Orchard Platform built the plumbing. Who would open the taps?

The beginnings of Orchard Platform were agreeably modest: four friends, a Chinese restaurant on New York’s Lower East Side, and a blog. In a 2015 interview, co-founders Angela Ceresnie and David Snitkof recalled that early setting. The subject occupying the table was less modest. Online lenders were changing how people borrowed. Someone still had to work out how institutions would buy the resulting loans.

A restaurant table, then a different kind of exchange

Founded in 2013, Orchard brought together Matt Burton, Ceresnie, Jonathan Kelfer and Snitkof. Burton’s background supplied an unexpected clue to the business. He had worked in advertising technology, where exchanges matched inventory with buyers at speed. By August 2014, eight of Orchard’s 17 employees had worked at AdMeld. The company had imported a small neighbourhood of expertise.

The resemblance between advertisements and loans was useful, up to a point. Both required data, buying rules and connections to multiple suppliers. But a misplaced advertisement and a misplaced financial order had different consequences. “There is little to no margin for error,” Burton told AdExchanger. Automation in credit demanded an accurate record of what the machinery had done.

Make the loans speak the same language

Consider the institutional buyer’s problem. A lender can make borrowing pleasant without making its loan book easy for an outsider to understand. Different originators produce different information. A buyer interested in several platforms needs a way to inspect individual loans, compare performance and keep track of purchases afterward. Each additional relationship can introduce another reporting chore.

Orchard occupied that space between making a loan and financing a portfolio. A 2015 Data & Society report described investors searching and filtering loans, seeing performance statistics and analysing loan-level data from multiple platforms. It also documented Orchard’s relationship with Karrot, Kabbage’s consumer lending product. The people using the tools were institutions; the borrowers were further down the chain.

The company’s consumer marketplace lending index addressed another awkward question: compared with what? A portfolio return means more when investors can compare it with an asset-class benchmark. loanDepot agreed in February 2016 to contribute personal-loan performance data to Orchard’s index and market-data products. The index was distributed through Bloomberg Professional, putting a young market’s measuring stick on an established financial desk.

“There is little to no margin for error.”Matt Burton · AdExchanger · 2014

That measuring stick could also reveal deterioration. The Federal Reserve Bank of San Francisco’s first-quarter 2017 report used Orchard’s data to describe falling online consumer-loan returns, citing increased charge-offs and lower average yields in late 2016. Transparency had a purpose beyond attracting investment: it made uncomfortable changes visible.

The machinery behind the money

Orchard’s business combined software, data and analytics for lenders and institutional investors. Its 2017 product announcement offered demos and free trials rather than a public tariff. The practical proposition was less time preparing information, more consistent analysis, and better control over funding relationships. Those benefits mattered to a lender trying to keep capital available while continuing to originate loans.

Capital Management handled allocation, facility monitoring and borrowing-base reporting. Analytics supported scenario testing and comparisons with anonymized peers. Deals added a qualified network for seasoned loan pools, forward flow agreements and credit facilities. Orchard Platform Markets, its registered broker-dealer subsidiary, operated the network. The menu reflected the actual variety of institutional credit transactions rather than a single buy button.

Partners extended the information available. Experian’s July 2017 collaboration supplied depersonalized consumer credit data for monitoring borrowers in existing portfolios, plus historical datasets for modeling. A November Bloomberg arrangement widened access to Orchard’s aggregate datasets and research. One relationship deepened the view of borrower credit; the other placed the resulting market intelligence before more institutional eyes.

The capital behind the company was substantial. A $2.7 million seed round preceded a $12 million Series A in October 2014. September 2015 brought a $30 million Series B led by Thrive Capital. That last announcement put cumulative investment at $44.7 million and said institutions had used Orchard’s technology to facilitate billions of dollars in loan investment. Neither figure was Orchard revenue.

Inc. reported Burton’s expectation of roughly $3 million in 2015 revenue. An expectation is not an audited result, but it helps distinguish the company from the market it served. Billions flowing through infrastructure do not automatically become billions earned by its owner. Orchard had to sell the usefulness of the machinery.

The market needed permission

The difficulty appeared when the machinery’s ambitions expanded. In April 2018, PYMNTS, citing Bloomberg, reported that Orchard’s move toward trading loan securities had faltered. Large originators, including LendingClub, were reluctant to permit trading of their loans because of regulatory concerns. That account identifies a specific obstacle: access to tradable supply.

Here the advertising analogy reached its limit. Standardizing information does not grant the right to transact. A marketplace can have interested buyers and competent engineers while depending on decisions made elsewhere. Our reading of Orchard’s experience is that the permission question belongs near the start of marketplace design, alongside demand. Better interfaces cannot settle an originator’s regulatory concerns.

The customer who knew what to buy

On April 26, 2018, Kabbage announced an agreement to acquire substantially all Orchard assets. It planned to bring Burton, Snitkof and more than twenty employees into its New York office, predominantly in analytics, data science and engineering. Kabbage was already a strategic customer. It knew the tools from using them.

The acquisition rationale was concrete: combine Orchard’s analysis capabilities with Kabbage’s forecasting and predictive underwriting, and improve reporting for bank partners. American Express later acquired substantially all Kabbage in October 2020. Orchard’s independent chapter had ended, while the buyer’s announcement made clear why the underlying capabilities remained attractive.

There is a practical lesson to borrow from the restaurant table. Teach a market something useful, make its information easier to compare, and build tools customers need before the grand marketplace arrives. There is also a condition: the parties controlling supply must be willing and able to participate. Orchard’s story makes that small word, “willing,” look rather expensive.