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LendingHub Australia Original Pitchdeck from Sep 2008


Published on was one of Australia's first P2P (peer to peer) lenders launched in 2009. This is the original pitchdeck by Ivan Mantelli who co-founded the venture.

Published in: Economy & Finance
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LendingHub Australia Original Pitchdeck from Sep 2008

  1. 1. LendingHub Australia Original Pitchdeck Ivan Mantelli LendingHub Overview September 2008
  2. 2. Background to this pitchdeck This presentation was written in September 2008 for the LendingHub peer to peer lending platform pitch to interested partners. LendingHub launched in 2009 with its own proprietary platform and showed early promise with both lenders and borrowers active on the market. LendingHub was one of Australia’s first P2P lenders, however it was too early to market and was at a time that Australian investors could not see a future in online or P2P loans. This document is provided purely for information purposes by Ivan Mantelli (original co-founder and CEO).
  3. 3. Lending Hub - Private & Confidential 3 Executive Summary • Lending Hub is a novel online distribution platform for plain vanilla personal loans with no direct (online) competitors yet in the Australian market • The current sub-prime credit crunch is creating an opportunity for new entrants • The challenge is to create an online community with a clear first mover advantage and liquidity of listings and user activity • Educating consumers will be central to our messaging theme as this will drive trust and familiarity • Our marketing approach will be principally focussed around friend & family, low cost, organic activities that are intended to create a true grass roots or viral marketing campaign • We need to generate a buzz around the peer to peer concept that leads to news articles and blog comments that leads to user interest which will drive a great deal of free traffic • The majority of our marketing initiatives will be online and low cost with a view to creating a large footprint (from links back from other sites) and ensuring that the site is search engine optimised (SEO) • Some paid online advertising and paid print advertising will be used sparingly with an emphasis on ROI given the high cost of these initiatives and likely low initial conversion rate
  4. 4. Lending Hub - Private & Confidential 4 Table of contents 1. Concept Overview 2. Positioning 3. Marketing strategy
  5. 5. 1. Concept overview
  6. 6. Lending Hub - Private & Confidential 6 What is Peer to Peer Lending? • Peer to peer lending is when individuals lend funds to other individual – No banks are involved but a broker usually manages the lender-to-borrower relationship – Interest rates are usually lower for the borrower – Low credit grade borrowers are able to access funds – The marketplace sets the ‘right’ risk premium – Investors can help “mates” and access an alternative high-yield product • This concept has been proven in US and UK – There are several players in US and EU that have quickly established a loan book and client base (, and Virgin Money in US and in EU) • The current sub-prime credit crunch is creating an opportunity for new entrants – Banks are increasing interest rates and are very selective in their lending – Non-bank lenders find it difficult to fund new loans • There is no true online lending model yet in Australia – Banks and non-bank lenders still use manual documents and phone/fax systems to originate loans
  7. 7. Lending Hub - Private & Confidential 7 How does it work? Lenders Borrower The marketplace that brings together lenders and borrowers: •Loan listing •Bidding •Settlement •Communication •Documentation •Loan Management Each lender funds the loan, e.g. $100 each Lending Hub collects funds and transfers $500 to the borrower Borrower repays loan each month Lending Hub sends proceed to lenders (net of fees) Platform • The platform will provide all the services required to originate, settle and manage a loan
  8. 8. Lending Hub - Private & Confidential 8 The personal loan is a large growing market in Australia The personal lending market has grown at a CAGR of 8.3% from FY03 to FY07 Source: Australian Bureau of Statistics Australian personal loan market size and growth 2 0 2 2 2 2 2 0 2 0 2 1 2 5 2 9 3 2 3 6 4 3 4 6 5 2 5 3 5 8 6 9 7 9 7 3 7 5 8 0 0 10 20 30 40 50 60 70 80 90 FY8 8 FY8 9 FY9 0 FY9 1 FY9 2 FY9 3 FY9 4 FY9 5 FY9 6 FY9 7 FY9 8 FY9 9 FY0 0 FY0 1 FY0 2 FY0 3 FY0 4 FY0 5 FY0 6 FY0 7 LoanAmount($bn) Personal finance
