LendInvest Raises 17M GBP Series B from Atomico

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Lendinvest logoLendInvest, a UK online marketplace for property finance, has completed a 17 million GBP (25 million US$) Series B equity investment from Atomico, the technology venture capital firm founded by Niklas Zennström, the co-founder of Skype.

This is LendInvest’s second equity investment in nine months. In June 2015, LendInvest secured a 22 million GBP (33 million US$) Series A investment from Beijing Kunlun, the listed Chinese technology company.

The round takes LendInvest’s total institutional funding (debt and equity) to over 200 million GBP (285 million US$).

LendInvest was launched in 2013 by founders Christian Faes and Ian Thomas, and has lent 560 million GBP to finance 2,100 properties in the UK. The UK mortgage market – a £1.3 trillion sector  is traditionally offline, slow and generally a very poor consumer experience says LendInvest.

Today LendInvest’s technology reduces the time taken to process mortgages from months to days, while maintaining rigorous credit controls. LendInvest has also opened up mortgages as a new and attractive asset class that delivers returns of over 5% per annum for investors.

LendInvest will use this funding to accelerate its investment in technology and extend its lead in the property finance market. The company is recruiting its first Senior VP of Engineering and will expand its technology and product teams. Continue reading →

Which P2P Lending Marketplace Do You Recommend?

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I am often asked “Which p2p lending marketplace do you recommend?“. It is a natural question to ask for people that are familiar with the concept of p2p lending, but have not invested yet.

I feel hesitant to answer it with an outright recommendation for any one marketplace.

Sure I do have my preferred marketplace. Everybody has. But ask 10 different seasoned p2p lending investors and you might get at least 5 different answers. What is right for me, may not feel right for you. There can be no one size fits it all for p2p lending marketplaces. Interestingly as a sidenote investors seem to have less problems to agree why they dislike a platform – and they can also agree on ‘better’ platforms, you just don’t get consensus on the best platform.

What an investor prefers is influenced by his personality and past investment experiences. Investors differ in the expectation they tie to the investment, in risk appetite, in how they perceive and gauge risks. They may prefer a more actively managed investment or a passive investment style. Some enjoy auctions and elements that create competition for others factors like user interface might be a factor that lifts one platform over another.

That such a variety of different models has evolved and still prospers shows that they cater to an audience that is not homogeneous in their needs and wishes. One could argue that there is such a variety because it is a new field and everybody was just implementing ideas and experimenting and there were no role models, but that eventually the models will converge towards a best practise model. And I believe that is and will be happening, but only to a certain degree. Doing business over the internet allows marketplaces to deviate somewhat from the mass market and develop a style that fits a certain clientele easier than it would be for an offline financial offer because the economics of reaching out to and serving this clientele are different.

One entrepreneur recently told me ‘We are different, we just need 10% of the users to like us’ (sry if I rephrased that to much). My answer was ‘Just don’t be to different. Investors are conservative. Why scare 90% of your potential customers away’. I still believe in my answer, because I think it commercially makes sense. However it is minted by my past experience and my perception of the investor behaviour. So I actually want him to succeed in doing things VERY differently and making it as satisfying and enjoyable for those 10% he wants to be the perfect marketplace for.

What do I answer on the question?

At conferences or in other situations without much time, I usually suggest several marketplaces the investor might want to look into and point to my blog for more information.

If there is more time, I usually ask questions to try to find out what the person is looking for, what factors are important for him and what his past investment experience is. Then I tell which marketplaces do well on these factors and might in my opinion be a good match based on what I understood he is looking for. It still feels imperfect and uncomfortable for me sometimes. Maybe it is just a cultural thing, that most people are not comfortable in making recommendations how other people should invest money.

What would be the best answer?

I often think, the straightforward answer is ‘It depends‘. I have never given this answer. Even in situations when I am pressed for a very short answer.

Impressions from the P2P Investing Day in Prague

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Today I am in Prague at the P2P Investing Day organized by Symfonie Capital. There are several Central and Eastern European marketplaces present like Bondora, Finbee, Estateguru, Zlty Melon, Symcredit and Zonky, but also Lendinvest and Ablrate from the UK. The content of the panels and presentations was not as basic as in last year’s conference. I’d estimate about 150-200 attendees.

One interesting discussion centered on the differences between a bank loan and a p2p loan for a SME loan borrower that has problems to make the payments. One argument was that the advantage of a p2p lending marketplace is that it can be more flexible in finding a solution, e.g. by prolonging the loan term – having power of attorney granted by investors it is free to find a solution it deems right for the situation. The counterargument was that the platform should adhere to a rather strict set of rules since it owes its investors predicitability. Personally I understand both views but as an investor I prefer platforms to stick to a predefined process, because only that will make collections and defaults rates predictable. If there is too much flexibility and on the spot decisions it will be very hard to statistically evaluate platform performance and development for troubled loans over time.

