Revolution in P2P Finance enabling consumers and businesses to raise finance through their social circles
Business overview
| Location | London, United Kingdom |
|---|---|
| Social media | |
| Website | www.flender.co.uk |
| Sectors | Finance & Payments Digital Mixed B2B/B2C |
| Company number | 08479948 |
| Incorporation date | 9 Apr 2013 |
Idea
Introduction
From funding friends to backing businesses, Flender will be a revolutionary social finance platform transforming the way we borrow and lend.
Flender will enable businesses and consumers to borrow money through their existing networks of friends, family and customers. While this market exists, Flender aims to be first to formalise and automate it.
Businesses will leverage their fan base and strengthen loyalty; while friends become part of each others’ success. Flender intends to do all this by offering:
• Trust through social network connections.
• Ability for both borrowers and lenders to choose their own interest rates.
• Seamless mobile user experience.
• Both for consumer and business lending.
Intended impact
Flender intends to offer established small businesses an innovative new way to access finance by leveraging their loyal customer base. In the consumer space, Flender will facilitate and formalise an existing and large market of social lending across the UK and Ireland.
We aim to do this via a unique combination of bringing trust through social networks, giving all users the ability to set their own interest rates, and all via a seamless mobile user experience.
Flender is not a traditional P2P platform with an anonymous marketplace. Instead, we believe that it will help businesses create lasting bonds with customers, and for consumers to reach through their existing networks and be part of each other’s success. And at the same time, underpinned with legal contracts created by Flender between borrowers and lenders.
Substantial accomplishments to date
After nearly two years in development, we expect that the Flender mobile platform will be ready for soft launch with customers in the end of 2016 and the native iOS and Android apps will follow in Q1 2017.
Flender is authorised and regulated by the Financial Conduct Authority under Registration Number 657861.
While regulatory framework is a long and expensive process, it is a large barrier-to-entry for any potential competitors.
Monetisation strategy
Business model.
Flender will generate income by taking an interest-margin between the borrower and lender interest rates.
For facilitating loans to businesses, Flender charges a success fee.
Launch
We expect to facilitate £0.5m of loans with our launch customers (see video for testimonials).
Use of proceeds
We will spend investment on.
1- Key hires, including a direct sales team and in-house software developers.
2- Marketing, including online targeting and above-the-line advertising.
3- Product development, specifically native iOS and Android versions plus roadmap features for all channels.
Funding history.
We raised £50,000 in 2015 from outside investors and an additional £200,000 in June 2016.
Market
Target market
We have two target markets:
CONSUMERS.
Formalising social lending:
Flender is not creating a new marketplace - we aim to be the first to formalise an existing lending market between family and friends which our commissioned research shows is worth £2.9bn p.a. in the UK.
Lending among family and friends is cumbersome and unreliable, there are no contracts, scheduled payments or debt collection procedures in place.
Flender will formalise and simplify this.
In the USA, lenders such as CommonBond and SoFi have shown that where there is a connection between borrower and lender, default rates are close to 0%.
BUSINESS / SMEs.
Flender will offer a new way to access finance:
The first step for a young business is often to borrow from friends and family. Through Flender the business will raise money at the rate they can afford and the lender could receive a good return on their money with the reassurance of a legal framework underpinning the transaction.
Where an established business has a loyal customer base, it can use Flender to leverage the existing relationship with its customers by inviting them to share in its success.
Customers also get to enjoy expanded / upgraded facilities along with their return.
Characteristics of target market
Existing Peer-to-Peer market size:
• £2.5bn p.a. (excluding social lending).
• 12,000 individuals and 900 businesses per month currently use existing P2P finance.
• Growing at 15% per quarter.
PLUS - Size of Family and Friends lending Market:
• Value of lending among family, friends and connections in the UK estimated to be worth and additional £2.9b p.a. (Based on independent research performed in September 2016).
TOTAL Size:
• Addressable Flender market therefore: c. £5.4bn p.a.
(Independent survey information is provided by Flender along with pitch).
Marketing strategy
Soft-Launch end 2016.
We find that business owners with good networks and customer loyalty are good launch customers and have identified sample businesses to launch with us.
We will soft-launch our web platform in late 2016 with a focus on Business/SME customers, some of whom can be seen in our pitch video.
Successful business owners are usually looking to expand or improve their premises and they have a loyal customer base to leverage instead of borrowing from banks, making them ideal for Flender.
Targeted marketing.
Our initial focus on the hospitality sector means we can target the sector both online and in person. In addition, we intend to leverage the publicity these businesses create for Flender by directly marketing to the customers of those businesses and converting them from a C2B user into a C2C user.
• C2B = Consumer to Business (i.e. someone willing to lend to a business).
Converted to:
• C2C = Consumer to Consumer (i.e. someone willing to lend to other individuals).
Rapid development and App launch.
The web platform soft launch will enable rapid user feedback based on real world usage and the experience we gain from this will feed into our native apps (iOS and Android) which we anticipate launching in February 2017.
App Launch
When our apps launch we will begin marketing to consumers in the UK and Ireland. The target audience for the Flender consumer user is the Millennial generation who are:
• Early adopters.
• Prefer to do everything by smartphone.
• Are open about their life online; including borrowing, dating and sharing most aspects of their life publicly.
We will also target the users of today’s P2P finance platforms who are borrowing for:
Education.
Home Improvements.
Vehicles.
Debt Consolidation.
Holidays.
Weddings.
Our routes to consumers are:
• Organic – SEO.
• Promotional partnerships (we are already in discussions with some of the above categories, namely Education and Weddings.)
• AdWords / Search Ads.
Competition strategy
We intend for Flender to be the first ‘social’ Peer-to-Peer lending platform, and the only platform that automates and formalises borrowing and lending through existing networks of family, friends and customers.
• Borrowers and Lenders set their own interest rate.
• No barriers such as the requirement to reach 100% of a funding goal or lose all funding.
• Users can share their campaign with either their private network only, or be visible to wider audience.
• Mobile-first approach plus omni-channel User Experience .
• Ability to launch in multiple countries.
Most P2P platforms rely on raising additional funds and include institutional money to fund their deals. On Flender, established businesses will leverage the existing bonds between them and their customers by asking them to participate in raising money.
As well as receiving funding, the business strengthens relationships and loyalty. Customers can earn a return and they enjoy an enhanced experience through upgraded facilities or improved services. Everyone wins.
We have invested in the compliance required to launch in the UK and Ireland, with scope to continue this growth and we believe that this will be a significant barrier to entry for any market entrants following Flender.
Traditional 'first generation' Peer-to-Peer platforms include:
Zopa - https://www.zopa.com
Funding circle - https://www.fundingcircle.com
RateSetter - https://www.ratesetter.com
Exit Strategy.
We are focused on achieving a market-leading position for Flender in 5 European countries, building value and cash reserves. We believe that potential acquirers include competitors, banks, payment processors, and card issuers.
Recent market events:
ThinCats: Acquired by ESF Capital (Dec ’15)
Funding Circle: $150m raise at $1bn val. (Apr '15).
Lending Club: $5.4bn IPO (Dec '14 ).
Prosper: $165m raise at a $1.7bn val. (Apr '15).
Avant: $325m raise at $1bn val. (Sep '15).
SoFi: $1bn raise at $3.5bn val. (Sep '15).
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