  9. 9. Lending Hub - Private & Confidential 9 The initial target market will be on the debt consolidation, auto finance and revolving personal loan categories The target market size is approximately $35bn Personal Loans by Category (Australia) ($000s) Source: Australian Bureau of Statistics Fixed (Other), 9,750,529, 12% Fixed (Unsecured Homes), 484,838, 1% Fixed (Debt consolidation), 3,952,495, 5% Fixed (Residential land), 4,926,137, 6% Fixed (Cars), 9,581,634, 12 % Revolving (Unsecured), 21,910,957, 28% Revolving (Secured), 21,093,211, 26% Fixed (Refinancing), 8,361,343, 10%
  10. 10. 2. Positioning
  11. 11. Lending Hub - Private & Confidential 11 There are three key challenges for building a P2P platform in Australia FIRST TO MARKET CLEAR VALUE PROPOSITION GAIN CTITICAL MASS • A compelling USP is required for both borrowers and lenders • The site must offer a simple and intuitive user interface that is ‘friendlier’ than the banks • Clear messaging combined with education is critical to user uptake • Achieving a first to market leadership position is critical for digital businesses • None of the potential local or international contenders are developed yet • Targeted launch date in April 2008 will give us a good chance of becoming the #1 • Achieving liquidity of borrowers and lenders will create an effective marketplace • Our core objective is to create onsite activity and repeat lending/borrowing activity • Achieving the critical mass of listings will provide a significant barrier to entry
  12. 12. Lending Hub - Private & Confidential 12 Where fits into the Australian personal loan market VirtualPhysical Lower rates Higher rates rates Business Model Wizard Virgin Money Regional banks Major banks BankWest CreditMart (online credit card broker) Auto Financiers GE Money Shops Pawn brokers Lending hub Target Market Flexirent Store Cards iGrin PeerMint (not live) Fosik
  13. 13. Lending Hub - Private & Confidential 13 Online competitors Players Current loan portfolio size Launch date Quality of site Financial strength Comments iGrin $170,000 Oct 2007 (Not fully functional) Low Low • Highly manual process • One man show • Low quality site Fosik Lending NA Early 2008 (not fully functional) Low/Medium Low • Only a small component of the site is live • lending platform is not live Peer Mint Not live Not live Not live Not live • Not live There are no serious P2P players in Australia
  14. 14. 3. Marketing strategy
  15. 15. Lending Hub - Private & Confidential 15 There is a dual target audience (borrowers and lenders) that require a tailored marketing approach Borrowers Lenders ‘Self-promotion’ tools will allow borrowers to market their loans to potential lenders in particular friends and family Borrowers are potentially easier to attract and to get excited about the P2P concept Lenders are harder to target and more difficult to attract • Large base of potential borrowers • Many borrowers dislike banks • Often willing to shop around • Will expend effort to get a loan • Looking for alternative to banks • Preference for simple products • Exhibit a typical ‘consumer’ profile • Smaller base of potential lenders • Are somewhat risk averse • Need to be convinced of investment merits • Currently have investment alternatives • Looking to maximise returns • Are often relatively sophisticated • Exhibit an ‘investor’ profile • Friends & Family • Debt consolidation • No credit cards history … ie students • Auto and vehicles financing • Small businesses start up funding • Home improvements • Military • Institutionalise friends and family lending • Professional money lenders • Small investors … share trade types investors • Ethnic communities with an entrepreneurial culture e.g. Chinese • Banks
  16. 16. Lending Hub - Private & Confidential 16 Building trust with members is critical to creating an active online P2P community • Successful online marketplaces such as eBay, Drive and Seek have created an online environment where users are comfortable transacting goods and funds • Building trust is of even greater importance to a peer to peer lending platform as users are potentially exposed to: – Uncertainty around identity and honesty of the counterparty – Submission of personal information and bank account details – Potential for investors to lose funds through borrower defaults • A safe and secure environment that engenders trust will be built based upon: – User education and ease of use (online tutorials, simple layouts etc) – Enterprise standard security and encryption features to prevent hackers and security breaches – Member (and in particular borrower) identity verification, credit checking and income verification – Backend reporting systems to ensure detection of fraudulent activities – A transparent system where members can see bidding activity, Q&As and report suspect listings Creating a safe and secure trading platform is the basis for user trust which should transfer into higher user activity and member referrals
