Fundedbyme is now a recognized p2p lending operator in Malaysia

Scandinavia’s equity crowdfunding platform, Fundedbyme, today received recognition as one of six operators  for Peer-to-Peer crowdfunding by the Malaysian Securities Commission in the Asian region. This announcement positions Fundedbyme as the only European operator in the Asian region. The award was awarded to Fundedbyme Malaysia at the third annual SCxSC Digital Finance hosted by the Securities Commission Malaysia. Malaysian Minister of Finance, Najib Razak and SC chairman Ranjit Ajit Singh handed over the award to Fundedbyme Malaysia’s COO, Angelld Quah, and CEO Daniel Geottfert.

fundedbyme-malaysiaThe Asian region is seeing an explosion in peer-to-peer activity, particularly, and crowdfunding in general,” says Daniel Daboczy, CEO and co-founder of Fundedbyme. “Fundedbyme is strategically positioned as the bridge between Scandinavia and Asia as we early-on saw the trend of cross-border investments – in the first equity crowdfunding campaign from Malaysia,
Halal Speed Dating, we saw that 40% of investors came from Europe, which is very exciting for both Asian and European entrepreneurs,” Daboczy continues. The latest equity crowdfunding campaign from Malaysia currently on the platform, iTalent, has registered interest to join from investors in 73 different countries.

Photo: Malaysian Minister of Finance, Najib Razak and Second Finance Minister Johari Abdul Ghani handing over the award to Fundedbyme Malaysia’s COO, Angelld Quah (Source: Fundedbyme)

The Regulatory Framework for P2P Lending Industry in Thailand : A Consultation Paper issued by the Bank of Thailand

This is a guest post by Pawee Jenweeranon, a graduate school student of the program for leading graduate schools – cross border legal institution design, Nagoya University, Japan. Pawee is a former legal officer of the Supreme Court of Thailand. His research interests include internet finance and patent law in the IT industry.

1. Introduction : The Peer-to-peer Lending Industry in Thailand

Peer-to-peer lending which also known as social lending or crowd lending has drastically increased in the recent years in many countries over the world. The volume of peer-to-peer lending activities also has been grown rapidly, for instance, the volume of peer-to-peer lending activities in U.K. has doubled every year in the last four years.

Peer-to-peer lending might be used in many ways if it is properly regulated by the responsible authorities, this is one of the reasons which lead to the issuance of the consultation paper to regulate peer-to-peer lending industry by the Bank of Thailand.

For instance, due to the current situation, poor people and SMEs in Thailand normally face difficulties in accessing finance from banks or traditional financial institutions[i]. This affects the increasing number of informal loans outside the financial institution system which are normally illegal, specifically; the problem of informal loans currently stood at more than 5 trillion baht and covered around 8 million households in Thailand[ii]. Continue reading

BLender Begins International Expansion and Offers Cross-Border Peer-to-Peer Lending

Blender LogoBLender, a p2p lending company from Israel, today announced its global expansion, beginning with new offices in Milan, Italy and Vilnius, Lithuania that will serve customers in Italy and the Baltics. The Israeli-based company delivers a P2P lending platform with a proprietary consumer credit rating system designed for territories without credit bureaus or traditional consumer credit information. BLender is a cloud-based platform that was built to work in a wide range of markets and languages.

In Italy the platform charges borrowers a 4.5% origination fee and investors 1.5% of each repayment (principal and repayment). Compared to other marketplaces these fees are in the higher price range. The fee for selling a loan on the secondary market is 0.45%.

BLender has experienced exponential growth since its launch in 2014 and has already provided approximately 12 million USD in loans. The company will continue expanding its global operations into territories that are craving consumer credit. In 2017, BLender plans to launch operations in Africa, Latin America and other European Union (EU) countries.

“Offering multi-national P2P lending has been our vision since BLender’s establishment,” said Dr. Gal Aviv, CEO, BLender.Since our Israeli launch in 2014, we have built the foundation, infrastructure and technology to enable BLender to operate in the global market, so we will be able to face operating, cultural, technological, regulatory and taxation challenges.”

With the expansion into Italy and the Baltics, BLender is enabling users to lend and/or borrow across countries, making financial borders a thing of a the past, says the service.

