OnDeck’s Big Data pitch has investors panting. The lender has raised $180 million in capital from elite investors, including Google Ventures and Peter Thiel. On the other end of the spectrum they have apparently been using some rather unsavoury characters to market their loans...Boiler room stock fraudsters, recovering heroin addicts and a bank robber!
Breslow shows a photo of a beaming Brooklyn wine store owner as he explains how banks aren’t lending to good small businesses. His point is that they want to borrow so little—say, $20,000 to make payroll—it’s not worth the banks’ effort to perform their expensive due diligence. OnDeck’s software, Breslow tells the audience, gives potential borrowers an “OnDeck Score,” a proprietary assessment of creditworthiness that pulls in more and better data than banks do. The startup’s technology analyzes thousands of variables—from cash flow metrics to clues from social networks—and spits out a loan verdict in hours, not weeks. Algorithms replace loan officers, entrepreneurs get the money they need, and everyone is happy. “We set out to create a different kind of score,” Breslow says. “And a billion dollars of loans later, we think we’ve done it.”