Orca: An Honest History of Our P2P Journey
I’ve met Giles Andrews, the Chairman of Zopa and one of the founders of the peer to peer lending (P2P) industry, on a couple of occasions. On each occasion, he has asked how we got involved in the sector. As we approach the launch of the Orca Investment Platform I thought it would be good to break up our analytical blog posts with a personal piece on Orca’s background. If Giles is interested, there is a fair chance that some of our readers might be as well. I’ll attempt to avoid self-indulgence and share our journey from the start.
In 2014, I was approached to help set up an alternative lending platform. The idea was to launch a retail bond, raising capital from direct retail investors and then lending the raised funds to property developers. The business didn’t yield the success we hoped for, but it did provide us with invaluable learnings which we’ve taken to Orca.
We learned a lot about the P2P market, retail investors and how to launch financial products. I also formed a professional relationship with my cousin Jordan Stodart who is the other co-founder of Orca. We both genuinely believed in peer to peer lending and wanted to do something in the market. We liked the people aspect of the asset class and wanted to build a product aimed at helping people - namely retail investors.
After six months of strategic debate we formed a plan to build an investment platform for the peer to peer lending market - the ‘Hargreaves Lansdown’ of P2P, if you like. We felt this type of product would naturally open the market up to a larger user base of retail investors and ultimately more people could benefit from the attractive returns that P2P offers.
It was, however, a big goal. So we broke this vision into three phases: 1) Launch a basic comparison service. 2) Launch an in-depth research service. 3) Launch an investment platform. The first two steps were designed to get us to market as quickly as possible and to further our knowledge of the asset class. ‘We’ll publish what we learn’ type strategy allowed us to share our findings with investors interested in the asset class. We are of course a business, so we also wanted to earn a sustainable amount of revenue along the way. You can see this three-phased strategy in the image below, taken from an investor pitch deck in early 2016.
Figure 1: Orca product roadmap, early 2016
Just prior to officially forming Orca in November 2015, we met our now-Chairman and angel investor Alex Lee. Alex advised that we join an accelerator programme and mentioned that one was kicking off in Belfast at the start of November 2015. Within two weeks of this call we moved out of Edinburgh, boarded a boat and joined the programme in Belfast. Within a month, and after meeting our Lead Developer John McKay, we launched a basic comparison website and started publishing data and research on the Orca website. From month three, we were generating affiliate revenue.
I have always been personally drawn to the transparency of the P2P market and the availability of data. We teamed up with Dublin City University (DCU), and throughout 2016 a small team, including myself, conducted in-depth analysis on the market. We built cashflow models from the loan books of the P2P platforms and established a standardised methodology for comparing one investment relative to another. Our tech team built web scrapers to collect volumes and interest rates from the websites of the P2P platforms. Today we scrape 32 web sites with real-time data displayed throughout our platform.
While pleased with our achievements by this point, we faced a big decision: Continue building a niche P2P research service which we thought might support a small team, or go for the larger visionary goal of building the investment platform. Nine months ago, we chose the more difficult option of building the investment platform, and ever since we have been working to achieve our goal and launch our product. There have been a lot of significant strategic product decisions, particularly around the investment structure which I’ll share in a follow-up blog post.
I’m incredibly proud to be part of the Orca team. It's been a challenging but rewarding journey so far, and I’m genuinely excited about the benefits that the Orca Investment Platform can add to the P2P industry, and of course the people who use our services. It’s humbling to have you on our journey and I appreciate your continued support.
CEO & Co-Founder