  17. 17. Lending Hub - Private & Confidential 17 Initially a common theme of ‘better rates’ and ‘safety and security’ will apply Message 1. Cheaper / Better Rates 2. Convenient to Use 3. Quick Decisions 4. Easy Terms 5. Pitch your own cause Message 1. Better Interest rates 2. Safe to use 3. Help Others 4. Diversify Portfolio 5. Convenient to Use Features ▪ Online presence, no Banks ▪ Simple loan product ▪ Auction based system provides best rate possible ▪ Maximise your self-promotion opportunities with text and photos ▪ Flexible Loan Terms based on credit rating Lender Features ▪Online platform, no Banks ▪Alternative asset class provides better returns than shares ▪Compliance systems and controls ▪ Success Stories, past returns and customer testimonials ▪ Flexibility in choosing risk and return profile ▪ Auction based system lets you choose your risk premium BorrowersLenders
  18. 18. Lending Hub - Private & Confidential 18 The marketing strategy revolves mainly around online initiatives supported by some low cost offline initiatives Search Engine Optimisation Online Offline Build Online Footprint Partnerships Free Press Releases Paid Online Marketing High natural (free) keyword rankings on Google Link backs from search engines, blogs, videos, articles and other websites Online and offline partnerships to generate referrals and funding Create a buzz with journalists to get free PR in traditional print, TV and radio media Pay Per Click (PPC) advertising via Google which has a direct traffic – cost relationship Drives traffic however will not necessarily lead to a higher user base Critical to ‘getting found’ on the web when users search through Google/Yahoo
  19. 19. Lending Hub - Private & Confidential 19 The initiatives are principally low cost, ‘grass roots’ activities that we can action in-house 1. Optimise web pages, headers, URLs and text (SEO) to be easily readable by search engines 2. Be registered on the main search engines and ensure we are listed 3. Post comments and links on other relevant financial information blogs 4. Use the Lending Hub blog which positions us as an authority, costs little and greats great link backs 5. Create video interviews that can be broadcast on youtube and are more visually interactive 6. Google AdWords advertising to generate traffic once the site is search engine optimised 7. Create niche groups such as ‘Say NO to BANKS’ on facebook, Linked-in, etc 1. Promote through trade events such as the Investor Expo 2. Get articles written on us about the revolution of p2p lending, social lending and the threat to banks 3. Approach particular groups that can form partnerships and referals 4. Highly targeted ads in print products such as Smart Investor Online Offline By targeting a lower profile set of initiatives we expect to create a buzz amongst a niche group of online consumers that converts into an active user base
  20. 20. Lending Hub - Private & Confidential 20 We will provide our members with the tools and incentives to create referrals • Successful online communities generate significant word-of-mouth referrals and grow through ‘viral’ marketing (e.g. Facebook) • As is now common to most online social communities we will provide tools and systems for member referrals, emailing, watching loans and bookmarking pages (e.g. Digg) • In addition a Customer Testimonial tool/application will let users submit a testimonial about Lending Hub in return for a small reward (value $25-$50) • Feedback from users will be operated on a reward for positive contribution basis • The Group feature will have a rating system to indicate the relative success and positive loan experiences (measured by repayments and minimal defaults) • Allowing users to post videos should provide a more interactive borrowing and lending experience (to be explored) • Subscribe and RSS tools allow investors to be instantly notified of all new listing
  21. 21. Lending Hub - Private & Confidential 21 Pursue a local strategy similar to GE personal loans • A national marketing approach will be pursued for online activities however there are opportunities to target specific locations initially that will allow us to reach our target demographic • Sydney to be pursued initially followed by Melbourne • Western suburbs have a number of working class families with high leverage seeking to refinance or consolidate multiple loans • Eastern suburbs and north shore have large numbers of Sydney’s professionals
