A unique approach to P2P lending
We have brought to life a unique approach to peer-to-peer lending that enables non-accredited investors to get back in the game. We have raised over $1 million from 500+ investors who believe in our vision to make small-dollar loans affordable to anyone who’s creditworthy, while turning borrowers into investors. This includes $225k raised in 2019 and 2020 in two previous crowdfunding campaigns. As we expand across the country, we are looking to further partner with the crowd to help fuel our growth as well as source the capital to provide a much needed financial cushion to America’s new middle class.
Most of the country is living on the edge
In the past three decades, the median household income has risen 14%, while average house prices soared 290% (Wall Street Journal, Aug 2019). Despite the longest economic expansion in US history over the past decade, with wage growth failing to keep up with the rising costs of housing, health care, and college, much of the country feels crushed under the weight of a financial burden. These moments can be terrifying – waiting for a paycheck to arrive just to be able to pay rent, keep the lights on or buy food. And now, due to COVID-19, the situation just got worse for millions more. According to a just-released Federal Reserve study, around 40% of Americans earning less than $40,000 a year lost a job in March 2020 alone.
This can force people into using debt traps, like payday loans, that charge enormous interest over the first two weeks of a loan or can very quickly bury the borrower by forcing them to pay off one loan with another. Or, they may end up paying bank overdraft fees or late fees, which can be even more expensive. Some may be lucky enough to be able to borrow from friends and family, but that can come with feelings of guilt and embarrassment. On the other side, you may want to lend money to a friend or stranger, but are worried that it won't be paid back. No one wants to be in these situations, but the reality is that they happen, and they are happening ever more frequently in the new reality we now live in.
Reward doing the right thing
Hundy has created a peer-to-peer lending community that rewards good behavior and celebrates those who do the right thing. This mobile-focused community for personal loans allows people to get the money they need quickly without going through back channels or putting themselves into financial peril. Hundy offers a financial cushion to those who are creditworthy but don't have the best credit by traditional measures, while rewarding both borrowers and lenders through a point system that allows them to earn badges and ascend in levels, demonstrating their good character to the community.
With Hundy’s mobile app (available for both iOS and Android), you can get a loan or a deposit advance up to $500 through an account that can be set up in just a few minutes. Borrowers will then receive their funds in just one business day. Hundy borrowers are given 31 days to pay back a loan (or 61 days for an advance), with a 60-day grace period if they’re unable to pay the loan off in the original time given. Throughout this time, there is an open line of communication with Hundy that helps to maintain one’s good status within the community. When users pay back their loans on time, they are given the opportunity to receive larger amounts in the future, and in addition to that, both borrowers and lenders receive points when this happens, which can be used by borrowers towards discounts on loans or earn lenders additional cash back on their investment. And once a borrower makes it to the top level, Hundy will match their points so they can become a lender at very preferential terms, giving many their first long term investment.
Serving America's new middle class
Over three-quarters of U.S. workers live paycheck-to-paycheck (CareerBuilder survey, January 2019), so the situation was already bleak for our new middle class. Mid-pandemic, per the New York Times, "lines of cars stretch for miles to pick up groceries from a food pantry; jobless workers spend days trying to file for unemployment benefits; renters and homeowners plead with landlords and mortgage bankers for extensions; and outside hospitals, ill patients line up overnight to wait for virus testing." Shown below: People waited in cars for food distribution in San Antonio in early April. “It does underscore the fact that so many people in our country live on a precipice,” a national food bank executive said. (Associated Press)
Given this backdrop, it's no wonder that quick access to affordable cash - even a few hundred dollars - is a must-have for most Americans. According to self-reported survey data collected with each Hundy loan, the number one use of Hundy is to buy groceries followed closely by utilities, a car payment, and help with rent. Over 75% of Hundy's borrowers make less than $60k per year.
