Depending upon the source, the estimates are that fully one – half of the world’s population or 2.5 billion people are unbanked. In addition, sources indicate that that over one billion individuals and small corporations are under banked. Regardless of whether there is overlap or duplication in these numbers a significant percentage of the world have little to no access to a formal banking system. Moreover, within the developed world the financial crisis of 2007 and 2008 all but eliminated the community bank infrastructure that served small firms and individuals without “institutionally” acceptable credit credentials.

Peer to Peer funding structures were created and in some ways, have evolved to meet the needs of this unbanked and under banked community. The data shows, however, that these programs have fallen short of providing a systemic and reliable infrastructure for this market segment. In part this is attributable to a lack of coordination and transparency between and among the various peer to peer lending platforms. In part, there is a lack of regulatory oversight and the associated rules and structure inherent in such programs. And, finally, we suspect that there are simply the natural tensions and discoveries of a new market.

We know that peer to peer platforms have morphed into “bank to peer” platforms where traditional lending institutions provide the vast bulk of capital to this segment of the market; and, that micro, small, and medium enterprise (MSME) credit lenders face significant capacity issues, which are rooted in inherent financial limitations, ongoing operational inefficiencies, and a lack of aggregated and reliable data. This results in an imbalance in the distribution of loans, as there are too many barriers between many qualified, would-­‐be borrowers and available capital resources. Given these dynamics, many potential borrowers have ceased trying to access capital altogether, with the sentiment that their situation is hopeless and that “opportunity” lies beyond their reach. We also know many individuals face many of the same problems and that their situations are even more stark in that they lack the education or knowledge to access financial markets in any meaningful manner.

The Institute’s Goals in the Crowd Funding Market

Simply put, the Institute’s goals are education and transparency. To this end, the Institute will provide information portals to individuals and firms on the evolution of the crowd funding market, financial literacy courses for this market segment and insights into the structure and risks associated with individual products, lending platforms, and governmental regulation. The Institute’s platform will be designed to promote transparency and thus assist banks/ asset money managers and traders in the creation of financial instruments. Here, in addition to helping these entities become better market makers and agents by using peer to peer credit and equity data globally the Institute’s approach will promote the development and use of a meaningful secondary market thereby increasing liquidity and promoting growth in this area. In addition, insurance and reinsurance companies will be able to assess and manage risks, that over time could alter how risks pools ‘building blocks of insurance’ evolve. Our goal is to also serve as a due diligence infrastructure for retail investors “the crowd” in helping individuals understand the language, risks, and rewards of this market; and, to provide transparency for intermediaries (e.g., lending platforms and regulatory bodies).


The Institute will expand access to capital by providing insurance and technology-­‐based risk solutions for SME credit lenders. The Institute’s solutions will increase the financial and operational capacity of lenders, so they can better serve the overwhelming market demand for capital. By improving [harnessing] the power of actuarial algorithms, data analytics, and technology (e.g., internet, mobile), the Institute will provide quality, yet reasonable, solutions for the world’s financial services providers.


Business Structure and Requirements


To reach our aims, the Institute is seeking out, recruiting, creating, and supporting the individual aims of independent and multiple stakeholders in achieving our goals.

Management Structure – establish a meaningful global foot print with the flexibility of incorporating industry experts on a negotiated and as needed basis.

Technology – create and provide for the day to day management of a sophisticated technology platform that permits the storage, manipulation and display of a great deal of data/information as well as providing interactive services to selected end users. More important, technology must enable the Institute to:

  • Provide onboard feeds / constant data sources;
  • Produce an industry standard level of data quality;
  • Provide data insight as demanded by clients, prospects, or industry standard;
  • Pass industry standard due diligences;
  • Establish an industry standard level of stability and (managed) process driven set-up; and,
  • Establish a mechanism to monitor for money laundering activities. 


