Noah Breslow | CEO Abhra Mitra | Data Analytics Manager

May 20, 2014

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© Copyright 2013 OnDeck. All rights reserved.

PRESENTERS AT MAY’S EDITION OF DATA DRIVEN INCLUDED:

JEFF STEWART: @URGENTSPEED @LENDDOFRIENDNAVEEN AGNIHOTRI: @NAVAGNI @LENDDOFRIENDNOAH BRESLOW: @NOAHBRESLOW @ONDECKCAPITALABHRA MITRA:

@ONDECKCAPITALJAMES GUTIERREZ: INSIKTRENAUD LAPLANCHE:

@LENDINGCLUB

#DataDrivenNYC

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Agenda

The Small Business Lending Gap

How Data and Technology are Enabling Innovation

Case Study

Q&A

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99.7%of all businesses are

small businesses

Meet Ben, owner of Waterfront Wines

in Brooklyn, NY, and 3-time OnDeck

customer

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Large and Underserved Addressable Market

(1) SBA 2012 Small Business Lending Study - # of Non-real estate small business loans outstanding for depository lenders as of June 2012(2) Oliver Wyman, How “New-Form Lending” Will Shape Banks’ Small Business Strategies, 2013

Bank $100k or less

Bank$100-250K

Unmet Demand

Total Market Opportunity

Sub-$250K U.S. Small Business Loan Demand

$100B

$120B

$46B

$266B

1 1 2

<$0.5B

(current outstandings)

The Small Business Lending Gap

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Disrupting Traditional Financial Services

Lending is one of the last industries to be transformed…

Retail

Travel

Real Estate

Payments

Lending

Brick and mortar stores

Traditional travel agencies

Brokers & classified ads

Checks, cash, & high card fees

Retail banks and credit card companies

THEN NOW

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Proven Platform for “On-Demand” Capital

Small Businesses

Data Aggregation

Real-Time Monitoring

OnDeck. com

OnDeck API

Loan Sales with

Asset Visibility

Origination Platform

Servicing Platform

Data Sources

Customer Database

Daily Collections

(ACH)

Proprietary Credit Model

1st online-based, daily collection lending platform

Over 240,000 loan applications processed

Over 3,500,000 daily payments collected

Millions of variables in small business database

Over $400M of Commitments

Nearly 20K Borrowers Served

Turn-key Capital SolutionsCapital Sources

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The Small Business Digital Footprint

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Data + Technology = The OnDeck ScoreTM

Payment History

Amount Owed

Credit His-tory

New Credit

Types Credit Used

Personal Credit Score

Financial Info Non-

Finan-cial Info

Trade Info

Public & Social

Business Attributes

Cash Flow

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Who to Target vs. Who to Approve?

10 years in business

~ $1 million in annual revenues

500-800 FICO

<$75 avg. transaction size

One of 700 qualifying industries

Customer Profile

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At OnDeck We Are Always Looking for More Data to Improve Model Performance

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Version 1 Version 2 Version 3

60% 65% 85% 95%

Version 4

More loan history to model on

More data points on each loan

Result: Better model performance AND coverage

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For this we are building a data aggregation & learning platform

Data Aggregation

Record Linkage

Machine Learning

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Record Linkage – Similarity Weighted Across Different Dimensions

Mag’s Plumbing, 1400 Herr Road, Helena MT406-100-1000

Mags Plumbing Inc,1400 Herr Rd406-100-1000

Mag’s Plmbing,1400 Her Rd

406-100-1000

Mag’s Plumbing,234 Name Road406-100-1000

Mag’s Plumbing,400 New Road406-000-0000

Data entry typoBusiness Record Alternate Address ????????

Mag’s Plumbing,400 New Road406-000-0000

Mag’s Plumbing1400 Herr Road212-100-1000

Mechanical Turk + Intuition

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This Allows Different Data Sources to Vote in a Model

Pizza

Food & Dining

Restaurant

NAICS 722511

Full Service Restaurant

Funeral Directors

Funeral Homes

Easy: Lots of data, and words that clearly point to restaurants

Harder: Very few data points, but the model can still make a prediction

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Key Takeaways

Record linkage allows us to acquire more data points/sources

on every business

This allows multiple data sources to “vote” on the final answer

That leads to better models and better coverage

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Summary

OnDeck was founded in 2007 to

address an underserved market:

small businesses

Technology and big data are

changing the lending game and

driving efficiency

Q & A