Unicorn Analysis: SoFiSoFi, a San Francisco, based online student loan refinancing platform, claims that it is a "leader in marketplace lending, with over $7 billion in loans originated to date". In addition to student loan refinancing, the platform is involved with "low down-payment mortgages, mortgage refinancing, and personal loans"[1]. While the firm has raised over $1.3 Billion in funding from 6 rounds, it has failed to recognize the importance of patents with 0 published patents/applications [1].
Current Portfolio Analysis
In terms of its current portfolio, SoFi could attempt to act as some new entrants into the financial technology space are currently involved in, by patenting portions of the Peer-to-Peer lending process. For example, Metabank has a pending patent involved in "Person-To-Person Lending Program Product, System, And Associated Computer-Implemented Methods"[2]. As the peer-to-peer and online lending space grows, more competitors will continue to stake their claim into the industry.
Market Competitors
In terms of market competitors, SoFi is competing with traditional banks or credit unions and other student loan providers (Stafford loans, need based loans), as well as other FinTech platforms such as CommonBond and Earnest. While these competitors race for more funding, patents will serve as crucial differentiators going forwad.
Strategies:
In order to strengthen its IP position, SoFi can acquire or patent aspects of its online lending process including its online web based UI or its unique "Alumni-Funded Student Loan" which allows it to achieve low rates where it claims it can "save an average of more than $9,600 each over the course of their loans" by partnering with business school alums [2]. Patents and IP will be crucial as many of SoFi's largest competitors (financial institutions) have been in the industry for much longer and have yet to make major strides into the industry.
Sources:
[1] https://www.crunchbase.com/organization/social-finance#/entity
[2] https://patents.google.com/patent/US20090228307A1/en?q=lending+club
[3] https://www.sofi.com/press/sofis-innovative-alumni-funded-student-loan-is-now-available-at-27-universities/
Hey Sid,
ReplyDeleteI like how you gave specific instances as to where SoFi could improve its IP portfolio, as well as what areas SoFi holds significant IP presence in. Looking forward to your future posts!
Best,
Shauray
Hi Siddharth,
ReplyDeleteI enjoyed reading your take on SoFi in the financial tech space. I find hard to believe that with 0 published patents/applications, SoFi can still offer low down payment mortgages and personal loans. I do agree that SoFi does need some IP holdings in order to stand up against traditional banks and long standing credit unions; but feel that the process of incorporation restricts the ability for SoFi to innovate quickly to the needs of its customers. Just some personal thoughts--thanks again for the read!
Hi Sid, good job on the post about SoFi's IP portfolio. I had heard about SoFi before briefly through some ads, but good job on providing a detailed explanation of their business and notable revenue streams. I definitely agree with your point that SoFi acquiring patents and intellectual property will help the business compete in the long run with some of the more established players in the space such as traditional banks and credit unions. Also, great job in pointing out a specific area of SoFi's platform where they can obtain valuable and useful patents. Thanks!
ReplyDeleteThe Unicorns I always expect to have patents don't have any patents! Apparently, the trend is, if it's a website cutting out the middle-man, it's going to have lots of competitors, low barriers to entry, and no patents! Other such Unicorns include Instacart and Warby Parker.
ReplyDelete