Trade Association – the peer to peer lending community has not evolved to the point where it has a trade association that can speak to regulators and market participants with one voice. The institute can fill this void and function as a de facto global trade association that levers and invites the peer to peer and small/mid-capitalization community to share information and ideas on an open platform basis; as well as, provide an infrastructure for global regulatory issues and concerns. Within this concept is the need to build an information portal that reflects the history and evolving language of this market segment.

Asset Management/Risk Analytics Platform – The Institute will support and design asset and risk management algorithms, products, and programs; and, assist third parties in the structure and rating of equity and bond instruments focused on peer to peer platforms and small to mid-capitalization programs.

Rating Agency – the natural outgrowth of the Institute’s efforts in this area will be to design and implement a score sheet for peer to peer platforms and small/mid-capitalization companies based on standard market due diligence and, perhaps, social network data. During this scheme the Institute will collect, store and analyze individual company data and score such data against traditional valuation metrics as additional social data concepts are tested to determine their impact, if any, on intrinsic valuations. Further, this model will assist in:

  • Establishing benchmarks and indices to develop / educate a growing market; and
  • Developing opinions / judgments about ‘the market’ in an organized / managed process using a defined methodology.


Advisory Board – to reach its ends, the Institute will create and solicit industry/marketing/investment/regulatory professionals to provide insights and advice.

Management Structure – while the Institute is a not for profit entity, the management structure will absorb for profit entities and contractual arrangements with individuals that meaningfully compensate them for their work in designing and implementing a global infrastructure and presence. To this end, the Institute anticipates:

  • 5 to 6 senior professionals that are responsible for developing and executing the day to day operations of differing aspects of the business; (b) a staff of no more than 10 that support the platform; and, (c) grouping of at least 25 to 50 “Research Associates” that reflect differing elements of the investment/academic community and who are listed within the Institute’s web site.
  • Specific projects will be negotiated on an as need basis – these Research Associates can also be the basis for a “LinkedIn” type of data base where the public is invited to contact these people directly and to follow – thus, promoting the de facto Trade Association aspects of the business model; more important, the Research Associates can and may lever their own business models and gain global notice through participation in this structure; (d) and; approximately 10 “Research Fellows” – students or junior industry professionals – designed to provide academic assistance to and begin to train next generation of participants.

Product Mix – the product mix is designed to essentially reflect all elements that a trade association would advance:

(a) education and meaningful information – provide historical archives, white papers, video/audio programming, individual and corporate research portals, seminars, online classes, forums/chat rooms, etc.; (b) provide various bench marks and other quantitative industry analysis; (c) in addition there can be ancillary products developed with the technology team that provide insight into individual/regional loans and equity investments; (d) sentiment indicators based on social data with the eventual goal of valuations based on this data; (e) separating out individual firms for analysis and providing valuation insights; (f) third party marketing opportunities with money managers and the development of online participatory forums and chat rooms; and (g) creating and implementing accreditation and continuing education programs for the industry. And, in so doing become a significant voice within both academic and governmental organizations.

Partners – as mentioned above, partners will be a critical element in the Institute’s success. Here, a select group of partners that have substantial and differing resources that can be levered in creating a significant global presence as well as providing advice and business insights are required.  The most important element here is to solicit and confirm partners who are also de facto stakeholders and as such will expend monies and provide resources to participate for their own business and financial reasons; and, in so doing lever and support the collective brand; this will also be true of those solicited and selected to be Research Associates.  The type of partners required are (a) branding partners – providing name recognition and specific business resources; (b) media partners – Bloomberg, Wall Street Journal, Barron’s and various foreign based newspapers that will publish benchmarks and monthly industry analysis/updates; (c) financial institutions [banks, hedge funds, insurance companies, etc.] where the Institute can assist in the securitization of assets such as credit cards and small/micro cap loans as well as other crowd funding initiatives; and (d) marketing partners – facilitate distribution of the Institute’s various products and research initiatives .





The Institute’s goal is to become a meaningful gatekeeper in the crowdfunding space. To this end, through information and transparency we will assist in understanding and managing risks, providing capital solutions and strategic advice.