Capital is the name of the game
October 31, 2022
A key part of our growth story in 2023 is going to have to come from increasing our total assets outstanding, regardless of whether we're underwriting the transaction or not. With our marketplace, we have the opportunity to generate revenue from borrowers, investors, and now underwriters as well. Going through this process of signing third party underwriters onto the platform, we've also realized that our core value proposition to them at the moment is the investors on our platform as most of them are coming with borrowers. Smaller underwriters tend to have their own borrower relationships and as such, their biggest gap is on the capital side of the equation.
We've relied historically on retail accredited investors to fill this need as they were the quickest to acquire. As we scale though, the sheer number of retail accredited investors we'll need to get on board becomes increasingly more challenging. Accredited investors are great for the $2-3M deal but it takes hundreds if not thousands of them to close the $15-20M deal that many borrowers need as their capital needs get larger. Captive capital that we can rely on and fall back on to close these larger transactions becomes a much more viable solution over time. To that end, we started by offering blended notes in order to provide a guaranteed percentage of allocation in each note. The modest success of the blended note program has caused us to look externally in search of credit facilities that can commit $50M+ to our marketplace. Taking it one step further, another form of captive capital that is a natural evolution of our blended notes is setting up a fund, something that is actively managed that can be deployed into deals that fit certain criteria. Funds are easy to understand for any and all types of investors - retail accredited, family offices, investment advisories, and more. They are tried and true investment products in the industry that we'd be doing ourselves a disservice by not exploring in more detail.
Every option is available and up for consideration as we'll need all the capital we can get to hit our 2023 targets 💰
