Smava Raises 34M US$ Series C

smava-logo-2016German credit broker Smava today announced that it has closed a 34 million US$ investment which was led by growth investor Runa Capital, with additional participation from Verdane Capital and Runa Capital is a venture capital firm with other investments in Zopa, Lendingrobot and Lendio. Verdane Capital is a Scandinavian private equity firm. Existing investors including Earlybird Venture Capital also participated in the investment. This series C round follows the previous round in 2015 which was 16 million US$. In total Smava, which launched in 2007, has raised about 64 million US$ so far.

Smava wants to use the funding to expand the customer base, hire additional talent and continue enhancing our scoring technology according to CEO Alexander Artopé.

Smava connects private borrowers with a broad selection of banks and private investors on its marketplace. Smava offers personal loans ranging from 1,000 to 120,000 Euros. Continue reading

Smava with Higher Net Loss for the Year 2011

German p2p lending Smava had a high net loss for the year 2011. Documents available to show that Smava incurred a net loss of 2.77 million Euro (approx. 3.68 million US$) in 2011; up from 1.75 million EUR in 2010. Overall loss carried forward up to the end of 2011 was 7.7 million EUR (approx 10.2 million US$). Smava did raise new capital in 2011. They had a cash reserve of 1.98 million EUR in the end of 2011. The high burn rate might have contributed to Smavas decision to change the business model in early 2012 moving away from p2p lending.
No financial figures were available to for later periods.

Decline of P2P Lending Volume at Smava Continues

At German the volume of newly originated p2p loans continues to fall and reached a record low of  approx. 700K Euro in January. That’s only about one-third of the volume Smava funded on its peak-time in mid-2010. Smava changed its business model in spring 2012, since then focusing on brokering bank loans and the aim to rely on the commissions paid by the banks as main source of revenue rather than the p2p lending transaction fees. There are no public figures available on the volume of bank loans brokered by Smava. I do wonder if they will reach break even by pursuing that model as competition in that market is fierce.

(Source – click for larger image)

Smava Changes Business Model; Brokers Bank Loans

German Smava, launched 2007, yesterday announced that it will offer more products and evolve into a marketplace where borrowers seeking loans get multiple offers. The site logo and layout have been redesigned to reflect this change. Smava said p2p loans will be continued to be on offer and the new products (bank loans) added will give the borrower more choices.

My take on this – what does Smava achieve with this change?

Smava’s new loan volume was static since mid-2010. With the current change Smava:

  1. can increase revenues. Since borrowers can be offered more loan terms and get multiple offers from banks, the probability of a sale increases. That bank loans need less explanations than innovative p2p loans further spurs this. Smava earns lead and sales commissions from the banks.
  2. can justify high marketing costs to acquire the borrowers better now as the resulting traffic is more efficiently monetized. Unlike before Smava no longer needs to balance demand and supply (borrower growth versus lender growth) but instead can totally focus on marketing to borrowers.
  3. decreases costs, as the intense vetting of loan applications (of which about 90% were rejected) is no longer necessary in most cases, since the bank does it for the referred applications

Why does Smava still keep p2p lending?

The question is not if Smava will continue p2p lending (the announcement said they will), but rather if Smava will continue development on that offer. That is unlikely since little happened in the last years. My assumption is that Smava keeps p2p lending on offer mostly for PR and marketing purposes.It allows Smava to position itself as different to loan brokers and loan comparison sites and keep a little of the image of financial innovation attached to the site. Continue reading

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

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.

Smava Raises 4 Million; Gets Share in Prestiamoci

German p2p lending service Smava has raised 4 million Euro in a new round. New investor in this round is the largest Italian private bank “Banca Sella”. Smava also joins in on Italian p2p lending service Prestiamoci saying that Smava aims to grow to a leading European p2p lending service.

This is actually the second start Smava undertakes for European expansion. Smava Poland was merged after a rather short time in operation with another Polish service.

After this round VC Earlybird holds 54%, VC Neuhaus Partner holds 20%, Banca Sella holds 10% and the founder team holds 4% of Smava shartes.

In its press release Smava stresses its successful growth. However in the past year Smava had to deal with a significant decline in new loan volume funded per month.