Just before the holiday in New York City, Crowdfinance 2013 convened investors, entrepreneurs, and thought leaders in the crowdfunding and peer-to-peer lending industries. At one point in the conference, a guitar business that had successfully run an equity crowdfunding campaign, told the story of their process.  Long story short, it was a long, hard, time-consuming endeavor and the entrepreneur admitted that he was certainly in no hurry to have to endure that again.

The story sparked a contrast against the story from an entrepreneur at the PayPal crowdlending conference the week prior, and I began to wonder what was at the core of these opposing experiences.

The only conclusion I have come up with so far is that equity, by its very nature, is an exercise in qualitative evaluation, whereas debt is far more quantitative.  It is simply easier and faster to evaluate risk and to fund a debt deal than an equity deal.

The Crowd, as Dara Albright mentioned at Crowdfinance 2013, represents a change in the source of funding, but not a change in the nature of the assets being funded.  Irrespective of where the money comes from, assessing the creditworthiness of an established business involves financial analysis, credit scores, industry loss rates, and more, much of which is readily available or accessible in real-time with the aid of technology.  The asset — a loan — lends itself to an analysis process that itself can be made fast, easy, and convenient.

In contrast, determining the intrinsic value of a business — be it a high-tech startup or a local dry cleaner — involves much more subjective analysis. And, the asset origination side of the business has little to do with the capital source, whether traditional or Crowd.

So, I left the conference glad to be in the business of lending and feeling confident that our borrowers will have a much smoother experience securing lending capital from Dealstruck than from other equity platforms in the industry.