Through July 2020, we were lending exclusively in California and have originated over 10,000 loans on volume of $1.1M. We currently have over 1,200 active borrowers and investors in our community. Over 1/3 of borrowers participate in the community, which means they have paid off their loans early or on time and are posting these achievements on the Hundy Hub for everyone to see. In August 2020, we began a geographic expansion by tapping into our nationwide waitlist (currently over 250,000 users), and by early Q1 2021 we should be in 17+ states.
An ecosystem with network effects
On the demand-side of the marketplace, we’ve built a community of borrowers who are looking to benefit from their good character and reliability. On the supply-side, Hundy accepts accredited and non-accredited investors who pool their money together to lend to our borrowers. We incentivize both sides of the marketplace for posting and celebrating their achievements as well as encouraging all to do the right thing.
In our hybrid, two-sided marketplace model, Hundy is the lender of record, loaning money to first-time borrowers at a cost about half of what a typical payday lender charges (177% APR during the initial 31-day term), which then drops to 60% if the term is optionally extended to 90 days (we also have a new, interest-free deposit advance product with a 61-day term that is paid for by recipient via an optional donation). Over time, due to the unique data produced by our growing community along with our proprietary AI approval models, our underwriting will improve, which should allow us to reduce our default rate while increasing the approval rate of quality applicants. Finally, both top-rated borrowers and lenders have the opportunity to own a piece of the company incentivizing viral promotion as the company continues to grow. Once we get these three flywheels working in concert, we'll have a powerful engine for growth.
Momentum since the last crowdfund
We couldn't have been more pleased to have added over 450 new investors to the Hundy community during our two raises with StartEngine over the past year. This has created some great momentum for us as we head into 2021:
- YoY growth: We doubled loans originated and loan volume and expanded the waitlist by over 50% to over 250,000 users.
- New growth: We rolled our Deposit Advance product to eight states (with more on the way) achieving a CMGR of 61% over the past quarter.
- Product: Launched the investor side of the platform in beta with over 25% of our investors sponsoring borrowers and added customer cash flow analysis to our credit model increasing our application approval rate by over 40%.
- Coming next: In Q1 2021, we anticipate a full release of the investor side of the platform allowing our investors to redeem their points for cash, members and investors to follow each other and over 30 Guru-level borrowers to become investors.
The Numbers (thru November 2020 - except where noted)
App installs: 318,829
Waitlisted users: 251,629
Transaction volume: $1,132,250
November gross revenue: $6,929
Trailing 6-month revenue CMGR: 9%
Loan payback rate: 90.7%
Annual borrower retention rate: 82%
Expanding our reach going forward
To date, our marketing has been focused on organic channels and primarily our ASO (App Store Optimization) efforts. As a result, almost all of our app installs have been sourced from the app stores, of which 90% are iOS and 10% Android. Due to licensing restrictions on small-dollar loans in the US, we have been limited to lending in California, so over 85% of our user acquisition has fallen onto the waitlist. Going forward, our plan to is to expand our available audience via our new deposit advance product, and to tap into that new audience using the following marketing channels:
- Opening Waitlist: As we enter each new state, we invite people in from the waitlist - in some states, this is tens of thousands of users.
- Paid Ads: We've spent the past 6 months testing different ad channels and have been able to get one channel down to a CAC (customer acquisition cost) that is at the magic one-third of our CLTV (customer lifetime value). We plan to allocate close to 15% of the proceeds from the raise to advertising on this channel.
- Android/Mobile Web: At less than 10% of our current customer base, Android users are a clear opportunity for us. Due to restrictions that Google has announced for small-dollar loans, we'll be releasing a mobile web version of our app to give Android users easy access to Hundy.
Hundy has created a unique community
While there are other consumer lending apps focused on non-prime loans of less than a few thousand dollars, Hundy is unique in this category because of its community-centered design. There are three layers to our platform design that each build upon the Hundy community – and the Hundy community is what sets us apart.
