Uncrunch America was recently launched by three pioneers of peer-to-peer lending as a way to get credit flowing again, even if the big banks are not lending. This is an example of pre-competitive cooperation because while the three founders may offer all types of loans individually, with Uncrunch America they specialize in the following:

1. Personal Loans. If you have good credit, you can now get a personal loan of up to $25,000 funded by fellow members at a fair interest rate through Lending Club.
2. Small-Business Loans. If you own a small business and need more than $25,000, listen up. On Deck Capital has been actively lending to small, healthy storefront businesses throughout the credit crunch.
3. Home Loans. For traditional mortgages and social mortgages, Virgin Money has credit-worthy borrowers covered.

Uncrunch America has the imprint of Richard Branson, founder of Virgin. It is a big, bold, and perfectly timed move.

Who Else Supports It?

Uncrunch America is also supported by:

• Credit Karma, which is dedicated to helping consumers better understand the power of their credit by giving them completely free access to their credit score.
• Geezeo.com, a suite of online personal-finance tools, from basics such as building a budget to asking complicated questions of Geezeo's financial experts.
• ChangeWave Research, a worldwide research network of professionals dedicated to identifying transformational change at the corporate, industry, and macro-economic levels.

Why Not Add Facebook to That List?

Facebook has 200 million users who have come together because they know each other. That is the basis of trust. And lending is based on trust, a simple fact that got obfuscated by Wall Street's toxic financing vehicles.

Facebook can empower its users in very real ways by connecting them in peer-to-peer financing networks. Facebook does not need to do the heavy lifting of providing peer-to-peer lending -- for example, dealing with all the regulatory issues. It just needs to do what it does best: leverage the social graph.

In the process, Facebook can help Uncrunch America. Not only can Mark Zuckerberg become insanely rich, he can feel good about what he is doing for the world.

Global, Not Just US

This is a global credit crunch. It merely originated in the US. Talking to Paul Jozefak of NeuHaus Partners, he mentioned Smava, a peer-to-peer lending service in Germany, as a star in his VC firm's portfolio.

There is also Zopa in the UK (expanding into Italy, Japan, and the US), and a couple of others have been spotted in China: Qifang and PPDai.

There is now even a site dedicated to tracking peer-to-peer and micro-finance lending globally.

Time to Get Real

Surely the web is more than just a tool to hurl sheep? As college students, the original Facebook users, go out into the coldest job environment in 30 years, with parents less able to help them pay their way, alternative ways to make and save money become important. If Facebook can help with that, then it becomes an important tool for how these students build their lives. Many older Facebook users are already struggling financially.

Facebook has many opportunities to help people use their network to help each other in very real ways. Uncrunch America is just one highly visible way to get started.

Real Venture Capital (RVC) is anything that takes a risk and works hard to create something fundamentally new. Many classic VC funds fall into this category. So do many angels. But I would also put entrepreneurs who bootstrap their ventures into this category. I would also even put Private Equity and Hedge Funds that do turnarounds and transformations.

This is very different from Momentum Venture Capital (MVC). The old asset class categories make less sense in this context. You get all kinds of MVC that would traditionally be called VC, Angel, Entrepreneur, Private Equity or Hedge Fund. But they are fundamentally different from Real VC. MVC jump on trends and amplify them. If they are lucky and smart, they get out in time. They are the bubble inflators. Their core competency is timing trends. They ride momentum.

In a downturn such as this, MVC get crushed. MVC that timed it well and got to cash are sitting pretty, playing golf ready to jump in a gain when the cycle turns. But MVC left "holding the bag" at a time like this get crushed.

RVC is contrarian. They invest when most people are scared and sell when everybody is bullish. MVC is the opposite. Smart MVC invest when the trends are obvious and get out quick, the classic "flip artist". Dumb MVC invest when the trends are obvious and don't get out in time. But both smart and dumb MVC are primarily trend spotters.

Warren Buffet is the RVC Hero

Warren Buffet ignores Mr. Market and buys companies that generate lots of free cash flow. RVC build the kind of companies that Mr. Buffet would want to buy (which mean that anybody would want to buy and that you don't need to sell until the right buyer comes along).

Sure, But Safe??? Look At Alternatives

No asset class looks safe now. Remember that the objective is some cash after inflation, and inflation has certainly reared its ugly head again. Here are some of the usual assets that people turn to in difficult times. (In brackets are the classic "Chicken Little" fear mongering questions that you hear today).

1. Cash (in what Bank? After Inflation? In what currency?)
2. Money Markets (frozen assets in panic, no inflation protection)
3. Muni Bonds (what did Schawzenegger say about California needing emergency funds?)
4. Property, "safe as houses, right?" ('nuff said).
5. Oil (will drop if global economy slows)

I could go on and on. The point is that when nothing is safe the risk/reward of investing in a new business that you really understand, with people you trust, suddenly looks less out there on the risk curve.

The Playing Field Just Tilted To The Little Guy

This is what we wrote about yesterday related to SaaS and traditional IT vendors.

