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Cadence

https://withcadence.io/
Lending & Profit Sharing
Cadence is a blockchain-based provider of short-term loans, offering investors terms as short as one month.
Scorecard
A
Quality of Offerings
A
Fees
C
Quantity of Offerings
C
Brand
A
Liquidity & Cash Flow
A
Risk & Diversification
Accessibility
B
Alts for All Score
4.5 - Very Good

Cadence is a crowdfunding platform focused on providing short-term debt investments under Reg. D. The firm uses a blockchain-based platform (don't worry, no Bitcoin or crypto here) to greatly increase operational efficiency and administrative processes, allowing it to offer investment minimums as low as $500 per investment; previously, the unit economics of having a large pool of investors with low minimums were unfeasible due to high administrative costs.

The Firm uses a self-formulated risk framework to vet all inbound deal flow, and only lists an investment if it satisfies all of the criteria contained in its diligence process. When analyzing prospective investments presented by its origination partners, Cadence also utilizes institutional underwriting practices and security structures specifically designed to protect investor principle. It’s clear that Cadence makes an effort to offer listings from a diverse group of originators; the company offers detailed information on each of its origination partners, including statistics on how many deals they’ve had listed on Cadence and weighted average returns data. When considering an investment on Cadence’s platform, in addition to weighing the prospective investment itself, it’s also important to perform due diligence on the origination partner. The experience and general profile of the originators on Cadence’s site varies significantly. While ‍some have demonstrated a 10+ year track record of generating returns, others operate in riskier geographic markets (i.e. South America) or relatively nascent sectors. Cadence's returns indicate that it is bearing risk somewhere, and it’s important for investors to understand this risk is on a deal-by-deal basis.

Cadence’s strongest point of differentiation lies in the ultra-short-term nature of many of its deals--some as low as 1 month. The short duration of Cadence's deals presents a highly compelling and, thus far, largely unique opportunity for investors to achieve competitive yields in a highly liquid alternative investment product. The relative liquidity of Cadence's deals stands out in an alternative space typically characterized by investments with lengthier capital lock-up periods. Past investment opportunities on the platform, all of which have been fully funded, show deals in a range of industries and durations that boast annual yields ranging from approximately 8-15%.

With strong risk-adjusted yields, high liquidity, and low investor minimums, Cadence is a compelling option for accredited investors and worth a serious look. Depending on your investment strategy and your preferred level of involvement, the only potential issue with Cadence is the requirement to frequently engage with the platform to keep capital at work due to the shorter investment periods.

Pros

  • High volume of deal flow with a diversity of investment period lengths and industry verticals
  • No fees for investors, the company makes money on the origination side of its business
  • Highly navigable website that features an intuitive user interface and an FAQ section for educational purposes
  • As a provider of short-term private debt, investments on the Cadence platform generally have little to no correlation with public market performance

Cons

  • A significant portion of Cadence’s opportunities are either those with exposure to assets in developing markets or those which involve lending to small businesses to fulfill short-term cash requirements. When executed correctly, both of these investment types have proven to produce favorable returns, however, those returns reflect a meaningful degree of risk being borne by the investor. 
  • For those seeking investments that require little to no regular active management, the short term nature of the debt products offered by Cadence, and the need to re-invest proceeds frequently, may be a detractor.
  • Due to the short-term nature of the investments on Cadence, all gains are taxed as ordinary income at the investor’s normal income tax rate.