A Lending Makeover

What is extensively known is the profile of the individual to whom money is being lent—so much so that it raises questions about privacy. According to Brustkern, while an individual’s financial profile is detailed to creditors, it is hidden from others on the platform. From an investment perspective, personal data is all part of the due diligence process.  

The biggest users of peer-to-peer platforms are trades people, followed by military people, police, firemen and doctors. As NSR proclaims: “trades people and patriots are great investments!”

One way or another, all of these users are alienated from consumer finance. By servicing their capital needs and enveloping them in a more direct process, there is actually an impact and an ethic. That ethic is embraced by many in the peer-to-peer community and is their rationale for dubbing what they do impact investing.

Since 2007, $10 billion has been issued in the P2P sector, touching one million lives. A major selling point of P2P lending is its agnosticism with regard to ethnicity and geography—another reason why proponents call it impact investing. Consumer lenders, meanwhile, have famously been called out by minorities and inner city residents for discriminatory practices. P2P, because it is community based, rises above those kinds of issues.

Still, it is technology that makes P2P attractive to so many.

“The alternative capital markets are plagued by opacity, informational inefficiencies and limited deal selection. However, we’re seeing a proliferation of new developments, such as P2P lending and payment solutions disintermediating sectors traditionally dominated by large financial institutions. It’s only a matter of time before the alternatives market follows suit,” Lee says.

To that end, Lee created DarcMatter. “With DarcMatter, financial advisors are now able to better cater to their clients by having the technological means to access new and portfolio-diversifying opportunities from all around the world,” he says. Those opportunities go beyond P2P, to myriad private issuance of securities—so-called qualified investments.

DarcMatter is an advanced online investment platform that provides investors with institutional-level access to these private investment opportunities. By utilizing proprietary structuring and technology, DarcMatter can provide a “frictionless” process for both investors and private issuers while remaining fully compliant with all current financial regulations. Frictionless, of course, means these are more direct connections between investors and investments, and less third-party involvement means less costs or fees.

It works like this: Investors register to gain access to investment opportunities. DarcMatter then uses a secure and seamless engine to make direct investments, disseminate information and collect profits and distributions from a single user dashboard. DarcMatter posits that by incorporating alternative assets into an investment strategy, there are greater opportunities for portfolio balancing and potential for enhanced investment returns.

But financial advisor participation is key. With direct investing via P2P lending investments such as NSR’s or broader exposure to alternative issuers via platforms such as DarcMatter, advisors are increasingly being presented with unfiltered investment propositions. This greatly increases their value to clients because it is only with sage advice that these investments can be incorporated into portfolios properly. And as clients increasingly desire direct investments, the alternative securities space is rife with opportunity.

 How much market or societal impact these investments afford, however, remains to be seen. But what can be easily gleaned by the amount of activity and deal flow that P2P lending and alternative securities markets are seeing is that direct-exchange and P2P iterations are growing exponentially.

New investments of this ilk warrant attention, if not engagement, even if they are old businesses being disrupted and upended.

People always like having alternatives.