After a successful launch south of the border, Toronto’s InvestNextDoor is bringing its “Borrowing 2.0” business model home to Canada.
Capitalizing on the new national regulations which allow Canadians to participate in investing and capital raising for small businesses, InvestNextDoor delivers a model that seeks to reduce investment risk in current market conditions and focus on above average fixed-income returns for retail and institutional investors.
Founded by two Canadian female entrepreneurs, Tabitha Creighton and Lisa Ohman, the platform is the first of its kind to solve the issue of access to capital using debt securities instead of traditional lending structures.
“Small businesses deserve to have access to the same financing options available to their large corporate counterparts. Our platform does just that, using a securities-based lending model that allows business owners to conveniently apply online and use the power of their community relationships,” says Creighton, CEO. “This is a long overdue opportunity for retail and institutional investors, as well as the small business owners who can now access new sources of borrowed capital at competitive rates never available to them before.”
Recent research suggests there is $75 billion in consumer cash sitting on the market sidelines, looking for something in which to invest.
Using data from credit agencies that maintain some of the largest databases of commercial financial obligations in Canada and the United States, InvestNextDoor applies the first algorithm of its kind for evaluating publicly accessible small business debt securities
Meridian, the largest credit union in Ontario, has become the first community banking partner.
“Small businesses account for more than 90 per cent of companies in Canada and play a large role in job creation so their success has a major impact on the economy,” says Bill Whyte, SVP and Chief of Member Services with Meridian. “By working with InvestNextDoor, Meridian is able to support our small business Members with access to additional capital, and investors with unique opportunities that support their communities.”
“Our business is evolving both investment models and small business lending, by taking a page from Bay Street and making it applicable and accessible to small businesses,” says Creighton. “This solves the issue of access and supply, using technology as an efficient way to transform lending. It’s a win-win-win situation because when businesses prosper, so do investors and the communities.”