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Lendit Europe Recap

November 18th, 2014 by wiseclerk

I just returned from the Lendit Europe conference in London. It was a great occasion to meet so many of the people that developed p2p lending to the current state and hear what they have to say about the future.

The entire industry is enthusiastic as all figures report fast growth which will be further boosted by the tax incentives (NISA) coming for retail lenders in the UK . Cormac Leech, analyst at Liberum, projected that interest rates (and yields for investors) will in effect slightly rise for the UK platforms while they might slightly sink on Prosper and Lending Club. Others do wonder if the UK services will manage to scale loan demand fast enough to match the expected retail investor money looking to invest through the new ISA.


Impressions from Lendit Europe (photo used with permission)

There were multiple examples that marketplace lending is achieving broader and broader reach, both in terms of countries served (e.g. Ovamba, the p2p lending platform operating in Cameroon that GLI Finance invested into) as well as specific markets served (e.g. more and more property investing or Bitbond tackling Bitcoin based p2p lending).


Impressions from Lendit Europe (photo used with permission)

I did not watch all the panels and presentations in the main conference room (the keynote presentation slides are online here; the videos will be made available on the Lendit site in the a few weeks) as I spent much time to meet up with people that I previously only knew from email or phone conversations.

Read the rest of this entry »

Finexkap Raises 22.5M to Launch French Online Working Capital Financing Platform

November 16th, 2014 by wiseclerk

Finexkap, has completed a 22.5 million US$ fundraising, comprising 7.5 million US$  in Series A equity funding and 15 million US$ to finance the company’s lending operations.

Finexkap is a French working capital financing platform to purchase SMEs’ receivables on the web through refinancing vehicles managed by Finexkap AM, which is a wholly owned subsidiary of Finexkap. The platform provides a market-disruptive short-term funding solution to entrepreneurs needing fast access to financing, and the company plans to use the Series A cash injection to scale up its data and product operations, increase its marketing efforts and make additional strategic recruitments. The company will use the 15 million US$ of commitments secured for its refinancing vehicle to fund the first batch of receivables.

GLI Finance invested 4.1 million US$ in July 2014 as part of the Series A funding round and now has a 26.44% equity stake in the company following completion of the overall fundraising. Other investors include Finsight, a globally focused Fintech investment fund which includes partner, and former COO and Board Member of LendingClub, John Donovan, as well as Fintech private investors and family offices. Since its inception, Finexkap has been advised in its financial strategy and fundraising by Luc Hardy of Sagax, an early investor in and advisor of, LendingClub.

In France, the acquisition on a regular basis of non-matured receivables is a credit activity which only licensed credit institutions can carry out. After extensive and collaborative regulatory review processes with the French Financial Markets Authority (”AMF”) and necessary legal structuring, Finexkap AM  has just secured a licence which allows refinancing vehicles managed by Finexkap AM to buy non-matured receivables and, consequently, operate throughout the European Union and in other states party to the European Economic Area agreement. Read the rest of this entry »

Lendico Makes First Spanish Loans Available on German Marketplace

November 14th, 2014 by wiseclerk

Today p2p lending service Lendico made the first loans from Spanish borrowers available to German investors on the German marketplace. German lenders can now bid on these loans provided they fulfill a few prerequisites. To prepare for this, Lendico had in the past weeks informed interested investors of the necessary steps to enable bidding on these cross-border loans on the German marketplace:

  • Lenders need to upgrade to a (free) premium account, if they don’t already have one.
  • Lenders need to send a form via postal mail to the tax authorities that certifies the status of residency. Lendico advices that it will usually take the tax authorities 5-21 days to process this confirmation.
  • The returned postal form can then be submitted via post, fax or email (scan) to Lendico.

The origin of the listed loans is now marked by a flag symbol on the German marketplace (see below).


Excerpt of a screenshot of Lendico.de showing listed German and Spanish p2p loans

This does not work (yet?) for loans from the other Lendico markets.