“BLender identified a credit gap in countries where the supply of consumer credit is insufficient for the populations’ needs and is priced very high, and a gap in other countries where the savings options have very low or even negative yield,” said David Blumberg, founder and managing partner, Blumberg Capital, a San Francisco-based venture capital firm that led BLender’s last funding round. “BLender’s multi-national lending options mediate this credit gap by creating a meeting ground between borrowers from countries that lack consumer credit, to lenders from countries where the yield on their savings in insufficient. We support and strongly believe in the vision, management capabilities and business potential of the BLender team.”

Investors on the BLender platform will earn predicted interest rates of 5-6% annually. The safeguard fund acts as an additional layer of protection to the lenders in case of a default. BLender’s default rate is approximately 1% before activating the safeguard fund. Thanks to the SafeGuard fund, the effective default rate is 0% says the service. BLender also offers ReBlendTM, BLender’s secondary market that offers the lenders the option the trade their loan portfolios and enjoy liquidity.

Recently BLender was chosen to participate in the exclusive ELITE program of the UK Stock Exchange that finds and nurtures companies with the potential for an IPO. As part of the program, BLender receives the guidance of the program’s experts for two years that help promote the company’s activity.

Furthermore, the company was selected as one of the most promising Fin-Tech companies in the world for 2015 by the accounting firm – KPMG, and also by the United Kingdom Trade and Investment Department.

The multi-national expansion was done in collaboration with KPMG.

BLender's founders
BLender’s founders

Silver Bullion Reports First Year Results for Gold & Silver Secured P2P loans

Silver Bullion Pte Ltd in Singapore reported today, on the anniversary of the launch of their bullion secured peer-to-peer(P2P) loan platform, that the platform has funded over S$11 million across more than 400 successfully matched loans. There were zero occurrences of borrowers defaulting on their loans. One hundred percent of lenders, with loan tenures expiring within the first year, received their principle with interest on time.

Launched on 5th August 2015, Silver Bullion offers a p2p marketplace that allows borrowers to obtain a loan using physical gold and silver bullion as collateral. This gives lenders, seeking a good rate of return, confidence that their investments are safe.

Silver Bullion’s CEO, Gregor Gregersen, commented: ‘The first year results of our P2P loan platform shows that owners of physical gold and silver like to have the option to be able to borrow short term funds at good rates with the bullion that they store with us. Now, they are able to reinvest with the borrowed funds whilst continuing to own bullion and benefit from rising gold and silver prices.’

P2P-Banking.com conducted an interview with Gregersen earlier this year.

silver-bullion-vaultDue to the safety that Silver Bullion’s loan platform gives to lenders, 72% of the matched loans were initiated by borrowers. The company has seen more than 30 loans matched consistently each month since March 2016 – a rate of more than 1 matched loan per day. Interest rates across all loan tenures currently hovers between 2.5% and 4.5% per annum.
Unlike unsecured P2P lending platforms, loans matched by Silver Bullion’s lending platform are fully backed by physical gold and silver. Loans with tenures longer than 6 months begin with a collateral-to-loan value of 200%. The exceptions are loans with the 1 month tenure which have a lower collateral-to-loan value of 160%.<

Borrowers’ collateralized bullion is stored at Silver Bullion’s vault, The Safe House. They are covered by one of the most comprehensive insurance policies in the industry that also insures against inside jobs and any unexplained losses.

 

Regulatory Development of Peer-to-Peer Lending in Taiwan

This is a guest post by Hungyi Chen, Ph.D. candidate at the Graduate School of Law, Nagoya University. He is researching alternative finance in East Asia.

1. Relevant Background

Internet finance, including (1) online stored payment by non-bank, (2) crowdfunding and (3) peer-to-peer lending becomes hotly debated issues in Taiwan recently. To boost the development of financial innovation, the regulation of online stored payments by non-banks was already implemented on January 2015 after discussions and debates between financial authority and platforms. Besides, a regulatory framework for equity-based crowdfunding has also been enacted in the end of April 2015 and amended in the early of January 2016.

