The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 445 million Euro. I track the development of p2p lending volumes 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 platforms.
Milestones achieved this month (total volume since launch):
I started investing on the p2p lending marketplace Mintos in January 2015. Nearly 4 years have passed. Most of the time my strategy was buy-and-hold, that is I invested in loans with the intention to hold them till maturity. That’s also what I had been doing at the majority of other p2p lending platforms. In the beginning of the year I had a large chunk of high-interest, longer-term Mogo car loans, together with some mid/longer-term loans of other originators on Mintos. After many of the Mogo loans were bought back in summer I decided to switch to a completly different strategy on Mintos. Thereafter I concentrated on trading, that is buying loans on the secondary market and selling them at a higher price on the secondary market again, usually holding these loans only for a short time frame.
Summary of my account statement for 4th quarter 2018 – click on image for larger view
As you can see in the screenshot above I made 712.80 EUR profit from trading (buying and selling) loans in the fourth quarter. Compare that to the 127.14 EUR (101.74+25.40) interest earned. Obviously trading has been much more profitable. I consider it not much riskier than my previous buy and hold strategy as I was able to maintain a reasonable level of diversification over several investors. But of course investing on Mintos is high risk anyway.
Which loans did I select for trading?
It all comes down to buying cheap and selling at a higher price. My experience is that this works best with mid-term, EUR BB loans. With short term or very long term loans the impact of premiums und discount is to high / to low on the YTM for a good turn-around of inventory.
Below is a snapshot of the loans currently in my Mintos portfolio today – of course the composition changes very frequently with this strategy. It can be observed that loan ranges between 18 and 42 months dominate my portfolio, which consists of 478 indiviudal loan parts. Also loans with 13% and higher interest rates are overweighted.
This trading strategy worked very well for me in the past quarter. It would probably not scale, if an investor tried to deploy much more capital, as loan supply that matches my criteria for buying is limited and competition is increasing.
The Net Annual Return (NAR value) Mintos displays for my return has been constantly increasing this quarter and today is at 14.74%. Remember this is calculated for the whole time since I started investing, so since January 2015. If I would calculate this figure only for this quarter results, it would be much higher.
Screenshot Dec. 28th, 2018
So what to expect in 2019?
Interest rates on Mintos have been fluctating over the past years. In the last months they have risen considerably. Possibly a seasonal effect. I have no idea whether they can rise a little further still, or have peaked and will fluctate back in the other direction for a few month. Also the economic cycle might turn.
I will stick to my buying and selling strategy for now and for this strategy supply and demand on the secondary market is much more important than whether the interest rates are 1 or 2% higher or lower as most of my result is generated from secondary market gains rather than interest earned.
Also I am acutely aware of the risk that the huge number of originators pose. Even if Mintos does a good job of vetting and monitoring the originators, the sheer number of originators statistically means that chances that one of them might get into financial trouble are not neglectabe. For indivual investors the only viable measure to have some protection (and to reduce losses in that case) is diversification across several originators.
I do hope that 2019 will be a very profitable year for Mintos investors!
On invitation of Crowdestor I travelled to Riga and met the founders of Crowdestor Janis Timma and Gunars Udris. Crowdestor is a Latvian p2p lending platform for SME loans. They launched a year ago. Loans are typically for terms of up to 18 months and interest rates are quite high – the current loan offer by a transportation company seeking expansion capital carries 17% interest rate. The Crowdestor website is available in English, German and Portuguese language. Currently most investors on the platform are Germans, followed by Spanish investors.
We talked about their experiences in launching the platform and I asked how they acquire new clients requiring a loan. Janis explained that at the current stage it all comes down to networking in the business community of Riga. Latvia is a small country, about 2 million inhabitants, and Riga is the dominating city with about one million inhabitants in the larger urban area. He said chances are very good that he has a friend that learned that a company is looking for financing and know someone in the management of the company and can put him in contact.
Crowdestor then negotiates the loan terms with the business and checks their business records and background. Janis said they have been extra careful with their loans so far, turning down very many requests as the founders understand very well that a default of a loan at this very early stage could harm their fledging marketplace.
Gunars (left) and Janis in font of the luxury appartment complex they showed me.
Both are very proud of the projects financed by the Crowdestor marketplace. They drove me around to show some of the projects. As one real estate project is at the moment only a piece of land, where construction has not yet been started, we went inside another apartment complex finished by the very same real estate developer, so I could experience the high quality of work and the attention to detail. It was an apartment complex with 3 buildings, themed Churchill, Hepburn and Dietrich, located directly on the shore at a popular beach. There is a spa in one of the buildings only for the residents and each building has a concierge.
