P2P lending site Faircent gets a good deal, receives funding within six months of starting up

Gurgaon-based peer-to-peer lending website Faircent recently raised venture capital at an enterprise valuation of US$4 million. The undisclosed funding round was led by Devesh Sachdev and Ashish Tiwari, promoters of Fusion Microfinance.

The beauty of the P2P lending model is twofold: anyone can earn interest on their savings as a lender, and borrowers get much better terms than they would at banks. Faircent caters to those in need of retail and business loans using a format that allows it to keep institutional charges to a minimum to the benefit of users. Borrowers can directly interact with lenders, negotiate the terms and conditions of the interest rates, tenure of loans, and strike a deal. Both borrowers and lenders have to pay a listing fee.

Faircent, which started operations in July 2014, spent nearly 12 months developing the platform’s proprietary technology, which enables its underwriting and borrower rating system.

Faircent’s features include a bidding engine that helps users in interest rate discovery, a matchmaking technology to connect prospective borrowers and lenders as per their respective requirements, and an index of borrowers based on the purpose of the loan, amount, and tenure.

Apart from bringing interested users together, the platform also uses an algorithm to figure out the creditworthiness of prospective borrowers and lenders by leveraging big data-based models that factor in personal, demographic, financial, national credit bureau, and social networking data to determine the rating of borrowers.

This is a shift from the lender-borrower dynamic, as the borrower has the upper hand with an option to accept or reject the offers from the lenders.

In an event where a borrower defaults, the lender will have the right to initiate proceedings against the borrower. Faircent states that it does not identify itself as a financial institution, but acts as a platform to facilitate a transaction of borrowing and lending between two users. However, the firm can blacklist the name and details of defaulters.

The startup, which was self-funded by the founders Rajat Gandhi, Vinay Mathews, and Nitin Gupta will use the new influx of cash to strengthen their technology, talent, and brand focus.

Faircent will be share the P2P lending space with the likes of Angaros Group-backed I-Lend and a host of social fund-raising platforms including MicroGraam, Rang De, and Milaap.

Here’s a video which explains in detail how the peer-to-peer borrowing and lending model works.

(Source – Economic Times)

See: SoftBank gets in on China’s P2P lending craze with $10 million investment in Edai