There are 5 fintech companies that I've been paying attention to as I try to figure out the model for Lighter Capital -- actually -- there's many more than that...but for the purpose of this blog post, let's focus on:
- Second Market
- Receivables Exchange
- Wanga (UK)
- OnDeck Capital
There are lots of differences and variants to these businesses but I like all of them and it seems like they follow a somewhat simple formula.
- Market segmentation -- Each company in its own way focusses on a market that is underserved by the capital markets. One way or another, the underlying businesses need capital.
- High rents (i.e charge a lot) The above businesses make capital available to the customer via the internet and charge a rather high rent. Wanga is off the charts!
- They've figured out repeatable customer acquisition -- to varying degrees the above customers has each figured out how to acquire customers cost effectively.
At lighter capital, we're trying to make sure we accomplish these goals as quickly as possible.