Another project they were really enthusiastic about is INCH2 shoes a e-commerce venture that designs and sells fancy shoes online and is growing extremely fast. The shoes are produced in Portugal on their behalf. They had a smashing success selling shoes for 1 million EUR turnover on black Friday this year (overall turnover about 5 million EUR in 2018).
I got a small tour of the INCH2 office and had a look at some of the fancy shoe designs
INCH2 got a 100K expansion loan through Crowdestor earlier this year at 17% interest. Janis explained to me that they actually were looking for a 500K loan, but it was clear that at the current stage of development of the platform Crowdestor would not be able to raise that much cpaital from investors, therefore it was agreed to start with a smaller loan. In 2019 there will be a second loan for INCH2 on the Crowdestor platform.
And that brings us to the current situation. Crowdestor has a pipeline of 7 projects they want to finance in the near future but are aware that they need more investors, to be in a position to fund all these projects. Over lunch at ‘The Catch’ restaurant – really great tasting food by the way I can very, very much recommend that restaurant – and they will open a location in Berlin too – in fact when we were there they had staff of the German restaurant there that was getting training – we discussed pro and cons of possible different marketing strategies and platform features that could help Crowdestor to accelerate growth or the platform.
During a small drive to the city, Gunars showed me where several of the many other p2p lending marketplaces that are headquartered in Riga (most well known is probably Mintos) are located. Crowdestor itself is currently moving office to have a more space. Gunars told me that they have a good working relationship with the founders of many of the other platforms and are exchanging experiences and thereby benefiting each other.
In fact he arranged a small visit for me at the Viainvest office where we had coffee with Simona the Viainvest CEO, who had wanted to meet in person when she learned that I would be in town. Simona answered my question and gave some details to the current situation of the Viainvest business and future plans (which I am not to divulge just yet, but the company plans to announce them very soon).
At the Viainvest office. The group occupies a two floors in the building.
The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 473 million Euro. I track the development of p2p lending volumes 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 platforms. This month I added Debitum Network.
I removed Unilend, as the platform has closed and the company has gone into receivership.
P2P lending marketplace Mintos has raised 5 million EUR in a Series A. The money is earmarked to provide new features for investors.
Mintos will be magnifying its role in the financial services sector by adding personal IBAN accounts and debit cards to its established global lending marketplace in the near future. The IBAN personal accounts will give investors the ability to make and receive payments from around the world, including receiving a salary directly to their Mintos account. Meanwhile, the Mintos card will allow investors to make transactions around the world or online and withdraw money at ATMs.
This will be made possible by the e-money licence Mintos is applying to receive. As an Electronic Money Institution, Mintos will protect money held by investors under the European PSD2 legislation.
Martins Sulte, Mintos CEO and co-founder: “Providing customers with a personal IBAN account and debit card will mark a major leap in our services and significantly improve the user experience. Soon, everybody with their own IBAN accounts will be able to give the account details to their friends, companies or customers to get paid, to pay using a debit card, and to continue using Mintos for investing in loans around the globe and earning great returns. Our upcoming mobile app will make it even more convenient.”
The fintech startup has a fast-growing customer base of 87 000 investors from 71 different countries, with plans to open doors to more users in additional locations. With 100 000 registered investors forecasted by the end of the year and 300 000 by the end of 2019, Mintos will be focusing efforts on investor acquisition and expanding to additional global markets. To accomplish this, Mintos plans to significantly invest in doubling the size of its team.
The 5 million EUR series A funding comes from existing investors Grumpy Investments (previously, Skillion Ventures), Riga based venture capital firm that is focused on investing in technology companies.
Clearly Mintos attempts to position itself away from a pure investment offer to a broader financial service.
The table lists the loan originations of p2p lending marketplaces for last month. Zopa leads ahead of Mintos and Ratesetter. The total volume for the reported marketplaces in the table adds up to 481 million Euro. I track the development of p2p lending volumes 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 platforms. This month I added Crowdproperty.
Dofinance crossed 50M EUR total volume lent since launch.
I read a lot. Really a lot. I average about 100 to 150 books I read each year. Nevertheless I rarely blog about a book on this blog, since I want to keep this blog focussed on the topic.
I’ll make an exception today. For one of the best books written by a politican I ever did read.
