A good and sensible perspective on the alternative lending space, post Lending Club by Charles Birnbaum from Bessemer. "Many great companies will be built as entrepreneurs bring more software, data-driven underwriting practices and innovative origination models to improve the market for borrowers and enhance capital market efficiency in the years ahead"
This group of alternative lending startups has seen phenomenal growth and has leveraged software and better data to disrupt large markets. But at the same time, these new originators shouldn’t continue to be valued off of the same metrics and lofty valuation multiples as SaaS businesses or online marketplaces. Instead, these new lenders are more appropriately evaluated within the context of the financial services companies they are trying to displace. When you approach alternative lending in this way, you can see that the former hype and current disillusionment with the category are both off base.