UK

Zopa Turns 7 – Arranged over 180M Pounds in Loans

wiseclerk 3 Comments

British P2P Lending marketplace Zopa celebrated its 7th birthday today. Zopa was the first to initiate a p2p lending marketplace over the internet, an innovation that meanwhile has grown to an industry with dozens of p2p lending services launched operating in most G20 economies.

Giles Andrews, cofounder and CEO of Zopa said, ‘After 7 years, Zopa members continue to enjoy better rates on personal loans and savings than the banks offer. Meanwhile, despite their size and virtual monopoly, banks have struggled to even stay solvent, requiring huge taxpayer bailouts.’

Since launch, Zopa has arranged more than 185 million GBP (approx. 291M US$) in loans. As older loans have been repaid, an estimated 90M is currently still loaned out. According to company statements Zopa loans now account for between 1% and 2% of all new personal loans issued in the UK each month. In January Zopa arranged more than 8.2 million GBP of loans.

Ratesetter Adds More P2P Lending Choices

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Ratesetter yesterday added more choices. Borrowers can select loan terms of up to 5 years.  Lenders can invest money for 1 or 5 years (in addition to the existing monthly access and 3 year term choices). It is interesting that Ratesetter has decoupled the borrower’s products from the lender’s products. For a borrower loan with an 18 month term there is no directly matching lender product. Ratesetter will combine funds invested in monthly access with money invested in 1 year bonds to fund these loans.

Bottom line of this, as I see it, is that Ratesetter will steer towards more active management of the money invested. Unlike other p2p lending marketplaces that act more like a platform, but where the users alone make the investment decisions, Ratesetter will directly take action.

Crowdcube Celebrates First Birthday – Crowdcube Infographic

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British P2P Equity marketplace startup Crowdcube celebrates its first anniversary (Happy Birthday from P2p-Banking, too :-)). Lately Crowdcube picked up speed substantially in attracting more and more startups pitching for funding. While investors are currently very selective in what to fund, the volume funded has shown nice growth too. The following infographic by Crowdcube illustrates that (see ‘Amount invested’).


(Source: Crowdcube) Continue reading →

Adwords Marketing Activity of British P2P Lending Marketplaces

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I did some research on use of Google Adwords in the online marketing strategy of Zopa, Funding Circle and Ratesetter.

Who is most active in search engine advertising?

I was surprised to see that Funding Circle is the most active in advertising on Google Adwords.

The chart shows that Fundingcircle had active ads nearly the whole year, while Zopa ran the ads only for certain intervals and Ratesetter only gave it a small try. Continue reading →

How to Become a Shareholder of Crowdcube

wiseclerk 6 Comments

Yesterday I invested a small amount and will become a shareholder of Crowdcube Ltd., which runs the British p2p equity marketplace Crowdcube.com (see earlier articles about Crowdcube). Crowdcube is currently using it’s own platform to raise 300,000 GBP (approx. 470K US$) for a stake of 9% in the company.

If you decide quick, you can become a shareholder of Crowdcub too (minimum investment is 10 GBP). For UK residents investments of over 500 GBP mean they are eligible for a 30% income tax rebate under the EIS scheme. At the time of this writing the pitch is 54% funded and it looks like it will fully fund within the next days.

Crowdcube provides a slide presentation and a forecast. The forecast is a bit sketchy with some figures being debatable in my view but overall I think Crowdcube is a promising venture for the following reasons:

  1. The founders achieved quite a lot in the short time since launch
  2. Good marketing angle. New pitches might allow them to uphold high PR resonance (at least locally and industry sector specific). With luck and craftsmanship they might achieve equal marketing spin in p2p equity as Kickstarter has achieved in crowdfunding
  3. I expect p2p equity in UK to get a boost by rising tax reliefs (50% !) under new SEIS scheme (see yesterday’s post)
  4. Crowdcube, if growing fast, might reach a level where (for UK) it profits from network effect. However the pitch is missing competitor analysis and strategies to deal with them.
  5. Good revenue/cost ratio. With less (technical) complexity than say Zopa or Ratesetter (but much higher risk for investors in pitches)
  6. Should they succeed in creating a secondary market that is not awkward/clumsy in the future, then that will heighten the attractiveness for investors as it offers liquidity for the investments

I am fairly optimistic that the influx of pitches won’t be a problem. It is hard to gauge how the funding success percentage of these will be as that depends on the quality of pitches. The single biggest threat to Crowdcube’s business model in my view is the prossibility of one of the companies funded at the market place failing big time and leaving very unsatisfied investors.

I plan to post further reviews of the progress (naturally I won’t share any confidential data made available to shareholders).

Short News: Smava, Fidor, P2P Equity, SEIS, This is Money

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German laws require a banking license to hand out loans. To comply with regulation the two active German p2p lending services partner with a transaction bank, which originates funded loans and then sells the debt claim to the individuals (‘lenders’) that did bid on the loan request on the p2p lending marketplace.
Smava now switched it’s bank partner. Since Smava’s launch in 2007 the bank partner was the biw Bank für Investments und Wertpapiere AG. For all new loans after Dec. 1st, Smava cooperates with the Fidor Bank AG (see earlier coverage on Fidor). Smava feels that Fidor is a great match and praises the integration advantage Fidor offers with its web APIs. The change does not bring any immediate benefits for lenders other than a) unlend money will now earn 0.5% interest p.a. and b) the e-money license of Fidor allows lenders to start lending without verifying identity first – but that’s rather symbolic as it applies only to amounts of up to 500 Euro (and the minimum bid on Smava is 250 Euro) meaning that new lenders could test Smava with up to 2 bids before going through postal identification process.

P2P Equity

Smarchive, the fourth startup pitching at German marketplace Seedmatch (see earlier coverage on Seedmatch) raised 100,000 Euro in less than 3 days. The pitch originally was for 50K, but was oversubscribed to the maximum possible amount (100K).

Seed Enterprise Investment Scheme (SEIS)

In the UK the market the surrounding conditions for the emerging p2p equity market get better and better. From April 2012 investors in eligible startups will be able to claim 50 percent income tax relief (on a maximum investment of 100,000 GBP per year). The minimum required investment is just 500 GBP per startup. The new law will replace the Enterprise Investment Scheme (EIS) which currently already offers a generous 30% tax break. The British government will also ease some of the restrictions of the current EIS scheme.
The SEIS will bring a huge boost to p2p equity marketplaces in the UK.
Maybe an idea to be copied in other legislations to foster startup foundation?

ThisisMoney on P2P Lending Risiks and Quakle

ThisisMoney has two (1,2) long articles on the failure of Quakle and risks associated for lenders with p2p lending in general. While not wrong, the articles oversimplify some things. And actually there are more risks for lenders then the two mentioned (compare my old article ‘For Debate: A Flaw in Current P2P Lending Models?‘). The author is a strong advocate of the P2P Finance Association: ‘Checking for the association membership is crucial. It’s a self-governing industry body, so does not carry the same weight as regulation by the Financial Services Authority – something the industry wants but lacks as yet – and is currently the best benchmark for those considering lending.‘. Not a bad advice, but with the association and the market so young, I see that as a bit of limiting, possibly excluding any new entrants that might launch.