February 2006

Thinking last night about the previous post I started to wonder whether it was possible to provide an intermediation service to enable P2P finance - whether it made sense (and was a tractable proposition) to put potential microfinancers in touch with potential microfinancees - rather like eBay but the transaction would be Money/Money rather than Money/Stuff .. or rather Money/Wait&Hope/Money.

I’m not sure but think it is worthy of some thought. My initial thoughts were that P2P finance is based on knowledge, trust and maybe to a degree friendship. So the relationship is personal rather than intermediated. How would a potential microfinancer get to trust the recipient of his or hers investment - how would they find out about the person they are lending to which IMHO is critical to this?

Or maybe we could look at a microfinancing VC operation where instead of contributions of millions to join a club we would accept contributions of a 100 quid, pool this up and lend out to craftsment and geeks with cool ideas. In the first instance, I guess, we would have to ensure that the risks were known: “Don’t expect to get your money back”.

What would the T&C’s be between this VC firm and the individuals receiving investment. Would we classify it as a loan and look to get back more than base rate on the portfolio of investment or would it be some sort of share ownership setting up a company based on the individuals? The former, I think, makes more sense in the short run.

Questions, questions, questions.

But I kind of like it.