Wiserfunding and Defyca partner to bring SME debt funding on-chain
At Wiserfunding, our mission is to address the $5.4tn SME (Small and Medium Enterprise) funding gap by empowering lenders [...]
At Wiserfunding, our mission is to address the $5.4tn SME (Small and Medium Enterprise) funding gap by empowering lenders with the most sophisticated credit intelligence. Lending involves an entire ecosystem of stakeholders, so achieving our mission is a team effort by nature. We have partnered with market leaders such as Codat, and FullCircl to make SME lending as reliable, transparent, and frictionless as possible.
Now, we’re very excited to announce our new partnership with DEFYCA, a company building the next generation of private debt, so we can continue to bridge the funding gap.
Why we’re excited
DEFYCA is creating the future of SME private credit through their blockchain-enabled debt marketplace. Their platform provides lenders with a reliable, transparent and flexible way to package and distribute debt.
Bringing traditional debt finance on-chain increases security, reduces cost, and accelerates the speed of each transaction. By tokenising on-chain debt, securities can be sold in smaller increments without additional friction, enabling smaller investors to gain exposure to a new asset class, while larger investors can control and diversify their portfolios with greater precision.
We believe Defyca represents the perfect fusion of the old and the new. They are addressing age-old private debt challenges by building the next generation of private debt marketplace on the Avalanche subnet to enable flexible financing for good companies and great returns coupled with quality liquidity for investors.
How we’re partnering
The new partnership will build an instant, verifiable, tamper-proof digital rating and certificate of creditworthiness based on Wiserfunding’s SME Z-Score models and DEFYCA’s RiskPassport smart-contract technology. The RiskPassport will enable lenders and investors to transact more quickly, safely and with complete transparency.
DEFYCA’s RiskPassport is set to become an integral part of the evolution of private credit markets, including fully digital, blockchain-based infrastructure, where debt funds are tokenised and traded by both traditional credit investors and digital securities investors alike. The RiskPassport will serve as a digital risk fingerprint that quickly, reliably and securely conveys essential credit risk and compliance data for due diligence.
“We are super excited to work with Gabriele, Jeff, and the wider team at Wiserfunding to launch our RiskPassport service on the Avalanche blockchain.
SMEs are the backbone of our economies, providing jobs and growth which sustain our communities. Given the current inflationary cycle, their need for financing options has never been greater nor more underserved.
Investing in credit facilities to SMEs is a matter of earning risk-adjusted return based on the risk profile of the downstream borrower, the partnership between DEFYCA and Wiserfunding will make credit investing efficient and transparent on a scale that has not yet been possible.”
The key to DEFYCA’s platform model is neutrality and objectivity. To maintain the integrity of a marketplace where investors and borrowers are both treated fairly, stakeholders need an independent third party to assess the risk associated with each debt issuance. Understanding risk and how it translates to pricing, alignment of interests, and its behaviour through various credit cycles is a critical facet of smart credit investing. That’s where our partnership comes in.
The RiskPassport includes a full suite of Wiserfunding’s proprietary risk metrics and essential data, including the SME Z-Score, Bond Rating Equivalent and 1-year Probability of Default.
Investors benefit from SME-specific credit assessments which are the most reliable in the industry. With over 76 sector and geography-specific risk models, each assessment is externally benchmarked based on the SME’s sector. Due diligence processes can now focus on investor-specific criteria and value-add analysis rather than administrative tasks.
We are excited to partner with the DEFYCA team to bring true innovation to private debt lending at such a critical time for lenders, investors and SMEs.