The Pomp Podcast
#364: Nelson Chu on Digitizing Private Credit Markets
- Nelson Chu founded Cadence, a digital securitization platform that brings transparency and data infrastructure to the fragmented private credit market.
- Private credit encompasses small business lending, consumer loans, and receivable financing—a massive, opaque market growing at ~20% annually with $400 billion in uninvested capital waiting for deal sourcing and due diligence solutions.
- Cadence launched as a retail alternative investment marketplace (1–6 month notes, 8.5–15% yields, low minimums), then evolved into a SaaS platform providing lenders with daily surveillance reporting and data packaging for institutional capital access.
- The Fat Brands deal—a $40 million whole-business securitization—demonstrated Cadence's ability to fill the gap between bank-sized deals ($100M+) and crowdfunding platforms, ranking them 25th among U.S. ABS structuring agents in H1 2020.
- Real-time transaction data access (via Plaid, Stripe, Dwolla integration) enables daily portfolio monitoring, compliance verification, and rapid repricing—critical during COVID when yields shifted from 12% to 16% and back as performance stabilized.
- Default rate of ~2% (lowest in industry) reflects short-duration products, institutional-grade structuring, and founder co-investment; longer-dated competitors (3–5 years) face 15–30% defaults due to inability to detect deterioration.