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Stripe Capital

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Re: Stripe Capital

#231

Post by mNovak »

antaviana wrote: post #107
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…

Is there any expectation or obligation that all proceeds of the business are handled by Stripe? I mean, if you have several payment methods on your website, one resource to improve your APR could be to make more promiment other payment methods for the duration of the loan.

Probably they're assuming a business which is profitable enough for them to extend credit isn't going to mess around too much with how they conduct said business, in order to save a few hundred dollars

Re: Stripe Capital

#232

Post by shostack »

Liron wrote: post #65
edouard-harris wrote: post #43

What's most interesting about this is that, reading between the lines, this is effectively an income share agreement for businesses, capped to the loan amount: you pay back a percentage of your revenues until you hit the cap. This could be huge, and Stripe is perfectly positioned to execute on this.

It's only ISA-like for businesses whose low-profit times are their low-revenue times, like seasonal businesses. But often businesses have a relatively steady stream of revenue and fluctuating/unpredictable net profit/loss (especially if they're dealing with non-software margins), and this model isn't much of a downside-risk-reducer for them.

So basically expect to see a lot of costume shops using this come October?

Re: Stripe Capital

#234

Post by tomnipotent »

pc wrote: post #108
laurentb wrote: post #78

Earlier quoted context omitted.

In this case, then surely showing a calculator straight on the page allowing people to see what APR they would get based on their payment/sales configuration would make the whole process more transparent and easier to understand by people who might not be savvy enough to understand the nuances then?

Yeah, we've iterated a lot (and done a lot of customer interviews) to try to figure how to make the presentation as simple-to-understand as possible. It's hard to show a (de facto) APR precisely because it will depend on your subsequent sales. (And showing it could even be confusing because there's no compounding with our fee structure.) All that said, one of the key questions we care about when speaking with custome…

Provide a tool that show's the loan repayment based on historical data e.g. a scenario.

Let me go back 12 months, pretend I took a loan of $X amount at Y date and simulate the repayment based on a customers actual historical data.

Re: Stripe Capital

#235

Post by gesticulator »

CPLX wrote: post #218
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 wonder if you’ve considered the perverse incentive you’ve created. It may prove fatal to this model. In short, you’re charging the highest interest rate to those whose businesses do better than you expected and the lowest rate to business who underperform your projections. As such, you’ve created a financial incentive to underperform, and are entering this business of lending money by literally penalizing the least…

Perhaps, but it’s really only worse looking at it from the APR. The business is still performing better nominally when they outperform so there’s no incentive to do worse on a nominal basis.

Re: Stripe Capital

#237

Post by mod »

hammock wrote: post #103
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…

What's stopping a business from getting a loan and then transferring the funds - and directing part/most of their future receivables - to another entity, in order to drag out the loan term?

There's a minimum amount due.

Re: Stripe Capital

#238

Post by skrebbel »

kryogen1c wrote: post #109
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…

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…

Isn't that pretty common on HN? I've read similarly great comments from sytse (gitlab), eastdakota (cloudflare) and a bunch more I can't drum up right now.

Re: Stripe Capital

#239

Post by onion2k »

skrebbel wrote: post #238
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…

Isn't that pretty common on HN? I've read similarly great comments from sytse (gitlab), eastdakota (cloudflare) and a bunch more I can't drum up right now.

It's certainly a lot more common on HN than other forums but that doesn't mean it's not worthwhile pointing out when it happens. Positive feedback from readers is great.

Re: Stripe Capital

#240

Post by heliodor »

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…

> an interesting way to make it hard to compare

It's simply a side effect of the non-typical structure of the loan.

The loan structure is a new offer for the market an aligns with the customer's business needs for the first time ever. Saying you can get another loan elsewhere is incorrect for a certain segment of businesses.

Talking of APR comes from a saver mindset on a fixed budget, which is what people do, not corporations. Corporations focus on generating money first, and optimizing last.

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