The first layer is a social feed where community members can share their achievements of good character, i.e. paying a loan off early, paying off on time, or paying off after entering the 60 day installment period. Second, with this offering, we are once again opening up Hundy to non-accredited investors by enabling them to purchase a promissory note convertible into Hundy equity with an ability for these investors to sponsor individual members in the Hundy community. They can sponsor anyone, or specifically look for people whose stories and/or background that they identify with. And last, both borrowers and lenders will be given an ownership opportunity in the ecosystem they help to create. This truly gives borrowers a path to financial independence, and lenders a way to help them get there while earning cash back.
We have passion and experience
At the helm of Hundy is Pete Budlong, a veteran of two-sided marketplaces and mobile marketing platforms including Classifieds2000, Excite, Soundflavor and Yelp. Also leading Hundy is Ram Hegde who has directed engineering teams at both Nokia and Intel. Ram was hired to build the Hundy MVP prior to the founding of the company. He then came on as co-founder to build Hundy’s current platform. Our small, but close-knit team is deeply passionate about expanding financial inclusion to anyone with good character. We believe that rewarding good behavior helps to empower those who need a boost and, by creating a unique two-sided mobile marketplace for loans, we are ushering in an era in which we can say 'goodbye' to predatory lending.
Here's what our customers are saying
I appreciate you guys so very much. Thank you
- Jose T., Van Nuys, CA on 11/21/20
Thanks for following. Awesome customer service. I’ll invest again because of this experience. Thank you!
- Ricardo R., Lake Forest, CA on 8/5/20
I cannot tell you how much of a relief that is thank you so much for being flexible with me and working with me thank you so very much! 😢😢😭😭❤️
- Racheal E., Claremont, CA on 5/16/20
Thank you Hundy happiness team I promise that I will take care of it as soon as I can and pay the balance off and make this right I appreciate you working with me.
- Leah M., Ventura, CA on 4/2/20
Thank you so very much.. I am now able to purchase my insulin from the Walmart Pharmacy. Hundy is truly an incredible service, as I’ve never had such support in the past with other companies..
- Michael D., San Diego, CA on 12/18/19
You guys are honestly life savers !!! You don’t know how helpful this was to me and appreciate it!
- Jose P., Garden Grove, CA on 10/22/19
Appreciate it and so much thanks to you.. and the whole Hundy team!
- Ariel L., Salinas, CA on 10/7/19
Meet our Gurus and Ninjas
Our community is nearly 20,000 members strong, and at the top we currently have 30 Guru and over 100 Ninja borrowers, which are the two highest status levels in the Hundy point system. Once a borrower becomes a Guru, they unlock their ability to become investors on the platform. This will be quite a turnaround for these folks who just a year or two ago were struggling to borrow a few hundred dollars.
P2P lending 2.0 powered by Hundy
The one disappointment of the last decade is the lack of opportunity for individual investors, particularly non-accredited investors.
— Peter Renton, Co-founder Lendit & Editor Lendacademy.com
We envision a world in which anyone who is creditworthy has access to an affordable financial cushion from the people around them, particularly non-accredited investors. With the growing financial struggles facing our new middle class, the ubiquity of mobile devices, and the new crowd-based regulatory advancements made available by the JOBS Act, we believe Hundy is perfectly positioned to deliver on our vision as these three major generational shifts come together.
Invest in Hundy
We chose to work with StartEngine because allowing real people, not elites or institutions, to invest in loans via Reg-CF is fundamental to our business model. In addition, equity crowdfunding enables both our borrowers and investors to own a piece of the company giving everyone an opportunity to participate in the business.
The growth of our borrower community based on the sharing and celebration of good character is accelerating. After our first crowdfund offering went live, we added our crowdfund investors to the community for the first time. Shortly after this offering goes live, we'll further link our members and investors together in the community while expanding our geographic reach significantly. Please join us in making this a reality by becoming part of the Hundy community with your investment today!