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Trial By Fire

April 30th, 2020

Market Views

We all knew that FinTech made our lives easier and some entrepreneurs wealthier, but many skeptics still questioned whether doing business online was safe and dependable in times of stress. Well, now we know. FinTech has not only passed the test to date, it has displayed its value in ways that could not have been anticipated: in our view, it has become the clearly superior channel for consumers and businesses looking to borrow, manage payments and gain relief in the most stressed economic environment any of us have ever seen.

While many banks and traditional credit issuers were challenged to deliver relief efforts to their borrowers, consumer lending platforms like LendingClub have mobilized to deliver payment relief quickly. By April 1, LendingClub proactively designed, implemented and informed their millions of customers that they had programs in place to assist individuals experiencing a Covid-related hardship. The process was handled almost exclusively online, providing investors with real-time and transparent portfolio statistics (which we have passed along in our weekly commentary). Contrast this with the frustrating and painful experiences of stressed borrowers dealing with traditional lenders, highlighted in this May 13 WSJ article. Jammed phone lines, unresponsive bots, and lack of clarity made it difficult for borrowers to get relief when they needed it most from traditional lenders.

On the small business front, FinTech leaders like Square, Kabbage, and Paypal demonstrated that the online medium was the most efficient and democratic transmission mechanism of PPP loans from the government to those in need. Locked out of the process until mid-April, FinTechs delivered small business stimulus dollars based on merit and need. They were able to do so efficiently and quickly given streamlined, user friendly processes and simple web- or app-based forms. Once again, traditional lenders saw a breakdown in process, deploying needed funds based on favoritism and judgement. See articles here and here.


Confidentiality and Non-solicitation: No information herein constitutes an offer or a solicitation to buy or sell any securities or any interests in any product or investment strategy managed by HCG Fund Management LP (“HCG”).  Any offer or solicitation relating to any such investment will be made only by means of confidential offering documents relating to a particular fund  or investment contract and only in those jurisdictions where permitted by law.
Reliance: This information may not be relied upon for investment decision-making purposes. It does not contain all the information necessary to make an investment decision, including the risks, fees, and investment strategies of investment products advised by HCG. Eligible investors are described in official offering documents, all of which must be read in their entirety and will supersede the information contained herein.  No offer to purchase any securities or interests by a prospective investor will be made prior to receipt of all official documents, and no offer to purchase any securities or interests will be accepted without receipt of all official documentation that has been completed to HCG’s satisfaction.
Opinions — No obligation to update:  The information contained herein represents the views and opinions of HCG.  It is intended solely for informational purposes and is not intended to constitute investment, legal, tax or accounting advice.  The views about digital finance investing and estimated future investment opportunities expressed herein reflect those of HCG management as of the date herein and are a reflection of our best judgment at the time.  They are subject to change based on market and other conditions, and we have no obligation to update.  Actual results, however, may prove to be different from our expectations.  No warranty is given to the completeness or the accuracy of the information contained herein.
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Third Party Data: We do not verify third party data used in certain calculated metrics shown here.