Dan Recht is an Angel Lender on WeFinance who focuses on people improving their careers and those paying off student loans. He’s also the CEO of a hardware startup in San Francisco called Volute. He chats about lending on the platform, what types of people he looks for, and his view on coding bootcamps.
Lender Corner with WeFinance is a regular series that looks at some of our angel lenders, why they lend, and what they look for when looking for opportunities.
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What’s been your general experience with the platform?
I found the platform very easy to use. I really like how it’s a series of uplifting stories — of people making positive changes to their lives through education and career changes — and it’s really nice to be able to contribute to that.
Something that really influences me is that I was lucky not to have to take out student loans. I wasn’t rich, but I was economically advantaged enough that my parents had some money put aside for my college tuition. I was also lucky that I had a great uncle who left me a chunk of my tuition in his will. This combination meant that I graduated debt-free. Afterwards, I completed a PhD in Applied Physics, a discipline where you don’t take out loans.
As a result of all this, I feel fortunate and I feel compelled to pay it forward by finding opportunities to help other people.
What type of people do you lend to?
I’ve been lending to people who I know and also to people who appear low risk.
With people I know, it’s the easiest thing in the world since I already have a relationship and trust with them.
With the second group, I look for people who are unlikely to default. It’s also important that they have a compelling story — I’m really hoping to help people who are making important changes to their careers and lives.
What do you look for when you lend money to people?
I’m really looking for those people who are both a good investment and a good story. I want to be funding a positive change in someone’s life but at the same time, I’m looking to get a return on my money.
What tips do you have to borrowers who are currently creating campaigns?
I think vouching is one of the most powerful features of WeFinance. Having people write about you saying that, “I like Heather, I would invest in Heather because she’s good with money, my classmate, and she’s trustworthy.” As a lender, this makes a big difference for me since it contextualizes the person and corroborates the person is saying.
It’s doubly powerful when that same person contributes to the loan. If everyone has a great story, what sets someone apart is that their friends aren’t only willing to write about them, but they’re willing to put their money behind them — this combination of endorsement and actual commitment is really compelling.
Have you mentioned WeFinance as a lending platform to other people you know?
I run a hardware startup in the Mission District of San Francisco. One of the great things about the company is that we offer competitive salaries to our engineers and technicians because we value mechanical skills very highly. What that means is that we bring people in where it makes sense to refinance loans at an accelerated schedule. In those cases, I’ve casually brought up WeFinance as an option they should consider if they want to change how they approach their debt.
I love that WeFinance allows you to create your own payment schedule and pick an interest rate that works for you.
Do you have any soft spots for specific stories or situations?
I have a giant soft spot for people looking to improve their career prospects but it’s also where I have to put my investor hat on. I hold back when the person is trying to fund something inherently risky.
Another soft spot would be people who have high student loan rates. I’ve had some friends who have had serious problems with this and I’m always excited to be part of the solution to get the interest rate down.
Do you focus your lending around certain schools?
Not really. It comes into my risk analysis but alumni pride isn’t the reason I’ll invest in someone. If you go to a reputable college or good bootcamp, I’ll view you as lower risk.
I care more about the individual and the strength of their personal network. On this platform, I’m coming in as a stranger and investing in people and so I need to look at the whole picture.
What’s your view on coding bootcamps?
I’ve had friends go through them and get great jobs afterwards. At the end of the day, it’s about helping people make a positive change in their lives, and bootcamps are powerful tools to do that.
It’s amazing that you can spend a summer and turn your life around; I’ve seen this happen with friends and I believe in bootcamps as a thing.
Any final takeaways as a lender on WeFinance?
I don’t find credit scores helpful as much as employment, salary, and network signals. LinkedIn is helpful since it provides a snapshot of your work experience and your education. It’s key to explain what the loan is for and why WeFinance can help you.
The main thing for me about WeFinance is that I was fortunate that I didn’t have to take out student loans to go to college. I want to do everything I can to make greater education easier for as many people as possible.