Trustbuddy Acquires Geldvoorelkaar and Prestiamoci

November 13th, 2014 by wiseclerk

Trustbuddy has entered into an agreement to acquire Italian Prestiamoci, a long-term Peer-to-Peer (P2P) lender, for a total of EUR 5.3 million in order to strengthen its offering of business loans to small and medium-sized enterprises and consumer credit in most European countries.

Furthermore TrustBuddy has agreed to acquire Dutch Geldvoorelkaar for a consideration of EUR10.6m. The consideration comprises EUR 3 million cash, EUR 4 million through the issue of new shares at a 20% premium to the pre-announcement share price and a EUR 3.6 million vendor loan of which 50% is redeemed in January 2016 and 50% redeemed in January 2017. Shares issued as part of the consideration will be subject to lock-up restrictions which expire in January 2016 in respect of 50% of the shares and January 2017 for the remainder.

Both acquisitions remain subject to the satisfaction of certain conditions. In particular, the acquisition of Prestiamoci is conditional upon Prestiamoci receiving a payment services, PSD, license. The Company is currently considering various financing options, including a potential equity fundraising, to part finance the acquisitions.

Geldvoorelkaar (see earlier coverage)

Geldvoorelkaar is the first P2P lending platform with a credit licence issued by the Dutch Financial uthority (AFM).  Geldvoorelkaar offers a professional and established alternative source of financing for SMEs.

  • Geldvoorelkaar opens up European SME market opportunities to TrustBuddy. Management believes there to be substantial demand for alternative lending sources in the Nordic market in particular in P2P lending in the Netherlands.
  • Geldvoorelkaar has been fully operational since 2012 and has a c60-65% estimated market share.
  • Year to date, Geldovoorelkaar has funded EUR 20 million of SME loans with an average revenue margin approaching 6% with no active marketing.
  • Geldvoorelkaar is a strong SME platform with EUR 1.6 million expected revenue for 2014 and growth in the Netherlands expected at an average of 80% in the following two years.*
  • Geldvoorelkaar is already profitable with an expected earnings before interest and tax for 2014 of EUR 0.7 million
  • Subject to the satisfaction of certain conditions, TrustBuddy has agreed to acquire Geldvoorelkaar for a consideration of EUR10.6m. The consideration comprises EUR 3 million cash, EUR 4 million through the issue of new shares at a 20% premium to the pre-announcement share price and a EUR 3.6 million vendor loan of which 50% is redeemed in January 2016 and 50% redeemed in January 2017. Shares issued as part of the consideration will be subject to lock-up restrictions which expire in January 2016 in respect of 50% of the shares and January 2017 for the remainder.

Prestiamoci (see earlier coverage)

Prestiamoci is an Italian private P2P lending company focussing on long term consumer loans.

  • Prestiamoci has established a licenced P2P platform in the highly regulated Italian market. The acquisition is conditional on Prestiamoci obtaining EEA-wide PSD license approval, enabling European roll-out.
  • Prestiamoci re-launched its platform in May 2014 and has since funded EUR 175k with and average revenue margin of 4%.
  • Acquisition adds diversification to TrustBuddy’s existing offering into a product with lower regulatory risk and increased revenue visibility.
  • Prestiamoci’s seasoned management team joining TrustBuddy management will bring significant experience within credit risk assessment.
  • TrustBuddy expects to rollout a consumer instalment loan product in new markets in 2015, and envisages 80% of revenue from this new product from the Nordic markets.

In September 2014 Prestiamoci had concluded a financing round of 450K EUR and in October 2013 a previous capital increase of 550K EUR. According to sources, Digital Magics Angel Network ,which invested just a year ago and provided strategic support in refocusing Prestiamoci, achieves a gain of about 300% on the transaction. Read the rest of this entry »

Interview with Asger Trier Bing, CEO of Lendino

November 12th, 2014 by wiseclerk

Interview with Asger Trier Bing, CEO of Danish service Lendino.

What is Lendino about?

  • Lendino is a marketplace lender for loans to SMEs in Scandinavia ranging from 20K-2M USD.

What are the three main advantages for investors?

  • Investors get a higher return than from similar asset classes.
  • Investors are enabled to invest in companies that appeal to them (CSR).
  • Investors can invest in their own local area or in a company of a friend.

What are the three main advantages for borrowers?

