Month: October 2014

Seedrs Acquires Junction Investments – Will Expand Into US Market

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

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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. Continue reading →

P2P Lending In Japan – The Current Situation

Guest

This is a guest post by Tomoyuki Sugiyama, Representative Director of Crowdcredit, Inc (full bio at the end of the article).

Advent of P2P lending in Japan

maneo, Inc. and Exchange Corporation KK were the first P2P lending platform operators in Japan. In 2007, maneo, Inc. was established and it started the registration processes with Japanese authorities which were necessary to run the platform. And it launched the platforms – maneo – in 2008. Exchange Corporation launched its P2P lending platform AQUSH in 2009. Also SBI group established a subsidiary to run P2P lending platform – SBI Social Lending Co., Ltd. – in 2008 and launched the platform in 2011.

maneo at first focused on consumer loans, but soon changed its focus to SMEs loans. AQUSH focused on consumer loans and widened its line-ups to real-estate collateralized loans, overseas consumer loans (investments are made in the loans originated by LendingClub) and loans of which borrowers are solar energy power plant operators in early 2013. SBI Social Lending focuses on securities collateralized consumer loans.

From regulatory perspective, any legal entity (person or company) which lends money in Japan must make registration under Money Lending Business Act, which prevents the P2P lending platform operators to offer a platform which personal investors lend money directly to the borrowers. Hence in Japan, personal investors effectively lend their money to the borrowers through investing in the P2P lending platforms’ businesses which they lend money to the borrowers as the operators of investment funds (Anonymous Partnership Agreements under Japanese commercial law).

Recent trend in Japan

Compared to the growth of P2P lending markets in the UK or in USA, Japanese P2P lending market grew moderately – currently the amount of outstanding loans managed by the largest P2P lending platform, maneo, is estimated to be around 60 million dollars. This is assumed due to over-banking in Japan – in Japan, national average loan to deposit ratio of traditional banks is below 70% and the banks lend quite aggressively, which is quite different from the situation in the UK or in USA where the banks are lending less and less in de-leverage process of their balance sheet in post Lehman crisis period. Borrowers in Japan can much more easily access to traditional financial system compared to the borrowers in the UK or in USA and national average lending interest rate of the banks in Japan is currently 0.887%.

As a result, no operator entered into P2P lending market in Japan after SBI Social Lending and there were only three P2P lending platforms in Japan until 2013.

In late 2012, Crowd Securities Japan Co. Ltd. (previously Midori Securities) announced to launch the fourth P2P lending platform in Japan – Crowd Bank – in 2013 and they launched it in late December in 2013. Crowd Bank offers SMEs loans, real-estate collateralized loans and also overseas microfinance loans which the platform lends to MFIs in Asian region.

Also in early 2013, Crowdcredit, Inc. announced to launch the fifth P2P lending platform in Japan and it was launched in June 2014. Crowdcredit became the first P2P lending platform in Japan which focuses only on cross-border P2P lending. Crowdcredit, as the operator of the platform, has invested in credit market in Peru in Latin America as a start. Continue reading →

New Figures on Lendico and Zencap

wiseclerk

Lendico and Zencap are German p2p lending services. They are separate companies, but both are founded/backed by Rocket Internet.

Lendico

Lendico is a p2p lending service with consumers as borrowers and has been rolled out in 6 national markets so far. See my previous articles on Lendico for more details. Lendico management did not give any official figures on loan origination amounts in the past. That’s the reason that Lendico is not included in my monthly loan volume stats tables. But in the context of the Rocket Internet IPO some figures and estimates became available.
An estimate says that Lendico Germany originated 1 million EUR loan volume in the first 6 months of 2014. The following are hard (official) figures:

  • Lendico loan volume stats for month ending Jan, 31st 2014: 2,343 loan applications received, 23 loans issued, 112K EUR loan volume originated
  • Lendico loan volume stats for month ending June, 30st 2014: 5,675 loan applications received, 65 loans issued, 376K EUR loan volume originated
  • Lendico number of unique visitors in month ending Jan, 31st 2014: 46K
  • Lendico number of unique visitors in month ending Jun, 30st 2014: 143K
  • Lendico net loss in 2013 was 3.2 million EUR. Note that Lendico launched in Dec. 2013
  • Rocket Internet states Lendico valuation to be 120 million EUR in July 2014

Based on non-representative lender postings on the Lendico forum at P2P-Kredite.com it seems that no Lendico (Germany) loans have defaulted yet and only very few have gone temporarily overdue. Continue reading →

International P2P Lending Services – Loan Volumes September 2014

wiseclerk

September was a very good month for most p2p lending services. The major UK p2p lending services grew strongly with Ratesetter surpassing 30 million GBP originated. I added the new UK service Ablrate which originated the first two loans.  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 September 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.