Optimizing for efficiencies

January 8, 2024

With a year of history under our belt with third party underwriters bringing deals to market, we have to take our reporting one step further. In the same way that we've been keen to track investor behavior (cohort performance, churn, etc.), we're going to need to begin tracking the performance of our borrowers and underwriters across their entire lifecycle as well. Attribution around where these borrowers were sourced from (team, underwriter, our website, or referrals), all the way through cohort retention and ultimately how fast they churn out and why. We did a great job of optimizing when we were the only underwriter and now that we've seen how third party underwriters operate, we need to continue to refine and eke out better margins.

We are in a unique position relative to the other marketplace solutions out in the market (e.g. YieldStreet, Fundrise, etc.), as we've spent the time and effort to build out actual software that makes us more efficient with higher margins. Traditional marketplaces run on 40-50% gross margins, a key metric that measures how much of the revenue is left after subtracting direct costs from generating that revenue, such as customer support, underwriting, hosting costs, and more. We finished the year at over [ ]% gross margins and the smallest team relative to most of the competition, a testament to the efficiencies we've been able to capture both from technology and our own internal processes. 

By adding this next set of metrics to our reporting arsenal to deliver on smarter sourcing, higher retention, and increased deal sizes, we should be ending this year at 80%+ gross margins which puts us on par with pure play software-as-a-service companies, something that is unheard of in this space