It does not offer a vision. It is better. It is a profound, through analysis of the current state of society, the upcoming huge challenges we face, the likely consequences of these and a set of solutions that actually are logical, made sense to me and are financially feasible.
Most politicians seem to be doctoring with tiny steps on the symptoms, but in this book the author describes a clear path he would want to take forward.
The book is written by Andrew Young, running for US president in 2020. I have no idea what his chances are. And I actually do not care much about inner-American politics.
The point is: In my view this book is not (only) about America. It addresses the major questions most Western society will face in the next decade. In Europe the impact will be delayed a few years and softened by better social security systems, but many aspects are the same.
One of these challenges is the replacement of many, many jobs by algorithms (AI) or robots (did you watch ‘Humans need not Apply’?).
What does it mean for all of us if millions of job disappear in a very short time-frame?
As part of the answer he proposes Universal Basic Income (UBI). I have been very sceptical about UBI. It reminds me too much about the failed Eastern European economies of the last century. And I am still not convinced. But Yang lays out a very logical set of arguments that makes me more curious.
Rarely have I wanted so much to see the implementation of a political plan, to see if it works out and delivers the expected results. A lot would have to happen. It is one thing to lay it all out beautiful in a book and a totally different beast to win the majority to implement change.
The book gets rave reviews on Amazon.com and in my view they are well deserved. If you are looking for a really interesting book either to read yourself or as a gift, I highly recommend:
British p2p property platform Kuflink has been in operation since 2016. Previously accepting only UK residents as investors, the platform announced that they have enhanced their KYC/AML procedures and are now open to investors from anywhere in Europe. Interested investors can use a free UK bank account from Transferwise Borderless or Revolut (Smartphone required). And in exchanging money to GBP new TransferGo clients can get a 10 GBP bonus when exchanging/sending at least 150 GBP.
Kuflink offers short term property loans (usually 3 to 12 month), secured by a legal charge. They run a very generous 100 GBP cashback offer available by signing up through this this link. Note that the landing page says 50 GBP, but I have negotiated with Kuflink that clients referred by P2P-Banking get 100 GBP (doubling normal cashback). VERY IMPORTANT: Read T&C and strictly follow them. E.g. the minimum investment of 500 GBP must be reached within 24 hours of first investment. While it is possible to spread your investment over several loans, be sure that you are in line with the T&C terms.
You can find more cashback deals on this page.
Screenshot: Available Kuflink loans (selection).
Every loan offer comes with detailed information, including a valuation report. Since the start in 2016, Kuflink has originated more than 20 million GBP in loan volume.
Kuflink does not charge investors any fees. Interest is paid on the first day of each month (for manual investing). There is an autoinvest option, but conditions are less interesting than on manual investing. Two features Kuflink lacks are a secondary market and a detailed statistic page (there is some information in the FAQ).
Mintos has announced a new feature – the autoinvest can now be used to buy loan parts on the secondary market too. I am setting up a new autoinvest to test it and am curious how many loan parts I will be able to acquire with this new feature. Just like on the primary market there are many selections adjustable.
Screenshot Mintos Auto Invest Secondary Market
Mintos will roll out the new feature to all investors on Dec. 3rd. Only selected investors will be unlocked earlier. Mintos says investors can deposit an additional 5,000 EUR to add to their balance to get early access. Also investorswhich have invested at least 50,000 EUR will have early access.
Screenshot: Further details of Mintos Auto Invest Secondary Market
For the further details of the test, I set the secondary market auto invest to buy loans with at least 10% YTM, a maximum loan term of 30 month and at least 0.5% discount. I left the interest rate open, as the restriction is not really necessary for me in this case in conjunction with the YTM and the discount.. For ‘Do you want to reinvest’ and ‘Include loans already invested in’ I choose ‘Yes’. I deselected ‘Diversify across loan originators’ as I want to buy all loans that match these conditions.
No surprise – no loans match my selection. Loans with these criteria selected by me have been bought up fast in the past, even before the introduction of this new autoinvest. I do wonder, which investor will get priority in case there will be autoinvests of multiple investors matching a new loan up for sale. I expect this new autoinvest will be a popular feature amongst Mintos investors.
Not many but a few other p2p lending platforms offer autoinvests for their secondary markets too.
The table lists the loan originations of p2p lending marketplaces for last month. Mintos leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces in the table adds up to 410 million Euro. I track the development of p2p lending volumes 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 platforms. This month I added Colectual and Landlordinvest.
Milestones achieved this month (total volume since launch):