UK

Interview with Matthew Powell, CFO of Lending Works

wiseclerk

What is Lending Works about?

Lending Works is an online marketplace lending platform for unsecured personal loans. We offer extremely competitive lender returns and fixed rate, flexible loans up to £25,000 over 1 to 5 years.

What are the three main advantages for investors?

  1. Lender protection – our unique Lending Works Shield consists of a reserve fund to cover loan arrears and insurance to protect against the primary reasons for borrower defaults, including loss of employment, fraud and cybercrime. No other peer-to-peer lender offers this. In addition, our underwriting processes are extremely robust, resulting in a 0.00% arrears and default rate since launch
  2. Great returns – our lender returns are extremely competitive and are protected by the Lending Works Shield, so the rate you see is the rate you get
  3. Flexibility – lenders can access their funds early using our Quick Withdraw facility, or can automatically reinvest monthly repayments using Auto Lend

What are the three main advantages for borrowers?

  1. Low cost loans – our loans are offered at market leading rates. By directly connecting our customers and cutting out the bank, we’re able to cut down the cost of a loan significantly
  2. Simplicity – by utilising the latest technology and being an exclusively online platform, we’re able to pay out funds within one working day of completing the simple online application process
  3. Flexibility – borrowers can make overpayments or settle their loans early at any time, without charge

What ROI can investors expect?

Lenders can expect returns of around 4.1% over 3 years, up to 6.0% over 5 years. These rates are protected by the Lending Works Shield so there shouldn’t be a need for lenders to factor in bad debts.

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

We started building Lending Works in 2012 and launched the platform in 2014. The idea was to create a simple and safe platform to enable ordinary consumers to get a fair deal. We tried to make lending and borrowing through Lending Works as simple as possible – most of our customers do not have the time or desire to actively monitor and manage their account. That’s why we opted to steer away from an auction-based or “market” model and introduced features like Auto Lend to automate the reinvestment process.

The company is funded primarily by angel investors. We’ve raised around £4m in funding to date which has enabled us to navigate the launch period successfully. We’re now focused on driving exponential growth through innovative partnerships and new loan origination channels.

Is the technical platform self-developed?

The technical platform is completely bespoke and was initially built by an external digital services agency. Since launch we’ve brought all development activity in-house which allows us to innovate quickly and to regularly release updates. We hired our first Head of Technology, Michael Raasch, in September. Michael has over 25 years’ experience working for large investment banks and has been fundamental in preparing our platform for large scale. Continue reading →

Lendit Europe Recap

wiseclerk 1 Comment

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.

Continue reading →

Nesta Study Examines Alternative Finance Trends in UK

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 Continue reading →

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

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. Continue reading →

International P2P Lending Services – Loan Volumes October 2014

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

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.