In order to encourage and accelerate the development of fintech industry in Taiwan, the financial authority, Financial Supervisory Commission (FSC) of Taiwan, has published Fintech Development Strategy White Paper on May 2016[i]. One of main goals is evaluating the possibility of introducing the mechanism of P2P lending into Taiwan’s capital market and providing a regime for regulating this industry.

Some business models of P2P lending are forbidden due to conflict with The Banking Act[ii] in Taiwan. Recently, it is considered to be introduced in Taiwan and evaluated by the recently established project team of the financial authority in Taiwan, Financial Supervisory Commission (FSC)[iii]. Despite the fact that the attitude toward P2P lending industry of financial authority in Taiwan is still vague, as of July 2016 there are three P2P lending platforms already providing their services in Taiwan, including Lend & Borrow[iv], Wow88[v], XiangMinDai[vi]. They have tried to design their business model to avoid potential legal risks. For better understanding of the P2P lending industry, this article tries to provide a brief regulatory overview of Taiwan in following part.

2. Regulatory Overview of P2P lending

Currently, there is no any specific regulation toward this industry in Taiwan. Recent official document[vii], indicate that the business model of P2P lending in Taiwan should avoid to involve in any activities of accumulating capital from general public or issuing any securities. XiangMinDai, a P2P lending platform in Taiwan, has analyzed by FSC of Taiwan. The former chairman of FSC of Taiwan, Ms. Wang, has stated that ‘…the business model of XiangMinDai is majorly providing services of debt transaction, which does not involve in activities of depositing or charging fund. Accordingly, it is not the regulatory scope of FSC at this moment…[viii]

Although there is no any financial regulation of P2P lending in Taiwan, Banking Bureau of FSC has issued a statement[ix] on April 14, 2016, pointing out some legal compliance issues for P2P lending platforms, including (1) platforms should not involve in issuing any securities, (2) ensure privacy of customers, (3) activities of deposit and store-value business without licenses are forbidden, (4) illegal ways of debt-collection is forbidden.

Taiwan Figure 1

Within 2 weeks, Banking Bureau of FSC, announced another statement[x] for supplement, indicating that (1) the interest rates of the case on the P2P lending platform is 30.15%, which may be illegal according to Criminal Act in Taiwan[xi], (2) legal concern of breaking the law of Multi-Level Marketing Supervision Act[xii] and Fair Trade Act[xiii]. Continue reading

Development and Regulation of P2P Lending and Equity-based Crowdfunding in Hongkong

This is a guest post by Hungyi Chen, Ph.D. candidate at the Graduate School of Law, Nagoya University. He is researching alternative finance in East Asia.

1. The recent development of online alternative finance

Given the recent trend that Fintech is rapidly growing in the world, in order to maintain the role of international financial center, the financial authority of Hong Kong has been aware of issues relating to Fintech industry[1]. On November 13th, 2015, Stored Value Facilities Payment Systems, such as online stored payment business as PayPal, is allowed to operate by non-bank[2]. This is a milestone for Hong Kong including non-bank of operating business highly relevant to conventional bank.

In order to enhance the development of startups in Hong Kong, financial technologies (Fintech) are emphasized by the authority since the investment of Fintech is a target of many venture capitalists[3]. Nevertheless, compared with other jurisdictions in Asian countries, which already lightened entry requirement to encourage non-bank for engaging business of equity-based crowdfunding, such as Japan, Korea, Malaysia, Taiwan, and Thailand, the entry requirement of Fintech, especially alternative finance may be stricter in Hong Kong.

Until now, there is still no equity-based crowdfunding platform established in Hong Kong. However, the huge demand from capital market gradually leads the development of crowdfunding in Hong Kong, especially debt-based crowdfunding, which is also known as Peer-to-Peer Lending. Currently, there are 4 major peer-to-peer lending platforms, including BestLend, GoLend, Monexo, and WeLend.

2. Relevant industry background

With unique selling factors, the peer-to-peer lending platforms may have a rapid growth in the near future. On one hand, from viewpoints of investors, the deposit rates of savings are from 0%~0.001%[4]. Even the deposit rates of fixed deposit of 12 months are from 0.15%~0.2%[5]. Additionally, inflation rates are around 4% continuously in 2013 and 2014[6], which means the real interest rate may be negative in Hong Kong. Accordingly, there are strong incentives for investors to vitalize their capital.

