JamesFrance
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Post by JamesFrance on Sept 24, 2016 8:23:55 GMT
I would be interested to know what others think about this. When I started in business I expected make a profit from the start and still expanded rapidly, but others used to say "You can't make an omelette without breaking eggs" and that it is normal to make a loss for a few years.
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registerme
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Post by registerme on Sept 24, 2016 8:29:39 GMT
With the exception of SS, which, as we know, is the most profitable p2p business in the universe, I don't think any of the platforms are reliably and consistently profitable yet.
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SteveT
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Post by SteveT on Sept 24, 2016 8:39:22 GMT
None of your poll options work for me. The issue for any business that is growing quickly is whether its core business model is scaleable to the point that it can produce sustainable profits (gross margins > fixed costs) and whether it has access to sufficient cash for long enough to keep it going until it does.
IIRC, Amazon didn't become "profit making" for at least 15 years, yet its investors clearly felt happy providing further cash to fund its exponential growth.
There are some P2P platforms that I think CAN scale successfully, some that I doubt ever will (although may be subsumed into others) and a few that I cannot fathom how they are still getting by. As you'd expect, I don't lend via the last category.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Sept 24, 2016 9:34:43 GMT
IIRC, Amazon didn't become "profit making" for at least 15 years, yet its investors clearly felt happy providing further cash to fund its exponential growth. Yes there have been some well known success stories but I can also remember some spectacular and sudden failures. I remember from when I was an employee over 50 years ago that the MD told me not to try to compete with a fast growing competitor as they would soon be gone. Sure enough the largest plant hire company in the midlands folded without warning soon after that.
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ben
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Post by ben on Sept 24, 2016 9:46:46 GMT
With the exception of SS, which, as we know, is the most profitable p2p business in the universe, I don't think any of the platforms are reliably and consistently profitable yet. I believe ratesetter have previously stated they are profitiable but expect to make a loss due to expansion.
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pom
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Post by pom on Sept 24, 2016 9:59:30 GMT
With the exception of SS, which, as we know, is the most profitable p2p business in the universe, I don't think any of the platforms are reliably and consistently profitable yet. I seem to recall MT crossed over into the black a while ago having been very sensible with their early growth...I would hope/assume they've stayed there As for the poll I'm with SteveT there's too many other factors to fit this poll
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stevio
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Post by stevio on Sept 24, 2016 10:19:23 GMT
Not sure point in this? I am happy that some platform's make a loss to start with
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jonah
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Post by jonah on Sept 24, 2016 10:29:03 GMT
With the exception of SS, which, as we know, is the most profitable p2p business in the universe, I don't think any of the platforms are reliably and consistently profitable yet. I believe ratesetter have previously stated they are profitiable but expect to make a loss due to expansion. They made money for 2 years but had a loss this year due to a number of things, not least being moving to getting PF fees over the lifetime of the loan. For more details, see the thread on the RS board.
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adrianc
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Post by adrianc on Sept 24, 2016 14:35:07 GMT
As for the poll I'm with SteveT there's too many other factors to fit this poll Likewise. Nowhere near that simple.
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Post by Deleted on Sept 24, 2016 15:14:22 GMT
FinTech startup companies clearly want to be valued more like Tech start-ups than like Financial startups. And they prefer to be regulated like Tech startups too... although the FCA is getting wise to this it seems 
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JamesFrance
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Post by JamesFrance on Sept 25, 2016 7:25:17 GMT
As for the poll I'm with SteveT there's too many other factors to fit this poll Likewise. Nowhere near that simple. A poll cannot cover every possibility which is why I kept it short just to get a general idea. I hoped people would point out other things which would influence their decision about whether to trust a platform with their money.
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Post by propman on Sept 26, 2016 8:18:58 GMT
The other point is that where people have money they can afford to lose, the increased platform risk is reflected in a higher expected return. If SS increased the return to investors, yes their platform risk would increase, but I suspect there might be an increase in demand rather than a decrease!
I'm another person who struggles to understand the increase in staff. I understand that managing bad debts and underwriting increases with staff, but would have expected that this would be less than half their costs, with marketing, administration, regulation and technology more stable and customer services somewhere in between. That said, there is a well known "hump" around 50 employees where management needs to become more structured as a couple of founders can't handle management of all areas themselves.
As for comparison with IM, this has much less capacity to outperform as their added value is merely investment selection. As most IM is for sophisticated institutions, there is limited capacity for them to increase fees and as scale increases so does the pressure on their margins and cost pressure from the increasingly better known fund managers.
However I do agree that the multiples applied to the likes of FC seem very high. I can only think that the market is factoring in the potential to revolutionise SME loan origination in banks who might therefore snap them up.
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