We-Decide vs Peer-to-Peer Finance

I worked at MYC4 for 2.5 years. (www.myc4.com)

I have been thinking why and how it relates to what I am doing now, because I have learned important lessons. The two projects actually share a lot:

MYC4 is a collective decision platform: investors collectively decide who gets funded. It is, in a sense, collective intelligence platform where investors provide their knowledge on who should get funded.

Yet, I must also say, that this principle that MYC4 and many other P2P financing platforms (such as Kiva, Finansowo, etc) adhere to is somewhat compromised by risk management systems that manage the credit decision centrally rather then fully empowering investors.In the case of MYC4, for instance, investors receive relatively limited information regarding the business (as it is very expensive to provide extensive information), and they are more or less taking MYC4′s risk assessment as the basis for their decision-making. In other words, although the investors (or the crowd) is given the power to make decisions on their own, the limited information they can access disable the platform to a large degree to exploit wisdom of the crowd.

One of the main reasons for this is the geographic limitations: the crowd can only be smart if the whole has knowledge on the parts of it. With most investors removed from the locations where loans are made, investors can hardly judge which loans/businesses may perform.

At We-Decide, the crowd is asked to make decisions for their own. There is no information asymmetry, and the crowd is wiser then any part of it. We-Decide is similar to P2P platforms in the sense that the crowd makes conclusive decisions, yet different as they make decisions for themselves where they have access to all the knowledge they need.