That maybe part of a bigger historical shift of power from BigCo to SmallCo, reversing what happened in the last 50 years when the share of US GDP controlled by Fortune 500 went from 1/3 to 2/3. Coase's Law and the reduction in transaction friction created by the Internet are the theoretical underpinning of this shift.

This historic shift makes it safer to build disruptive innovation from scratch than defend an incumbent position. To put it more simply, today it is better to be a Barbarian than a Roman.

In short, it is time for Real VC to be bold. Some will be bold. Some won't. Enough will be bold for this to work out just fine.

Image credit: Thomas Hawk

Far from it. These are great times for entrepreneurs. Really. This is not our bubble. We had our bubble and it burst in March 2000.

This is a credit bubble, pure and simple. That has far, far bigger implications for the economy than a stock bubble. So the recession is real. It is only a question of how long and how deep and my guess would be on the side of long and deep.

But equity valuations are fine. A very conservative investor friend who manages money on an asset allocation basis - choosing between bonds and equities - is pushing into equities. There are of course pockets of excess - please don’t tell me all the stocks you see that are overvalued, I know thats true - but broad markets are in reasonable value shape.

Nor are VCs going hog wild; sadly, because those days were fun :-) Sure there is a bit too much money at work, but that's good. VCs sure as hell remember the bubble and the burst. It is their “cousins”, the Private Equity (PE) guys, who've just had their bubble - fueled by the credit markets. But while VC and PE may sound the same to an entrepreneur - hey they are all money guys right? - at a more fundamental level they are on opposite sides of what is a very big battle.

The battle is around something which few people like to talk about in start-up circles. It is the big unmentionable, like sex for Victorians. The unmentionable is zero sum game. Yes, in an economy growing at 3% if we are lucky and zero or less if we are not, the dollars you earn come from another business. Economists call it “creative destruction”. People who work at newspapers call it a “disaster”. Entrepreneurs coming in like barbarians at the gate call it “window of opportunity”. Established companies and - this is the point - their PE backers, call it a possible negative externality which might impact Q4 earnings to the extent that they go near their debt covenant ratios. Or in other words, “I missed that barbarian with my boiling oil and he is now over the wall and wreaking havoc and oh my god there are so many of them….”

The first wave of barbarians were bad enough. They at least talked the same language of margins and profits. It is firms such as Craigslist and Plenty of Fish that really worry the bejesus out of people, as they are happy to take massive volume at ridiculous prices; which in a digital world where additional users are virtually zero cost and all the rewards go to the firm that gets the network effect, is totally sensible, rational economic behavior. More rational than chanting phrases learned in MBA classes like a mantra to ward off evil spirits.

But we are in recession, and that does change the game for entrepreneurs. In particular it changes the game for entrepreneurs banking on consumer advertising dollars. Advertising gets cut in a recession. Always has in the past and will do so now. There is a strong belief in start-up circles that the shift from traditional media to online is such a huge shift that it opens up an opportunity that is “big enough to drive a truck through”. Yes we are still in the relatively early days of this massive shift. But recessions lead to irrational behavior as much as bubbles and that can mean some short term pain.

More importantly, recessions have a way of changing behavior that lasts into the recovery and next boom. From that change of behavior, new companies and new industries are born. Pay Per Click, a more cost effective form of advertising, and offshore outsourcing, a way to cut legacy costs, both got their momentum going in the last recession.

Online CPM is like traditional media advertising. It is a traditional media model grafted onto online services. Which is like the talking heads in the early days of TV mimicing Radio. CPM is “faith based advertising”, you cannot measure the return. We will always have CPM but the prices will crash. Facebook ads going for 12.5c per CPM is one straw in this wind. Those low prices are OK when it costs so little to acquire the eyeballs, so these low prices are sustainable and may become the “new normal”.

Think about that. Right now there are new companies and new models that are below the radar screen that will emerge as major powerhouses in a few years and they will be radically different from what's out there today. Thats kinda cool. Kinda scary too.

In a recession, the winners are able to make one of these two propositions:

1. I will get you new revenue for a variable cost that is lower than your current cost of revenue acquisition. Note, that does not mean invest a lot of money now in the belief that new revenue comes in. It means, your current cost of revenue is 30%, I will deliver you that revenue for 25%. Guaranteed, no revenue = no fee to us.
2. I will cut your costs now. Not, in 12 months, maybe, if it all works out. I will cut it now, this month, no investment needed. We are talking hard costs, external vendor costs, not fire a bunch of people to get the return; the latter is also popular in a recession but takes longer and is more painful and may also harm the business, who knows when it is muscles not fat that is being cut. But if you are replacing another vendor it is simple; “they cost you $100,000 per month, we cost $80,000 per month and I can prove that we are at least as good”.

Those are not easy things to deliver on, but if you can deliver on them you will win. If your start-up proposition is marginal, burning cash and the VCs are not calling, well it could get a bit messy. But if you have one of those propositions you can build a phenomenal business in a recession and there plenty of VCs willing to bankroll you to get there - if thats what you need.

Who do you see out there who can deliver what customers want in a recession?