Defensibility Through Regulatory Constraints
An interesting video featuring Prosper co-founder Chris Larsen and Jim Breyer of Accel Partners, recorded in late 2006 as part of an Entrepreneurship lecture at Stanford.
Larsen and Jim Breyer, Managing Partner at Accel Partners, stress the value of having approval in a regulated industry. This provides an excellent barrier to entry and is very attractive to VCs. Larsen draws on his experience from E-Loan and Prosper in suggesting that while it is cumbersome, if an idea is in the interest of the consumer, it is not difficult to obtain approval.
I was unable to get this video to embed properly, so here is the link to the video.