  22. 22. Lending Hub - Private & Confidential 22 Partnerships and affiliates can be leveraged to drive site traffic • Building partnerships and affiliate networks both online and offline can generate significant referrals, trust and create opportunities for new products and features • Initially (3-6 months) targeted partnerships will be will online businesses in related or adjacent markets – Emerging business news and information websites that are keen to extend their reach e.g. – Online financial service suppliers such as payment facilitators and credit information providers e.g. POLi – Social networks such as Facebook and mySpace and business networks such as • There are a number of online personal finance websites that attract both potential lenders and borrowers – and (loan comparison sites) – (personal financial information) – and (trading discussion forums) • Generating funding liquidity is critical and longer-term we expect to explore the ability to build relationships or distribution arrangement with Credit Unions and Building Societies • Relationships with other offline businesses would enable us to build leads not dependant on Google and typical online initiatives – Master franchise type businesses that are assisting franchise applicants seek funding – Home loan brokers – Auto dealers – Financial planners
  23. 23. Appendix
  24. 24. Lending Hub - Private & Confidential 24 Our current SEO, blog and linking activities have already allowed is to capture the top position for several P2P related keywords Current Keyword Positions on Google Lending Hub is already ranked #1 on Google Australia for the keyword ‘Social Lending’ social lending #1 P2p loans #1 and #2 P2P lending #2 and #3 peer to peer lending #2 and #3 person to person loan #4 borrow and lend #4 and #5 borrow online #9
  25. 25. Lending Hub - Private & Confidential 25 Developing links from independent blogs and business news sites will generate relevant traffic to Lending Hub Reference Blogs Australian Blogs & Financial News • [p2p blog aggregator] • [blog] • • • • [news] • • • • • • • • • • http://blog.prosper/com Currently Lending Hub already has links from a number of P2P lending blogs achieved through relevant content and articles on the Lending Hub blog and providing other blog sites with articles on the Australian P2P industry
  26. 26. Lending Hub - Private & Confidential 26 Sample paid Google ad campaigns to attract Borrowers… CAMPAIGNS • Pay Student Loans • Consolidate Credit Card payments • Fast and Cheap Personal Loans • Fix the house • Buy new furniture, car or afford an holiday Credit Card Debts Consolidate all your debts with a cheap loan Easy Student Loans Range of personal loans from the community No Exit Fees! Apply Now Cheap Personal Loans Reduce your debts fast. Peer to Peer Lending in Australia now Pitch Your Cause.. Don’t have the money? Ger a fast cheap loan! Loan from Community Peer to peer loans $500-$2000, apply now P2P Loans Cheaper than banks Just do it online! Apply 24/7
  27. 27. Lending Hub - Private & Confidential 27 Sample paid Google ad campaigns to attract Lenders… CAMPAIGNS • Diversify Portfolio, with a new instrument • Target Expats - Australians living abroad wanting to benefit from boom in Australia • Create a social impact by lending to the cause that matters to you • Earn better interest Rates than the bank • Trusted site with innovative features Diversify Portfolio - new hedging instrument - NO BANKS Involved Peer to Peer lending in Australia Invest with better rates with no extra risk! Earn More and make a social impact on fellow Australians Get superior returns from Peer to Peer Lending. Find out more. Australian Citizen? Want to help your fellow country men and earn better Interest rates than US/UK? Peer to Peer Lending in Australia now Better Interest Rates Safe and Reliable p2p lending Invest Now!
  28. 28. Lending Hub - Private & Confidential 28 A Facebook application provides a gateway for consumers to (the US based) Lending Club in the US uses a Facebook app that delivers about 25 referrals per day to their P2P site ➢ Facebook has a different open source application system than all the other social websites ➢ It will probably be necessary to build a separate application for the OpenSocial websites such as Google and mySpace