The future of finance? P2P equity and VC funding

I'm optimistic about the efficiency gains coming from direct P2P entering the finance market, and with some skeptical reservation believe that this is where finance is heading generally---disintermediation can be a beautiful thing for market efficiency and participatory transparency.  As a survey: sites like Lendingclub and Prosper have gone far already in establishing the market for P2P credit.  Kiva and Grameen have done impressive things for P2P donation and microcredit models, and Kickstarter has been exceptional in artistic donation services.  Rather than waiting for banking institutions to evaluate the profitability of their ideas or causes, individuals are gaining increasing access to funding the opportunities they support, on terms they define themselves. 

But GrowVC is quite interesting for pushing P2P equity and venture capital solutions. You can check it out here if you're an entrepreneur looking for funding.  Most interesting is that GrowVC is, as far as I've seen, the first genuinely global marketplace in this field.  While Prosper and Lending Club are limited to US residents (and credit, rather than equity), GrowVC is creating a network of local representatives in several markets, so you can invest in anywhere from anywhere, creating localized funding communities online.  This is the bigger innovation in my opinion, and very near to what my collaborators at Loft Finance voiced in their call to common standards.  GrowVC's affiliate program also looks attractive in that they give 1% of the profit of the firms you bring in.  (Sounds too good to be true, so we'll see how that pans out.  You can help me test this by using my GrowVC links above.)

However, I believe there's bound to be a major shake-out in P2P finance, and it's anyone's guess who's going to come out on top, and whether that player has even emerged on the scene yet.  This is a nascent industry, and just like at the Dawn of the Automobile there were hundreds of American auto manufacturers, which consolidated to 4 in the 60s, then to the Big Three afterwards (and recently, almost 0!), we're seeing a number of different approaches exploring this space.  It's still the wild west---which means wild opportunity for success as well as failure.

My own experience with this patchwork of fiefdoms is that as a Michigan resident, the SEC requies "sophisticated investor" criteria be met in order to invest.  In other states, investors need be less sophisticated and can invest with limited assets.  The government of Tennessee has declared that no investors are sophisticated enough to invest in P2P finance (!)---(along with Idaho, Indiana, Iowa, Kansas, Maine, Mississippi, Nebraska, North Carolina, and North Dakota). That's unfortunate, I think.  So, from this perspective, it seems to me the biggest trouble with picking winners now is that P2P finance is still looking for a home, and stretching against regulatory regimes that aren't prepared for it---which will determine most of how the game plays out. In the US, these firms have had to contend, not only with fair-lending legislation governing traditional mortgages, but also with the SEC, as firms like Propser and Zopa are deemed investable securities.  While they do have facets of both, they face this uncomfortable position of being dual-governed, rather than being governed as a new and substantially different financial vehicle.  Obviously, unchecked "financial innovation" can be a very dangerous thing, but I would argue that P2P is the kind of innovation that could be of worthwile value to consumers if done correctly, and approached with a consistent and comprehensive methodology.

We shall see.  This is a bit afield from pure design or analytics---but I've become engaged on an analytics project in P2P finance right now, so I'll have some related perspectives (and data!) to report as time goes on.  It's an interesting frontier, for sure. 

Do you have thoughts or forecasts on the future of P2P finance?  Leave them in the comments.  (And if you do, I'll hold you to them later.)