On the other hand, from viewpoints of borrowers, there are two fundraising channels for loans, including banks (Licensed Banks, Restricted License Banks, Deposit-taking Companies) and Money Lenders. Since the financial authority restricted the mortgage market of banks to prevent a real-estate bubble, it is difficult for borrowers to get the loan amount they need from banks by mortgage. As a result, they turn to Money Lenders as an alternative opportunity. Although the interest rates of Money Lender are generally higher than banks, compared with banks which normally take 1-6 weeks for examining procedure, the process of Money Lender is more simplified[7]. Continue reading

Overview of the Regulatory Framework for P2P Lending and Equity-based Crowdfunding in Singapore

This is a guest post by Pawee Jenweeranon, a graduate school student of the program for leading graduate schools – cross border legal institution design, Nagoya University, Japan. Pawee is a former legal officer of the Supreme Court of Thailand. His research interests include internet finance and patent law in the IT industry.

1. Introduction

In the recent years, it is inevitable that the financial technology or Fintech takes the significant role toward the evolution of financial services industry in this region. In other words, Fintech normally be used to improve the financial industry services.

In 2015, the Monetary Authority of Singapore (hereinafter referred to as “MAS”) has committed two hundred twenty five million Singapore Dollar (around 166 million USD) to support the development of Fintech industry for the startup ecosystem in the upcoming years[1]. This is a good reflection of the significance of the financial technology or Fintech development in Singapore.

From the economic perspective, Small and Medium Enterprises (hereinafter referred to as “SMEs”) are important part of Singapore’s economy. SMEs account for 99 percent of all registered enterprises in Singapore[2]. From this reason, enhancing the competitive capacity of Singapore SMEs is essential for Singapore economy development.  Even almost all of the SMEs in Singapore are supported by the Governmental Enterprise Development Agency and Centers[3], (more than 100,000 SMEs got funding support by the Singapore government[4]); however, internet financial technology was also proposed as an alternative mechanism for enhancing the competitiveness of Singapore SMEs in the recent years[5].

 

2. Regarding Peer to Peer Lending


2.1 Background

Generally, there are many peer to peer lending platforms in Singapore; however, they normally lend money to businesses rather than individuals due to the strict regulation for money lenders. The additional limitation on lending to low-income borrowers[6] who are Singaporean citizens or permanent residents which is another requirement should be considered by the lenders.

In general, money lending in Singapore is mainly regulated by the Moneylenders Act 2010 and the Moneylenders Rules 2009. For the Moneylenders Act 2010, due to the main purpose of this act is to develop consumer protection mechanism to protect borrowers of small amount loans[7], this is the reason why the act provides stringent limitation for moneylenders to operate their business. This is another key different of money lending law of Singapore compared to other countries in Asia such as Hong Kong which focusing more on lending activity[8]. Briefly, the act requires moneylenders to hold the Moneylenders license with obligations and limitations for licensee[9].

In Singapore, even there are strict regulations in the existing law relating to a money lending business; however, there is the legislative effort of the Singapore government to address the issue regarding Securities-based Crowdfunding, which can reflect the understanding of the Singapore government toward the development of Financial Technology (Fintech) and the supporting regulatory framework.[10]

2.2 The Regulatory Framework for Peer to Peer Lending Business

From the document published by the MAS on Lending-based Crowdfunding – Frequently Asked Questions (FAQs)[11], generally, the operation of P2P lending is restricted by MAS under the Securities and Futures Act (Cap. 289) (SFA) and the Financial Advisers Act (Cap. 110) (FFA).

Specifically, the P2P lending business needs to prepare and register a prospectus with MAS in accordance with Section 239(3) of the SFA. In addition, not only the registration of the prospectus but also the P2P lending platform need to follow the licensing requirements, particularly, the P2P lending business which fall within the scope provided by MAS needs to hold a Capital Market Services (CMS) license. Continue reading

Regulation of P2P Lending in Malaysia

This is a guest post by Kylie Greeff of whitelabelcrowd.fund

As one of the first countries in Asia to publish a regulatory regime, Malaysia is opening up to entrepreneurs, institutions and global operators to facilitate the ease of business credit through P2P lending. Ranked 18th on the World Banks’ Ease of Doing Business league tables, Malaysia is positioning itself as the conduit for global players to setup in Kuala Lumpur as gateway for serving P2P lending markets across Asia. Malaysia has one of the highest levels of financial inclusion in the world at 92 per cent and the country has taken advantage of mobile phones and online banking to expand access.
The recently published Securities Commissions (SC) of Malaysia’s rules on the operation of a Peer-to-Peer platform sets out the minimum requirements for the compliant operation of a Loan based crowdfunding platform in Malaysia.

