GlobeFunder, a new entrant into the small “social lending” market, has raised $1.5 million in seed capital.
Unlike competitors Prosper and LendingClub, web-based networks that focus on facilitating small personal loans in the U.S., GlobeFunder’s goal is to tap into nascent international micro-loan market, which it says is potentially $300 billion worldwide. Micro-loans are typically in the hundreds of dollars.
Overall, the social lending market is hot. Last month, Prosper, the market leader, raised $20 million (see coverage here) and the month before that, LendingClub announced its $2 million seed round and launched with the Facebook Platform (our coverage here). The idea with these lending tools is that borrowers get lower interest rates and lenders higher returns than either would get from banks.
Microlending was made famous by the Nobel Peace Prize-winning Dr. Mohammed Yunus and the Grameen Bank, and involves extending micro-loans to poor entrepreneurs who don’t ordinarily qualify for credit. A recent article in BusinessWeek suggests investors believe opportunities exist in this market and are looking to exploit them.
In October, the Kalamazoo, Michigan-based GlobeFunder will launch a social lending service in the U.S., but will set up a shop in an undisclosed developing country shortly after that. The company won’t reveal much about its strategy. Chief exeutive Brian Mullally says GlobeFunder will build an “investor-centric” social networking platform that will include profiles and blogs in order to help investors make better decisions. However, LendingClub is already integrated with Facebook, and how GlobeFunder intends to outmaneuver LendingClub on that front is not clear.
But perhaps it won’t have to. Mullally says there are more than 10,000 microfinance institutions in the world and that they lack efficient access to liquid capital. Mullally says his company will tackle this problem by linking these tiny banks to both individual and institutional lenders with the promise of higher returns for all. That’s a big promise. Whether this start-up can deliver is it yet to be seen.
8 Comments
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Pablo H. said:
I think the’rey really bennefiting from the popularity of Kiva - a microloan portal started out of Stanford. Kiva has received a huge amount of attention and press over the last 18 months - including op-eds praising them in the NYT and WSJ.
It wouldn’t surprise me if Omidyar or Skoll where to inject some money thier way. Many eBay alumni really relate with the peer-to-peer microloan approach.
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Ben Decio said:
GlobeFunder offers a different approach than Kiva - market driven interest rates for investors - the idea is not to become Kiva or Prosper….both have done well to show the possibility of person-to-person lending…When the GlobeFunder launch occurs both in the US and our first international country (both slated for October launch)…the value propostion to both GlobeFunder’s investors and borrowers, will be immediately apparent, scalable, and unique. Check back in a few weeks as we begin to discuss the latest happenings with GlobeFunder as we move closer to our October launch date. Thanks.
Ben Decio
President and Co-Founder
GlobeFunder -
Amish Shah said:
Think about it….1 billion + people with little to no access to capital.
A way to get cash to these people through an efficient market and capital.
Prosper has validated the use of social (peer to peer) lending through a web based portal domestically and there is plenty of room for more in this space, especially internationally.
Globe Funder is on track. Eventaully large banks will pay a premium to get this distribution and these companies will be worth a fortune. -
Social Lending Watch said:
We recently published an exclusive interview with Brian Mullally prior to this news about their investment. You can read it at Social Lending Watch: http://www.sociallendingwatch.com/2007/07/10/slw-authoritative-report-5-brian-mullally-ceo-of-globefundercom/
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P2P-Banking.com said:
See the earlier interview P2P-Banking.com conducted with Globefunder CEO Brian Mullally:
http://www.wiseclerk.com/group-news/countries/us-interview-globefunder-to-take-p2p-lending-global/ -
Tim said:
Check out the GlobeFunder plan on YouTube:
Part 1
http://www.youtube.com/watch?v=6YWoNgpr09U
Part 2
http://www.youtube.com/watch?v=QhrN55rAV6IAlso, please see our latest interim site at http://www.globefunder.com
Click ’sign up’ to stay updated on the latest at GlobeFunderTim
GlobeFunder Team -
Kamolindu Karmokar said:
We are an NGO involved in microcredit and other educational activities.We have partnership agreement with Kiva and we gained a lot from. It is really wonderful that Globefunder is going launch a great program including asia countries- Like Bangladesh. Thank you for your assistance.
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GlobeFunder Raises $1.5M for International Micro-Lending Service said:
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GlobeFunder Raises $1.5M for International Micro-Lending Service | Tekjuice.com said:
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P2P-Banking.com Blog » Globefunder raises 1.5 Mio. in VC said:
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4:03 pm
VentureBeat » Lending Club raises $10.26 for social lending — joins crowded field said:
[...] The deal makes the the social lending industry very crowded, and the funding is a large amount for such a young company with little track record — especially when there’s so much competition (see our coverage). Prosper and Zopa both do something similar, and have raised much more cash. CircleLending, Wonga and GlobeFunder are other players (see coverage here). [...]