One reason I like the Lendship idea of facilitating friends and family lending is how it connects with the startup idea of you need a market that will be big in ten years.

Getting a loan from a bank for a medium amount of credit happens now because banks have have economies of scale, free capital, and free transfer of that capital. They aren’t particularly good and assessing the risk of a particular loan because, frankly, they don’t care. Defaults and non-performing loans are parts of spreadsheets and models.

Over the next ten years the advantages that economies of scale, free capital, and free transfer of capital won’t be quite the same moat for banks to stand behind as monopolist of lending. Individuals will have capital that is freely transferable to anyone instantaneously. When that happens, the advantage that comes from the relationship that friends and family members have (risk assessment) will be what tips the scales to loans between two individuals being much more prominent than loans between banks and individuals.

The market will be much bigger than it is today!