MicroVentures Merges Venture Capital and Peer to Peer Lending

MicroVentures Marketplace has launched a new service that aims to bring concepts from peer to peer lending into the world of venture capital.

The company allows businesses in a number of sectors to raise funding from individual investors on its platform. Businesses looking to receive funding pay a $100 preliminary application fee. If MicroVentures approves the provided business plan, businesses are on the line for another $250 screening fee which pays for the cost of due diligence. After the company is approved for funding, MicroVentures will take care of all required state and federal filing and list the investment on its marketplace. If 100% of the share are purchased by investors, the company will receive the funding and MicroVentures will take a 10% cut of the funding round.

InformationWeek reported in April that the company had funded its first three deals, totaling $150,000. One deal, totaling $100,000, was funded by nineteen individual investors. The company also arranged two $25,000 deals. MicroVentures is not disclosing who the recipient companies are because the company is currently in a financial quiet period.

The company was founded by Bill Clark, a former risk manager that dealt with small businesses. He told InformationWeek that he started the company because it’s very difficult for new companies to raise monies. He said that finding angel investors can often be too challenging and peer-to-peer lending sites, such as Lending Club and Prosper.com, often don’t provide sufficient capital to get a company off the ground.

“I thought, ‘What about a model that combines equity with peer-to-peer?'” said Clark in an interview with InformationWeek. “I spoke to some lawyers and the SEC, and once I was convinced I had a good idea, I launched MicroVentures Marketplace.”

Clark said to InformationWeek that businesses interested in funding can raise between $100,000 and $500,000 from investors on its platform in a period of three to six months. MicroVentures is offering funds to companies in a number of different verticals. The company’s FAQ says that it’s looking for ventures that can become profitable in a period of one to three years and ventures that have already been funded to some extent by their founders.

Interested parties can complete the investor application form or the business funding request form on MicroVentures’ website.