  • Borrowers get a lower interest on their loan, which will benefit them through decreased funding costs
  • It is faster and easier to apply for funding at Lendino than at a bank.
  • Borrowers can build a stronger relationship with customers who invest in their loans

What ROI can investors expect?

  • Investors should expect a net return of 5-8 percent

How did you start Lendino? Is the company funded with venture capital?

  • Lendino was launched in 2013 by Andreas Christensen and Asger Trier.
  • The vision is to improve finance.
  • The company has been funded by the founders until today.
  • A VC round is ongoing and is expected to close within 30 days.
  • It has a  mix of Danish and UK investors onboard. Read the rest of this entry »

Nesta Study Examines Alternative Finance Trends in UK

November 7th, 2014 by wiseclerk

Today the Nesta Study ‘Understanding Alternative Finance  – The UK Alternative Finance Industry Report‘ was released. The researchers Peter Baeck, Liam Collins and Bryan Zhang worked in four stages to compile this great report. One included questioning more than 15,000 users with the help of the platforms in distributing the surveys. Furthermore to gauge awareness of the general public for alternative finance 2,007 consumers and 506 SMEs were questioned.

The more than 90 page report documents and visualizes the fast ongoing growth of all alternative finance sectors in the UK and the positive reception by the users. I will conclude by citing some graphs from the study to induce everybody interested in p2p lending and alternative finance to read the full study.


Chart from study page 9


Chart from study page 9


Study page 13


Chart from study page 22 Read the rest of this entry »

Two UK Crowdfunding Platforms Currently Raising Money From The Crowd at Seedrs – Crowdlords & Trillion Fund

November 6th, 2014 by wiseclerk

At the moment there is not only one but two open pitches from UK crowdfunding/fintech startups  raising money in exchange for equity at Seedrs.
I invested small amounts in both of them and will become a shareholder when the pitches successfully close.

Crowdlords

Crowdlords is a pre-launch two-sided, residential buy-to let crowdfunding platform that wants to bring together landlords and investors.

Landlords who are fully vetted, would identify the properties and be required to invest a minimum amount themselves – the balance is sourced from Investors. Each property would be held in a Special Purpose Vehicle (SPV) with the shareholdings in each SPV split between the Landlord and the Investors.

Investors would be able to select from a range of properties and investments. Investors would gain returns from ongoing underlying rental income and a proportionate share of sale proceeds when the property is sold. Investors could invest fairly modest sums with a minimum investment of 1,000 GBP.

Crowdlords is pitching for 90,000 GBP offering 10% equity (810,000 GBP pre-money valuation). The pitch is currntly 83% filled.

Trillion Fund

Trillion Fund is a crowdfunding platform that raises money for environmental and social projects from ordinary people who want better returns.

Trillion focuses on loan based crowdfunding in green energy and social investment, and earns a percentage of funds raised, paid by borrowers, and an annual percentage of funds lent, paid by the lenders.

Using profit as motivation Trillion aims to re-engage consumers with their money and help them make a profit and make a difference. Trillion effectively operates a two sided network, bringing together people with money and those who need it.

Trillion claims that the recent merger with Buzzbnk has made it one of the largest social crowdfunding business in the UK.

The pitch seeks to raise 500,000 GBP in exchange for 7.7% equity (6M GBP pre-money valuation). The pitch just started and is currently 2.7% filled. Read the rest of this entry »

International P2P Lending Services – Loan Volumes October 2014

November 3rd, 2014 by wiseclerk

October was overall a good month for p2p lending services. Especially Zopa did grow and closed a bit of the gap to the 2 other UK p2p marketplaces . Prosper reached a total volume of 2 billion US$ originated since inception. I added one more service.  I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.


Table: P2P Lending Volumes in October 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

Seedrs Acquires Junction Investments – Will Expand Into US Market

October 30th, 2014 by wiseclerk

Seedrs, a UK crowdinvestment platform, has announced that it acquired California based Junction Investments. Seedrs plans to use this acquisition to expand to the United States in early 2015. Junction’s co-founders, Adam Kaufman and Brian Goldsmith, are now Co-Heads of Seedrs America, and they will be leading this expansion.

