: newspapers, public Financial pressTom transportation, community papers Loan counseling centers and [in process of testing] websites: both for profit and non-profit Grocery stores (POS), e.g. Family Dollar, Walmart, Target Online marketing: emailJane marketing, web searches, Adwords, blogs and forums Partnerships with finance advisors
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