
How LendingHome Scaled Their Marketplace to $750M in Real Estate Loans - sergiotapia
http://stackshare.io/lendinghome/how-lendinghome-scaled-their-marketplace-to-$750m-in-real-estate-loans?utm=source
======
jpeg_hero
More things change, the more they stay the same.

Tldr: standard tech stack to implement some sort of confidence game / exploit
asemetrical information.

In the hedge fund world investing in these short duration, volitile debt is
called "picking up pennies in front of a steamroller", meaning, if the market
doesn't crash this month, you'll earn a few excess basis points of return, if
the market does collapse you'll experience 100% principal loss.

Why do the entrepreneurs chose to do this? Well, raise $100m from the Chinese,
retain 5% of the equity , and hope you get liquidity before the bottom falls
out. Essentially an option on an option, but with no money down.

Better question is: why do the engineers do it? And why are they willing to
blog about it??

~~~
rahimnathwani
I don't understand your penultimate paragraph. From the intro to the article,
it sounds like the company makes money on origination and servicing, but that
other investors (not the company's shareholders) provide the capital that is
at risk.

So, unless I've misunderstood the business model, the entrepreneurs'
incentives are aligned with their shareholders (the Chinese investors you
referred to?).

