A standard template for new economics: gigantic rich tech platform through which thousands SMBs operate. The marketplace bloats with money, the suppliers survive on the edge of profitability. This is how Amazon, Uber Eats, Booking.com, and dozens of similar ones work.
And in theory, they could all earn even more if they issued credits to their suppliers. A lot of information goes through the platform, it is convenient to assess the borrower. The money also goes through it, one can instantly write out the loan return, there will be fewer unpaid loans. On paper, the marketplace is more efficient than a bank, it could both earn and help its sellers by improving the conditions a little.
In practice, the credit business is significantly different from the platform’s regular activities, and it’s difficult to build it from within. One can look at Ozon as an example, the platform re-launched its seller financing service several times, but it was never a success.
Parafin, the American startup of the day, offers marketplaces to switch on loans for suppliers with a single button. The startup provides the technology and accepts all the risk, all that the platform has to provide is the clients and their information. Later on, the theory falls in line with the practice – everybody becomes happy and everybody earns more.
Today, the startup works with America’s leading restaurant delivery service DoorDash and MindBody, the marketplace for fitness and similar offline services. In its latest round, it brought in USD 60M at the value of around half a billion.
#roundb #fintech #credits #marketplace #usa
Alexander made his career in Russian internet companies including Mail.Ru, Rambler, RBC. From 2016 to 2018 he was Chief Strategy and Analytics officer in Mail.Ru Group. In this position, he worked on M&A, investments, and new project launches. In 2018 he became Deputy CEO in Citymobil, a Russian Uber-like company that was invested by Mail.Ru Group and Sberbank (the biggest Russian bank), then he left the company to launch his own projects. Now Alexander is a co-founder of United Investors – the platform for co-investments in Russian early-stage startups. His blog #startupoftheday (#стартапдня) is one of the most popular blogs about startups in Russia.