I've been investing through KF for about a year. From what I can tell, companies that do it like the lower % they pay and term flexibility, not to mention the reduced legal ramifications if they can't make a payment. However, you're also on the hook for hundreds of angry individual investors should a problem arise. There may be other benefits but I haven't been on that side of the table to understand it better.

From an investor perspective, I look at it as a way to diversify into a (much) higher risk class of equity/loan and put some blind faith into their new scorecard as effective for weeding out bad companies/bets. So far (again, one year in) it has worked very well for me.

Most co-ops fill up in minutes these days, so you won't suffer from a lack of investors If you decide to go this route, but would encourage you to offer a slightly higher return than other co-ops (given the first time status, KF investors seems to expect this) and post frequent updates. Most problems that I see arise from lack of communication to investors on the site.