Given the recent publication of the SC’s rules, we have undertaken a comparison of the regulatory requirements imposed on Malaysian P2P platforms with their UK counter parts. The comparison highlights a number of differences first both in the rules that must be followed to operative a platform as well as the minimum standards imposed on operators operating the platforms in Malaysia. Whilst the comparison identifies a number of differences between the two bodies of regulation, this is not unexpected give the differences in maturity of the two markets. P2P in its earliest form began in 2005 in the UK, with the UK regulator announcing its intention to regulate the sector in 2013. The UK’s early P2P regulations were very similar to those now produced by the SC.

The SC in their production of their regulations have clearly done their research into the rules implemented by many platforms and regulators around the world in helping them draft their first guidelines, and have arguably used the UK’s regulations as their closest reference. A strategy that appears to have been widely adopted in their regulation of other financial markets as well.
Below is a more detailed review of the UK and Malaysian regulation.

Capital Requirements

The first noticeable difference in the platform operator rules is the requirements by the SC for a platform to have a minimum paid-up capital of RM5 million (approx. £80,000). The UK regulatory body the Financial Conduct Authority (FCA) does not impose a minimum capital requirement for the start-up of a platform. The FCA instead imposes a capital adequacy Requirement (CAR) on platforms once they are trading and authorised by the regulator. A platform’s CAR requirement is based on the trading performance of the platform weighed against its loan book. The SC’s decision to incorporate a minimum capital level on start-up platforms could be seen as a possible reaction to the recent debate in the UK and USA about the possible implementation of Capital requirements on P2P platforms similar to those currently applicable to banks. This being said, the requirement of RM 5m is not prohibitively high and may not be seen by many market entrants as a particularly high barrier to entry, particularly by those supported by financial institutions familiar with far more prohibitive capital requirements.

Whilst the FCA does not have a start-up paid up capital requirement, recent feeling and expectation in the UK is that the FCA will potentially move to more onerous Capital Requirements similar to those imposed on many other financial institutions.

Investor Communication and Transparency

It is interesting to note that the SC has decided to enforce a specific requirement on P2P operators to use ‘an efficient and transparent risk scoring system’ and to ‘carry out a risk assessment on issuers’. The FCA imposes no such requirement on platforms, although the majority of platforms do incorporate a risk rating identification system for the benefit of lenders, the platforms do not openly publish their system or processes as these are closely guarded as valuable IP of the platforms. In the absence of a specific requirement to have an ‘efficient and clear risk scoring system’ the FCA would expect platforms to assess their market and client needs and ensure that they operate with in the FCA’s Principles for Business (PRIN), most notably in regard to risk modelling, Principles 5,7 and 9. It’s worth noting here that the SC operate similar principles in terms of Fund Management Companies, see Guidelines On Compliance Function For Fund Management Companies.

Kylie Greef at Fintech NorthThe language used by the SC of ‘efficient and transparent’ is surprisingly vague and may be intentionally left as such to allow platforms the space to develop naturally allowing the SC room to review practices and later set what they deem to be appropriate transparent and efficient processes.

In its list of Operator Obligations, the SC appears intent on ensuring that the platform operators acknowledge and respond to the need to maintain transparency between the investors and the Issuers and to make investors aware of the nature of their investment. This can be seen in rules 13.05 (d-f).
Interestingly rule 13.05 (d) requires operators to ‘carry out investor education programmes’. The FCA again poses no requirement on platforms to ‘educate’ their investors but it does impose standards of disclosure and business conduct in its Handbook. The FCA expects platforms to take measures to ensure that they are open and transparent about the nature of the investment products it offers and that information is clearly displayed and prominent for investors (COBS 2.2.1 and 2.2.2).

