Fundraising: Debt Microfinance
There are two ways to go about raising money, thru debt and equity financing. We hear a lot about equity financing (venture capital, etc), but debt is certainly popular, just not as sexy. I came across Zopa this morning which helps people or companies increase their debt I mean, raise debt funding.
There are a few emerging players in this space, specifically, on the social giving side (Prosper, Kiva) . Zopa doesn’t look too social oriented, being that there is a company (Billster) who is raising money for a new marketing campaign. Is this the new fad for raising money for startups? What’s interesting is that I’d assume most of the lenders aren’t accredited investors, but I’m not sure about what the SEC rules are.
For this model to work for lenders/borrowers, there has to be targeted traffic coming to Zopa and a high propensity for the traffic to make loans or to list their needs.
As for right now, the traffic is fairly modest but is increasing month/month. I am not sure which lending site will ultimately win out as the best place for debt financing, but since Zopa is well designed, it may have a chance.