Like MoolahSense, CapitalMatch is lending-based crowdfunding platform based in Singapore. But it has several key differences.
|Loan fulfilment||Reverse Auction Process||First come first serve|
|Lending Rate||Reverse-Auction to determine lending rate. Typically no more than 18%||CM determines the lending rate. For investors, the annualized rate (after fees) is usu 20-22%.|
|Risk Assessment||No credit function. Provides financial ratios and very basic colour indicators.||In-house credit officer that provides a brief risk assessment and basic P&L and CF projections|
|Access to Borrowers||Conducts information sessions for investors to meet borrowing companies. Identity of borrowing companies are disclosed||No information session. Sometimes do not disclose identity of borrower when campaign is live.|
|Platform Fees||3% upfront fee of borrowed amount upon each successful campaign, borne by borrower.||All-in fees (incl bonus) 5-6% of borrowed amount, spread out across each repayment.|
My Personal Thoughts
CapitalMatch appears to be better aligned to lenders (investors), as it typically offers a higher lending rate (notwithstanding the credit quality of the borrowers) and its fee structure motivates it to be careful on choosing the borrowers on their platform. If there is a default, CapitalMatch don’t get paid. The drawback for investors is limited access to borrower. Apart from a Loan Sheet, CapitalMatch don’t really provide further information on the borrower.
MoolahSense appears to favour the borrowers more than the lenders (investors). The reverse auction has the effect of lowering the lending rate. MoolahSense earns a flat 3% fee upon a successful fundraising. This means that it isn’t really on the hook if a default occurs. For investors, the main attraction for MoolahSense is that it provides access to the borrower through its information session and online forum.
- If you are a hands-on investor who wants to understand about new companies, MoolahSense gives you the platform to interact with the borrower. But investors need to be careful about not underpricing their bids when participating in the reverse auction.
- If you have less time to understand new companies and trust CapitalMatch’s credit process, you may want to use its platform. Bear in mind that CapitalMatch’s credit track record is still too short to be useful. Hence, diversification is still very important.
- Finally, if you want to learn best possible way to invest in crowdfunding campaigns – please continue reading this blog.
Updated: Thanks for MoolahSense for pointing out a factual error in the earlier post. 26/8