Carrying out educational programmes in the form of video’s and blog post as well as informative events are a good way to encourage a higher level of customer engagement, but also goes a long way to building the trust of investors in the platform. Rebuildingsociety.com has benefited greatly from publishing a number of blogs about its journey, the types of investment it offers, the internal processes it uses to ensure the efficient and safe operation of the platform. Transparency is greatly valued by both the investors and the regulators.

Anti-Money Laundering and Financial Crime Prevention

As expected, the SC has incorporated the need and responsibility of platforms to ensure that they carry out sufficient Anti Money Laundering (AML) and Financial Crime (FC) Prevention practices as part of their normal operating processes. AML and FC are increasingly sensitive areas. Whilst the SC’s Guidelines on Recognized Markets does not set out specific instructions and guidance on the expected processes and levels of due diligence required by platforms, platforms should look to the SC’s ‘Guidelines On Prevention Of Money Laundering And Terrorism Financing For Capital Market Intermediaries’ which was developed from Section 83 and section 66E of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) and section 377 of the Capital Markets and Services Act 2007 (CMSA). This document sets out the SC’s expectations of platforms in relation to AML and FC prevention.

The SC’s guidelines on AML and FC prevention are broadly similar to those of the FCA set out in SYSC 6.3, in that advocate a risk based, profiling approach to AML and FC prevention processes and require firms to incorporate enhanced Due Diligence practices where individuals are profiled to be higher risk. Continue reading

Interview with Gregor Gregersen, CEO of Silver Bullion

What is Silver Bullion about?

Silver Bullion buys, sells, authenticates and stores physical gold and silver. Since mid-2015 we also launched the option for customers to securely lend and borrow to each other using their bullion as collateral.

What are the three main advantages for investors?

Physical bullion buyers receive the best protection possible (in jurisdictional, counterparty and storage risk terms) against systemic crises by being owners of insured physical property under Singapore law rather than bank creditors exposed to financial crises. They also have a long position in gold / silver. They profit from a financial collapse, hyperinflation or foreign nationalizations.

Alternatively, as lenders they receive a safe return (very low risk) by lending their funds to owners of insured and authenticated bullion stored with us. Lender funds are collateralized by a minimum 200% worth of gold and silver and, should during the duration of the loan, the collateral fall to 125% the borrowers will get a margin call. At 110% we will liquidate (sell) the borrower’s silver and gold to ensure the lender’s funds are always fully covered by liquid collateral.

Lenders can offer their funds at an interest rate and duration of their choosing. Borrowers are then free to accept the best rates and vice versa, thereby creating a Bid/Ask exchange which lets lender and borrowers determine their own interest rates. The system is also inexpensive (0.5% fee) and easy to use as borrowers do not need to be rated or scored due to their collateral.

What are the three main advantages for borrowers?

Because the loans involve so little risk (due to collateral) lenders are willing to accept comparatively low interest rates. Therefore borrowers can borrow cheaply (e.g. 4% p.a.) and unlock their bullion liquidity without selling it. The low rates allow for arbitrage opportunities vs. customer in high interest countries.

Because we have an abundance of lenders Borrowers can quickly and easily get a loan whenever they need it, without any usage restrictions and minimal additional paperwork.

Borrowers can choose to easily roll-over /refinance a loan before maturity. So they could roll-over as needed, giving them flexibility and a source of optional liquidity when needed.

Investors are required to open a storage account first. Doesn’t that deter those that only want to invest?

A storage account is required to do our AML and KYC checks and an account number is the pre-requisite to do P2P transactions. A customer / lender does not need to buy or store bullion and there is no cost associated with opening an account. So there is no downside.

Gregor GregersenWhat ROI can investors expect?

P2P Lenders have received secure returns ranging from 3.5% to 7% p.a. depending on currency, duration and borrower/lender demand. The nature of the bullion collateral also means are also well protected against both a borrower default and systemic defaults in a crisis.

It depends on the lender whether and how he values this risk diversification.

Is the technical platform self-developed?

Yes. It is highly specialized platform that is integrated with our bullion storage system which stores around 120 million SGD worth of physical bullion.

