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Stripe Capital

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Re: Stripe Capital

#151

Post by harshadante »

penagwin wrote: post #125
pc wrote: post #59

Earlier quoted context omitted.

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

I have two questions for you, so I figured I piggy back off this comment. * What does the entry level look like? This appears to be a decent way to launch a hobby into a business, but what is the income you're looking for? Does my app need to gross 1k/mo before it's an option? * What are the term limits? Or what if the app is shutdown, or underperforms? This appears to be a good way for people to launch hobby project…

We underwrite our loans based on factors that include your payment volume and history on Stripe. There’s no strict cutoff on how much sales you need to be eligible, but for now we require some payment history with us before we can qualify you for a loan. Eventually, we hope to be able to offer capital to virtually every business on Stripe—even those just getting off the ground!

Re: Stripe Capital

#152

Post by drinane »

owens99 wrote: post #150
kryogen1c wrote: post #109

Earlier quoted context omitted.

Just popping in to say this is one of the most impressive C-level replies i have ever seen. Straight acknowledgement of the criticism from OP, but explains the reasoning and demonstrates the benefit to both customer and stripe. Closes with willingness to change if business model doesnt produce results matched by test market. Doesnt read as defensive or marketing buzzwordy, just straightforward and simple. I hope to o…

It’s a solid response. Not sure if it’s worth pointing out but you are totally fan boying PC and making his response out to be way more than it is.

Just poppin' CAPS

Re: Stripe Capital

#154

Post by onetimemanytime »

juliusmusseau wrote: post #149
pc wrote: post #59

Earlier quoted context omitted.

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

Very neat idea. But I worry that it's vulnerable to bad people. Got a hefty personal bill coming up, and you're pretty confident your SaaS business will be dead within 6 months but Stripe has no way of knowing based on current numbers? Thinking of getting a divorce (startup or marital)... maybe time to grab the largest advance possible before your soon-to-be ex(-co-founder) realises? The problem is that even if only…

>>"But I worry that it's vulnerable to bad people."

You worry too much for them, that's why they charge a hefty interest fee. A certain % of non-payments or partial payments are built in.

Re: Stripe Capital

#155

Post by ummonk »

jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

It sounds like it is closer to equity than to debt.

Re: Stripe Capital

#156

Post by lotsofpulp »

ceejayoz wrote: post #143
whatshisface wrote: post #92

Earlier quoted context omitted.

https://www.kosherswitch.com/live/tech/how

These approaches are so baffling to me. Their tagline is even "control electricity on Shabbat!" while telling you all the ways you're technically not controlling electricity. Loopholes that violate the spirit of the law but technically fit the letter of it make sense in doing your taxes, but it seems extremely risky to take that approach with a god. "Haha guys, very clever, you got me" doesn't seem like the end resul…

I assume it’s a signal to others that you’re also willing violate the spirit of other laws (or rules, not necessarily legal) under the guise of plausible deniability.

Re: Stripe Capital

#157

Post by gr2020 »

pc wrote: post #59
jawns wrote: post #25

The way Stripe Capital has structured repayment of the loan -- fixed fee, dynamic loan term -- is is an interesting way to make it hard to compare against other lenders, which typical express their fees through APRs. The term of the loan is variable, and depends on daily sales, but assuming you have a high volume of sales and take out a small loan, the effective APR is going to be through the roof! For instance, supp…

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

Purely out of curiosity - and you may not be able to, or may not want to answer - but how does a company like Stripe structure this sort of business? Are you making loans right out of your working capital, or do you have separate debt obligations of your own to cover these, or something else? I would imagine this sort of thing is regulated somehow, but I don’t really know... would love to hear whatever you can share!

Re: Stripe Capital

#158

Post by cm2012 »

pc wrote: post #77
bduerst wrote: post #74

Earlier quoted context omitted.

>Our hypothesis is that existing lenders are disproportionately ineffective at detecting and underwriting internet businesses Is that because you have a view into your business customers cash flows, so you think you'll be able to better assess risk than traditional lenders?

Yes, but much of it is simply taking the problem more seriously. In principle, others could build this by leveraging bank account data. (Or by using Stripe Connect.) We were so struck by the extent of the problem reported by Stripe users, and by how that remained constant over time, that we decided to go tackle it directly.

You should research as much as possible about ONDK, the 800lb gorilla in SMB lending. They're a public company so the data is in their quarterly reports.

Re: Stripe Capital

#159

Post by [deleted] »

ceejayoz wrote: post #143
whatshisface wrote: post #92

Earlier quoted context omitted.

https://www.kosherswitch.com/live/tech/how

These approaches are so baffling to me. Their tagline is even "control electricity on Shabbat!" while telling you all the ways you're technically not controlling electricity. Loopholes that violate the spirit of the law but technically fit the letter of it make sense in doing your taxes, but it seems extremely risky to take that approach with a god. "Haha guys, very clever, you got me" doesn't seem like the end resul…

[deleted]

Re: Stripe Capital

#160

Post by davidpolberger »

BukhariH wrote: post #101
pc wrote: post #59

Earlier quoted context omitted.

[Stripe cofounder.] > But one thing strikes me as odd about this whole arrangement. The better a business performs, the quicker it is able to repay the loan, and the higher its effective APR becomes! It's essentially a prepayment penalty in disguise. So you'd better make sure the loan doesn't help your business too much, or you'll end up getting hosed by the loan fee. Yes, this is right -- if your business suddenly s…

I really love what Stripe are doing here - whilst yes the the APR can be quite considerably higher. That's fair since Stripe are taking on quite a fair bit of additional risk. As the borrower this loan is significantly de-risked since there aren't any dreaded monthly payments you must make. Here's my attempt at a quick interest calculator for Stripe Capitals loans: https://docs.google.com/spreadsheets/d/1RH9PpJ9kdB7X…

I created a version with sliders, making it easier to experiment:

https://connect.calcapp.net/?app=atzggn

Also, you don't have to duplicate the spreadsheet to make it editable, you can just use it straight away.

(Disclaimer: I created it with Calcapp, which is a SaaS product I built.)

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