Finally, the last parameter is funding cost, for supplier financing. This is important because Tradeshift already has very advanced semantic analyses of content (this is in fact how we build CloudScan). We use this to give CapitalAid and other financing parties access to a proprietary risk model to gauge factoring risk.
A lot of material is being considered in this model, including all past transactional data. This has led us to a model that has low funding costs with much less than 3% bad debt. We can guarantee a pretty high yield, and the rates of return are in the range where hedge funds are buying into the model.
< Interesting that it is Tradeshift that appears to supply the risk model instead of each financing company? Or is it because of Capital8 close relationship with Tradeshift? In a sense it could be a model that is close to what Lending Club has put in place with its investment arm. Standard grading and the level of exposure is defined by the portfolio strategy.