Smartloans Profitable, Closed $30 million in Loans till Date
The home loans industry has been a relatively untapped area for web entrepreneurs seeking to capitalize on the lack of sites servicing home buyers. That was something Smartloans’s founder, Vinod Nair, spotted early on when he launched his version of a comparison site for home buyers looking for a new home loan or to refinance their current loan. Unlike other sites that merely provides contact information to loan brokers, Smartloans, one of the startups featured at unConference Singapore 2009, allows users to (1) compare information pertaining to their loans from multiple banks without having to contact each of them individually, (2) get accurate projections of monthly and interest payments and (3) directly get in touch with bankers who will help in getting the financing done for home buyers. This entire suite is packaged in an intuitive and easy to use package with enough direction that anybody can apply for a loan.
Improvements to Smartloans
One of the distinct features of Smartloans as compared to its competitors is its smart UI and ease of use. Vinod’s previous startups, Homespace and Rentspace, was known for having a sleek maps-based UI that allowed potential home buyers to easily view the properties and the amenities around it. A lot of this interaction-based UI was brought forward to Smartloans. For example, users can view the total cumulative interest over the next 30 years in an easy-to-understand table, while comparing all that to different banks. No more messy calculations or number crunching for you.
With the recent addition of Citibank and CIMB into the list, this brings the total number of banks in Smartloans to 10. Quite an impressive feat considering that Smartloans was just launched in March 2009. It’s a no brainer for the banks since Smartloans offers qualified leads and the banks don’t have to pay for each lead generated (more on that in a bit). They have also expanded their loan offerings to commercial properties, which is the next logical piece of the loans pie. While the number of commercial properties loans closed is much smaller, the value of each commercial property loan is far greater than the value of a home loan. This would in turn mean more commission for Smartloans when a loan is closed. But the customer value does not end there. Renovation and business loans are available as well, making the lifetime value of the customer longer and of much higher value. This long tail offering makes perfect sense for Smartloans’s growth strategy.
Profitability
As of today, Smartloans has closed about $30 million in loans for the banks in its platform. All this is done while being a free service to its users. It makes no sense charging users just to compare loans packages. Furthermore, it does not make sense simply referring leads and being paid per lead. The key here is in pocketing a percentage of the deal closed by a referral from Smartloans, also known as Cost Per Action (CPA) in online marketing lingo. And that is exactly how Smartloans is able to hit probability this early. A dedicated sales team that follows up and qualifies leads helps ensure that customers close the deal and they get their commission.
This brings me to an interesting point. How many other web startups are there in Asia that are in the black in less than 10 months, and that too while being bootstrapped? And how did Vinod do it?
We will get to hear the exact details in our upcoming event, Echelon 2010, slated for May 2010. Details will be out as soon as we have them.
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