Seedrs was already open to international investors and startups, but so far the focus was clearly on the UK and Europe.

Seedrs on building a global platform: ‘A founding principle of Seedrs is that investment in startups and growth businesses should be global. We believe in a future where entrepreneurs and investors from all over the world can connect online. Investors should be able to discover and invest in opportunities anywhere, and entrepreneurs should be able to access capital worldwide.

Financial regulation remains largely national or regional, however, and compliance with applicable law has always been a non-negotiable element of Seedrs’s approach to business. Building a global platform is thus a multi-stage process that involves identifying the right approaches and partners in different jurisdictions.

Having opened across Europe at the end of 2013, we began to look at the U.S. market at the beginning of this year. The U.S. has been slower to embrace equity crowdfunding than the UK and Europe have, and full-scale crowdfunding is not yet possible there. But with the opening of online investment to accredited investors at the end of last year (under Title II of the JOBS Act), and the prospect of wider crowdfunding on the horizon (under the yet-to-be-implemented Title III of the JOBS Act, or an amended version thereof), we feel that now is the right time to begin building our U.S. presence.’

My take: This is one of the first international mergers in the equity crowdfunding space. It will be interesting to see if and how other players do on taking internationalisation beyond Europe.

Interview with James Buckland, CEO of Loanbook Capital

October 22nd, 2014 by wiseclerk

What is Loanbook Capital about?

LoanBook Capital is a Spanish peer-to-business (P2B) finance platform, providing an alternative to traditional savings and fixed income products to investors of all types via direct participation in loans, and other forms of credit finance, to mature, good quality Spanish SMEs.

LoanBook provides credit origination and management services to clients. These services are supported by an online platform, which gives investors access to credit opportunities through an auction marketplace, as well as a soon to be launched secondary market for trading loan participations.

What are the three main advantages for investors?

As with other P2B platforms, the main attractions for investors of this model are typically greater risk adjusted returns, control and transparency over investments and lower fees. LoanBook is no different in these characteristics: we provide access to an asset class that offers a return that exceeds that available from traditional fixed income investments with comparable characteristics (e.g. risk and liquidity), we allow investors to manage the risk and return profile of their portfolio online in a transparent way, and we do not charge fees to investors, other than for providing liquidity through our secondary market.

However, LoanBook has some unique features that other platforms do not. Firstly, we offer investors the opportunity to invest in both loans and invoice discounting (in the form of pagarés) through a single marketplace. This provides investors with the ability to better manage their risk by diversifying their portfolio in credits with a variety of risk, return and duration. Secondly, we put a great deal of emphasis on risk management; we have a team of credit risk professionals and have developed an in-house credit rating system that allows us to monitor and manage risk & recovery effectively, which ultimately leads to a better net return to the investors. Thirdly, our team is made up of professionals with institutional backgrounds in investment and credit management, which means that our approach to client service and reporting brings the best of institutional discipline and ‘alternative finance’ ease and transparency.

What are the three main advantages for borrowers?

As with advantages to investors, LoanBook offers the borrower the typical advantages that you would expect from a P2B platform; competitive and transparent cost of capital (interest rates & fees), access to an alternative channel of finance and a quick and easy application process.

Another key advantage for SMEs, over traditional banks, is that we do not ‘bundle’ our service with other products or services, such as insurance, deposit accounts or Director business. This enables SMEs to separate their working capital requirements from personal and ongoing operational financial needs. Furthermore, as is the case for investors, LoanBook has some unique advantages over its peers. Firstly, unlike other platforms that focus on a single form of finance, we are able to offer borrowers three types of finance in the form of loans, short-term revolving credit lines and finance via the discounting of ‘pagarés’. And secondly, we are not purely an online service; having a team of experienced credit professionals enables us to take a personal approach to managing relationships with SMEs.

How did you start Loanbook Capital? Is the company funded with venture capital?

LoanBook was started at the end of 2012 by two founding partners with their own capital and initiative. The company’s shareholder base has moved on somewhat since then, with each of the three-man management team, and a number of the employees, having an ownership stake in the company. Read the rest of this entry »