[Chambo]

I watched an interview of the CEO and he stated that "their default is in the single digits". Amazing for a lender in such a risky space. Makes me think their secret sauce is made of ACH debiting and some wacky algo.

Or...he blatantly lied. Wouldn't be the first time an MCA has lied about their default rates or renewal rates.

Of course, if they go public...then they have to produce these rates every three months for all the world to see. No more posturing on TV

[Ryan Shiroky]

Or...he blatantly lied. Wouldn't be the first time an MCA has lied about their default rates or renewal rates.

Of course, if they go public...then they have to produce these rates every three months for all the world to see. No more posturing on TV

apparently i repped you too much lately or i have to rep other ppls stuff first... but if i could, i would have repped this comment...

[memorifa]

Hi gentlemen,

Indeed, Ondeck could/maybe have straight-up lied.
I like to think that given that some sophisticated investors like Google Ventures piled in Ondeck, they must have some nice looking numbers which passed their stringent due diligence.

I still think it is important to understand how good ACH daily debits are at reducing Credit Risk.
MCAVeteran made a great point. A dip in sales (which you cant avoid) will make you restructure the size of the daily debit.
Nonetheless, that same dip in sales would affect their repayment even in a normal (monthly payments without ACH) situation and make you restructure the deal. As Sean and Benchmark mentioned, split-funding is a great tool and its obvious it reduces credit risk.

It would be great to make a small experiment - grab a large and non-correlated portfolio of clients with similar FICO scores and divide them in three groups. First group gets ACH daily debits, second gets split funding and third pays by bank deposits to a referenced account.
Which group will have more defaults?

Cheers

[Chambo]

Hi gentlemen,

Indeed, Ondeck could/maybe have straight-up lied.
I like to think that given that some sophisticated investors like Google Ventures piled in Ondeck, they must have some nice looking numbers which passed their stringent due diligence.

I still think it is important to understand how good ACH daily debits are at reducing Credit Risk.
MCAVeteran made a great point. A dip in sales (which you cant avoid) will make you restructure the size of the daily debit.
Nonetheless, that same dip in sales would affect their repayment even in a normal (monthly payments without ACH) situation and make you restructure the deal. As Sean and Benchmark mentioned, split-funding is a great tool and its obvious it reduces credit risk.

It would be great to make a small experiment - grab a large and non-correlated portfolio of clients with similar FICO scores and divide them in three groups. First group gets ACH daily debits, second gets split funding and third pays by bank deposits to a referenced account.
Which group will have more defaults?

Cheers

Google most likely got involved to get access tot he data to cross with their other ventures.