What is Arboribus about?
Arboribus is the leading Spanish P2B lending platform that focus in more than 12 months loans for SMEs. Through our platform, High Net Worth individuals along with retail investors participate in directly lending to the most robust businesses in Spain obtaining a diversified portfolio with a net return around 7%.
What are the three main advantages for investors?
If I have to remark three advantages I would say a combination of a high net return along with a moderate risk and a total decorrelation from the financial markets: Returns from 5% to 7% when fix income securities or deposits returns are under 1%, with a moderate risk obtained by lending to the most creditworthy businesses in a very diversified way, and a total decorrelation from the ups and downs of the stock market. If I’m aloud to say a fourth advantage, I would pick “simplicity”.
What are the three main advantages for borrowers?
First, simplicity of the process of getting a loan: all on-line with a dedication from the business of no more than 15 minutes. Second, cost: for small businesses we are slightly cheaper than the funding obtained from traditional banks. And third, we permit the business to really diversify its funding sources and reduce risks of dependency from banks. That last advantage takes a special importance in Spain where SMEs have been traditionally dependent from banks for more than 90% of its external funding, a shocking figure if we look that of UK (30%) of France (50%).
The actual weighted average interest rates on the platform is around 7%. Nevertheless, we expect to offer a 5% to 6% in a long term basis, net of fees and defaults.
How was Arboribus started? Is the company funded with venture capital?
Arboribus was founded by two friends (Carles and me). After one year of both dedicated full time to build the whole business, we got a first investment round and well after that we did the first crowdlending loan to a SME in Spain (that was July’13). Since there, we got two more investment rounds all covered by private investors (big business owners, bank managers and other business angels).
Is the technical platform self-developed?
Yes. We have in our team one programmer and almost the whole team is involved in improving our tools and developing new ones.
What was the greatest challenge so far in the course of launching Arboribus?
Having all legal issues clarified was a real challenge for us. We were the first one in launching a P2B crowdlending platform and the interpretation and adaptation to the current non-specific national and European legislation took us several months of studying, consulting to the Central Bank of Spain and to many lawyers. 2 years after that “audacity” and with a market of several other platforms operating in Spain, the government called us to launch a specific crowdlending peace of law in Spain that will enter into force at the beginning of 2016, piece of law we have worked on along with the government for more than 6 months.
Which marketing channels do you use to attract investors and borrowers?
Basically 3: online marketing that attract both investors and borrowers to our web site, very segmented direct sells and maybe the best one: the word-of-moth of satisfied customers.
What role do you see for institutional investors or banks?
Institutional investors have already shown interest on starting to create a portfolio of loans through Arboribus, basically because they are looking for better returns and decorrelation from markets. Our rapidly growing track record is having a great impact on building their confidence on us. I see a future Arboribus with maybe half of the funds coming from institutional investors, as it happens in the international level. Concerning the position of banks, the collaborative models we already see in action in the US will certainly occur also in Spain, but I think it will take time and will start with small and local financial institutions.
Are there any new product developments to be expected in the next 6 months?
We have permanently some innovative projects running. We are building better tools for our investors to manage their funds and plan its investments in a long term basis (f. instance, auto-bid machine, cash-flow planning tools, statistics with more detailed data), or to ameliorate our internal processes in order to improve effectiveness (better scoring information) and efficiency (during the whole loan servicing process, marketing, etc.).
Do you plan an international expansion?
Not by now. Concerning SMEs, the Spanish market is huge and we want to assure our leadership there. Concerning investors, we are already accepting international investors to invest through our platform. To me it is always great news that investors from other countries of Europe or even South America get in touch with us to create their portfolio of Spanish SME’s loans. They are looking for greater returns and, specially, a greater diversification of their financial assets.
Where do you see Arboribus in 3 years?
As a flexible and efficient capital market for SMEs and all kind of investors in Spain.
P2P-Banking.com thanks Josep Nebot for the interview