One interesting anecdote was mentioned by Lucie Tvaruzkova, CEO of Zonky, a consumer loan marketplace in the Czech Republic, launched several month ago. She said that at the moment there is a waiting list of 7,000 investors wanting to use the platform but to scale it properly in line with loan demand, she lets those in only bit by bit. So far 5,000 investors are already active on the platform.

Symvest 2016 p2p lending conference
Panel on consumer focused platforms with representatives of Savelend, Bondora, Finbee and moderator Michael Sonenshine

David Bradley-Ward, CEO of Ablrate, told me that he expects to put more airplane loans on the platform in 2016 than in the previous year, but has to be selective in which loans fit the investor appetite. He also says the situation gets easier as he now has institutional investment in place that can pick up loan parts that would otherwise go unfunded by institutional investors.

I liked the panel that had 3 SMEs, that borrowerd through a p2p loan, on stage, as this gave an interesting change of perspective. Continue reading →

Bondora Enhances Reporting Feature

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Bondora logoAfter what felt like a drought period, Bondora seems to focus again on working to improve functionality for investors. This week they released a new version of the cash flow report, with the following upgrades:

1) Historic payments will be split between current loans and loans in default as per the status active at the date of the payment
2) We will introduce day-level information that shows cash flow categorized per each investment
3) Forecast settings can be defined also for historic schedules so you can use cash flow based adjustments for predicting future payments
4) You can adjust your net return calculation based on the probability settings defined in the cash flow report
5) Cash flow report will show the opening cash balance and closing cash balance for each period
6) You will be able to define which data series to show on the chart
7) Historic planned schedules will be split between current loans and loans in default
8) Cash flow table results can be exported to Excel
9) You will be able to define which data series to show in the cash flow table
10) Live data from the current day (currently under Account statement for the last 24 hours) will be incorporated into the cash flow report
11) All data is in one table
12) You will be also able to filter to a specific loan in the Investments list straight through the cash flow report so you can quickly take loans off secondary market or put them there based on the information visible in the cash flow report

I have experimented a bit and like the way this report page gives me a quick visual representation of what is happing in my account and that it is very customisable. Plus it lets me set my personal values for expected loss rates and use that to calculate net return displayed in the dashboard. Read also what investor Oktaeder blogged about this feature.

If you are not investing at Bondora, this Bondora video will give you a good overview of the functionality.

International P2P Lending Marketplace List – Loan Volumes February 2016

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The following table lists the loan originations for February. Funding Circle leads ahead of Zopa and Ratesetter. I added Harmoney and Crowdproperty to the list. I do monitor development of p2p lending statistics 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.
Investors living in markets with no or limited choice of local p2p lending services can check this list of marketplaces open to international investors. Investors can also check how to make use of current p2p lending cashback offers available.
Last month these companies crossed significant milestones:
  • Pret d’Union reached 250M EUR since launch
  • Harmoney crossed 200M $ since launch
  • Smava reached 100M EUR (counting p2p loans only, not the brokerage model for banks) since launch
P2P Lending Volume February 2016
Table: P2P Lending Volumes in February 2016. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.
Notice to p2p lending services not listed: Continue reading →

Auxmoney Raises Series D from Seven Ventures

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Auxmoney Logo 2016Auxmoney, one of the oldest German p2p lending marketplaces, has completed a Series D round with Seven Ventures as lead investor. The specifics were not disclosed, only that Seven Ventures along with Index Ventures, Union Square Ventures und Foundation Capital invested a double digit million Euro amount. Seven Ventures is the investment arm of ProSiebenSat.1 Media SE, which operates large TV channels in Germany.

Raffael Johnen, co-founder and CEO of Auxmoney stated: „The partnership with ProSiebenSat1 is an important milestone on our path to change the public awareness for p2p lending in Germany. We will make a big step towards our goal to enable access to loans for more people. The raised capital and the better access to TV advertising will help us to make p2p lending part of everyday life of millions of people.” (original quote in German; own translation)

Auxmoney trippled loan volume in 2015 compared to 2014.  As of January 31st, 2016, according to numbers on file with P2P-Banking.com, the company had originated 441 million EUR in loans since launch, with a monthly loan origination volume of 10.6M for the last month on file (January 2016).

Auxmoney management
Auxmoney management