Social Lending: The Long Tail of Crowd-Sourced Funding

by Kurt

The Long Tail (as both a book and a concept) has defined and described so much change in recent history, but some of its most fascinating phenomena are just now bearing fruit. The original paradigmatic champions of the long tail online – eBay, Amazon and so on – are slowly losing steam, becoming less user-friendly and otherwise relatively uninteresting. Meanwhile, some of the most engaging (and still-evolving) representatives of an even smaller slice of the tail are shaping up to be amazing not only for connecting consumers to products but for providing funding to entrepreneurs.

Skip for the moment the (admittedly awesome) examples of niche incubators and startup schools, and look toward those services that are making a direct difference in the lives of non-internet folks – two of the best being: LendingClub and Kiva.

The former is a powerful service that helps provide micro-loans (via numerous small individual lenders) to people in search of anything from a bit more money to pay for a wedding to help consolidating their massive debt. I have invested a small amount in part simply to support other entrepreneurs and folks just generally having a hard time getting a normal loan, but have also enjoyed a return that significantly out-paces the currently crazy stock markets (as well as steady-state bond markets) – truly a win-win situation, which exposes me to the exciting as well as heartbreaking stories of loan seekers. LendingClub is not the only one of its kind out there, but personally I think the interface, vetting process and so forth are much better structured than some of its competitors.

The latter is purely non-profit, but is also very different from your typical send-and-forget charity donations. Instead, when you put money in Kiva not only can you select from a series of well-defined projects from around the developing world, but you can also choose the amount to give and, when it is paid back, you can invest it in someone or something else (or withdraw your funds). Again, the variety of uses is part of the fascination – it can be anything from a group of basket weavers in rural Africa starting an export business for their custom goods, to someone in Brazil simply seeking to pay rent on a street-vendor slot so they can showcase and sell their wares.

So if you, like me, have lost a little heart as the once-independent, fast-growing properties of the Long Tail Revolution have grown somewhat stagnant, I would encourage you to check out some other projects like these that are not just innovative but also can make a difference (and perhaps earn you monetary rewards as well).