[1StopFunding]

http://www.pitch.com/news/article/20...d-the-money-go

[Funder Mark]

I wonder if this is part of the reason Everest is stopping their longer term deals, because they know the good time is ending...

[Cfairbank]

I wonder if this is part of the reason Everest is stopping their longer term deals, because they know the good time is ending...

Thanks for sharing Cheryl.

re: Everest: As I understood it, their average transaction (9 months ago) was 5 months 1.41, with a double dip (so really 3.5 months on deals that renewed). On a short term/high rate product, you can "underwrite" (or better stated, price) to a reasonably high degree on a pool basis, and they made strong returns operating that way. But that's not how longer term, lower rate underwriting works -- you actually need to underwrite each deal on the viability of the business, not just their likelihood to make payments for 4 months, and offer a product that won't put the business underwater. It's very hard to apply a high risk underwriting/approval model to a longer term, lower rate product -- but makes sense that they tried it given what's coming on the regulatory side (rate caps aren't coming, but proving "product suitability", "ability to pay", or some other form of debt trap prevention absolutely is), and going longer term/lower rate was the only way to make that company "sellable".

Someone on this site said that they were getting slaughtered on that product, and frankly, it's not surprising. And the % of ACTUAL revenue they take when they stack us is frequently absolutely nuts, so really would be interested to know what underwriting model they are applying to the longer term product....

[Michael I]

Thanks for sharing Cheryl.

re: Everest: As I understood it, their average transaction (9 months ago) was 5 months 1.41, with a double dip (so really 3.5 months on deals that renewed). On a short term/high rate product, you can "underwrite" (or better stated, price) to a reasonably high degree on a pool basis, and they made strong returns operating that way. But that's not how longer term, lower rate underwriting works -- you actually need to underwrite each deal on the viability of the business, not just their likelihood to make payments for 4 months, and offer a product that won't put the business underwater. It's very hard to apply a high risk underwriting/approval model to a longer term, lower rate product -- but makes sense that they tried it given what's coming on the regulatory side (rate caps aren't coming, but proving "product suitability", "ability to pay", or some other form of debt trap prevention absolutely is), and going longer term/lower rate was the only way to make that company "sellable".

Someone on this site said that they were getting slaughtered on that product, and frankly, it's not surprising. And the % of ACTUAL revenue they take when they stack us is frequently absolutely nuts, so really would be interested to know what underwriting model they are applying to the longer term product....

Don't buy it . I have a couple and performing great . Now they did just add coj to all contracts . So not sure

[Cfairbank]

Don't buy it . I have a couple and performing great . Now they did just add coj to all contracts . So not sure

Think about what the default rate needs to be on a 1.41 product to be profitable on a cohort basis, double digit defaults you are perfectly fine -- the goal there is just pushing through as much volume as you can. 1.15x rate (at a year long that's upper 20s effective APR), you need to be very good at evaluating risk, especially if you are also sending out 15% up front in commissions.

[Cfairbank]

Think about what the default rate needs to be on a 1.41 product to be profitable on a cohort basis, double digit defaults you are perfectly fine -- the goal there is just pushing through as much volume as you can. 1.15x rate (at a year long that's upper 20s effective APR), you need to be very good at evaluating risk, especially if you are also sending out 15% up front in commissions.

You have early defaults on even a relatively small portion of a pool at lower rates, you will be underwater, not to mention covering funding or operating costs.

[mcaguru]

Article Quoted "EProdigy was incorporated in New York on December 31, 2014, just months before it received the $100 million investment"

My guess is they were approved for a line up to 100M i think it may be misleading that they got 100M infusion into company as it states in the article ... I've been wrong before....

[fundmcas]

isn't eprodigy the same company as capital stack?

[The Chosen One]

isn't eprodigy the same company as capital stack?

Yep.