new crowd fund investor worried about lendy defaults

Both Lendy and Funding Secure have problem loans that, in my opinion, bring into question their ability to manage tranched development loans.  Both are platforms that started elsewhere (marine assets & pawnbroking), but shifted across to property to achieve greater scale.

You do not have to look too far or dig too deep on either platform to find loans that make you wonder whether 12% is remotely sufficient for the risk entailed.

There are, however some key differences that should be noted:

• FS has a much larger number of loans, across a more diverse borrower universe
  
• FS does not have balance sheet exposure to defaults, whereas Lendy loans still on the old Ts & Cs do potentially elevate the risk of platform failure
  
• Lendy offers much larger loans, and thus a more concentrated borrower universe
• FS lenders are under no illusion that a provision fund will bail them out, and there there are evidenced capital losses.
  
• FS lenders can discount loans to shift them in the secondary market if they so choose.
  

Without in any way seeking to differentiate between their business practices, or indeed the accuracy and timeliness of their communications with lenders, I believe that the structural points listed above make the risk of platform failure lower at FS.