A word about the people who designed this P2P system might be in order. Gregor Gregersen (primary architect) was a senior data architect for Commerzbank (the second largest German bank), Otbert de Jong headed the global risk advisory department at ABN AMRO Bank and was a partner in PricewaterhouseCoopers and Simon Black is the founder of Sovereign Man, which is one of the best resources on internationalisation and spreading your risk. Continue reading

Interview with Craig Moore, CEO of Beehive

What is Beehive about?

Beehive is the first and only P2P financing platform in the UAE (United Arab Emirates). Otherwise known as marketplace lending, peer-to-peer finance is the practice of lending money to unrelated individuals, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution. Beehive bridges a significant funding gap that currently exists in the UAE market. Our platform applies the innovative technology of crowdfunding to eliminate the cost and complexity of conventional finance. Businesses bypass conventional intermediaries and receive financing directly from the crowd. This enables them to get faster access to lower cost finance, while investors get better returns. Beehive is a facilitator that enables businesses to secure the funding they need by creating the organizational framework and infrastructure required for community and financial support to materialize.

What are the three main advantages for investors?

The three main advantages for investors are:

  1. No Barrier to Entry: Individual investors can invest from as little as AED 100 into each business listed on the platform and receive monthly repayments currently averaging 12% per annum with reinvested returns. Investors get money transferred into their account in as little as two days.
  2. Diverse Portfolio: By investing on the Beehive platform, investors can diversify their risk across a number of products offered to a variety of companies operating across diverse sectors, with new companies listing on the platform every week. They are able to directly invest in a business they believe in. Investors are also able to buy or sell their finance parts to other investors on the platform through Beehive’s secondary market. This gives investors access to a market place where they can trade finance parts and allows greater access to liquidity and diversification.
  3. Sharia Compliant Structure: Beehive allows investors to ethically invest in some of the most innovative SMEs in the UAE. Beehive supports Dubai’s ambition to be a Global Financial Capital with its innovative Sharia-compliant platform, which helps Islamic finance customers to achieve their financial goals in a more ethical structure, and helps compliant SMEs tap sources of Islamic finance liquidity. Beehive was certified by the Shariyah Review Bureau (SRB) as a Sharia-compliant P2P finance platform in September 2015, making it the first P2P platform in the world to independently confirm its processes are compliant with Sharia principles.

What are the three main advantages for borrowers?

The three main advantages for borrowers are:

  1. Cost of finance: The platform offers considerable savings to businesses that need it: Businesses using Beehive save on average 30% on their financing costs. The average bank borrowing rate (unsecured) for SMEs in the UAE is over 18%, often much higher. Because investors compete for rates in a reverse auction process, business receive the lowest possible average rate from investors.
  2. Time to finance: The Beehive online marketplace facilitates faster, more flexible funding, with companies typically getting a decision on their finance requests in 3 days. The application process is completed online, and businesses receive funding in 14 days or less.
  3. Invoice Financing: Beehive’s SME invoice financing tool is designed to serve SMEs and help them manage their cashflows by closing the gap between the issue of an invoice and the receipt of actual payment. By unlocking the value of their accounts-receivable, they are able to tackle the dual challenges of rising inflation and late payments. These products give SMEs more options to plug invoice gaps, giving them greater control over their business and finances, and thus a greater opportunity for security and growth.

Craig Moore, BeehiveWhat ROI can investors expect?

The average return for investors is 12% per annum with reinvested returns

Please tell me more about Islamic Finance and Sharia Compliance. Is that a main factor for attracting clients?

One of the things we are very proud of is receiving our Sharia Certification. Globally we’re the first platform to be certified sharia compliant. It was our plan from the beginning to make a sharia P2P platform, because it hadn’t been done before and it would open a new asset class to Islamic investors. About 80-90% of businesses on the platform are Sharia compliant. What we find is that if the listing is sharia compliant, then investors will engage with the business whether they are conventional or Islamic, so it is a very attractive feature for both investors and businesses across the board.

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

Beehive has so far received two rounds of external funding in addition to founding investment.

Is the technical platform self-developed?

All the technology on the Beehive platform has been developed using in-house capabilities. Our in-house IT development, design and creative teams allow us to be agile and responsive to market needs. Continue reading