interview

Interview with Martijn van Schelven, Founder and CEO of Geldvoorelkaar

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Interview with Geldvoorelkaar founder Martijn van Schelven.

What is Geldvoorelkaar about?

Geldvoorelkaar.nl is about crowdfunding. We provide funds through our website for both SME as well as consumer lending. We provide loan-based funds. Borrowers borrow money and pay the investors back on annuity basis. Loans are on average 75.000 EUR. At this moment we mediate in approximately 2,500,.000 EUR each month. We facilitate screening on published projects, contracts and payment schedules between borrowers and lenders. Our start up was December 2010 and up till now we have approximately arranged credit for 500 companies. The total amount funded up till now is  31.5 milion EUR of which approximately  17.5 million EUR was funded in 2013.

What are the three main advantages for lenders?

  1. Direct ROI through annuity / interest
  2. Transparency on published projects, accessible and easy way of funding
  3. Extra incentives on most projects

What are the three main advantages for borrowers?

  1. Easy understandable debt against low costs
  2. Extreme commercial spin off, in addition to the funding
  3. Investors are not shareholders, but do act as such. Funded entrepreneurs keep their own independency

Martijn van Schelven

How did you start Geldvoorelkaar? Is the company funded with venture capital?

Me and my companion Edwin Adams were both one of the first franchisees for ING Bank Netherlands. A successful franchise concept which sadly was ended due to reorganisation within the bank. Our own bankshops were bought back by the bank. This money was invested in the development of Geldvoorelkaar. We are 100% independent.

Is the technical platform self-developed?

The platform was developed based on our own ideas. Centric (http://www.centric.eu/EU/Default) , a software engineer, developed the technical side of our platform and our backoffice. Continue reading →

Interview with Charles Egly, CEO of Pret d’Union

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What is Pret d’Union about?

PRÊT D’UNION is the first and sole peer-to-peer lending platform accredited by the French Central Bank.

Thanks to an innovative disintermediation model, PRÊT D’UNION enables private individuals and institutional investors to lend money to borrowers directly through a secured bond marketplace, offering above-market returns on savings and low interest rates on consumer loans. Each party gets a better deal, bypassing mainstream financial institutions.

PRÊT D’UNION was founded in October 2009. In March 2011 the company obtained a broker license from the AMF (Autorité des Marchés Financiers – SEC equivalent); in July 2011 the company obtained a credit institution license from the French Central Bank. The marketing campaign has been launched in January 2012.

In 26 months the company has issued over €80 million in loans (€11 million in 2012, €43 million in 2013). For 2014, Pret d’Union plans to issue over €90 million in new loans.

Since its inception, PRÊT D’UNION has raised €18 million in equity. PRÊT D’UNION also enjoys the benefits of the French Research Tax Credit (CIR).

What are the three main advantages for lenders?

Pret d’Union propose 4 types of investment products:

- Fund #1 (Conservateur Court – Conservative & short duration) which invests in consumer credit with initial maturities of 2 years and 3 years granted to A Borrowers.

- Fund #2 (Conservateur Long – Conservative & long duration) which invests in consumer credit with initial maturities of 4 years and 5 years granted to A Borrowers.

- Fund #3 (Equilibré Court – Balanced & short duration) which invests in consumer credit with initial maturities of 2 years and 3 years granted to B Borrowers.

- Fund #4 (Equilibré Long – Balanced & long duration) which invests in consumer credit with initial maturities of 4 years and 5 years granted to B Borrowers.

The format of our funds is pretty similar to LC Advisors’ funds. However we added a few features: an ISIN code (FR0011605690 for Fund #2) and weekly quotes on Bloomberg (ticker PDUALNG:FP).

Yields for Lenders range from 4.4% p.a. to 7.4% p.a.


Chart 1: Purpose of loans (PU Conservateur Court)

What are the three main advantages for borrowers?

For Borrowers, the three main advantages are:

- better rates,

- fixed interest rates and constant monthly repayments (no revolving loans),

- A quicker process.

Which marketing channels do you use to attract lenders and borrowers? Can you share the current CPA?

To attract borrowers we mainly use: emailing, aggregators, banners, affiliates … (CPA below 200€ per borrower).

To attract Lenders, it’s mainly “word of mouth” and PR. Continue reading →

Interview with Greg Ryan, CEO of Daric

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Daric will enter the US p2p lending market. I conducted an interview with CEO Greg Ryan in summer. I am publishing it now, as he has notified me that Daric will launch soon.

What is Daric about?

At Daric, our vision is to provide a platform to serve people that have capital and people that need it in an efficient, friendly, and easy to use way. We believe that being a Silicon Valley based internet platform, we can leverage new technologies to increase transparency in the financial system, use algorithms and automation to help both lenders and borrowers make better financial decisions, and increase access to capital for the community as a whole.

What are the three main advantages for lenders?

1. We have placed a great emphasis on the user experience and user interface of our platform (applies to both lenders and borrowers).

2. The ability to monetize hard assets (we will go into greater detail after we have established our cash based system).

3. Providing another platform for p2p lenders to deploy their capital on. By spreading out their capital on several platforms (Daric, Lending Club, Prosper, etc.), we can provide lenders with proper diversification which therefore reduces risk.

What are the three main advantages for borrowers?

1. We have placed a great emphasis on the user experience and user interface of our platform (applies to both lenders and borrowers).

2. We want to expand beyond the debt consolidation model currently used by the industry leaders.

3. Daric provides another source of capital for borrowers that need it. Borrowers greatly benefit by numerous sources of capital.

Which marketing channels will you use to attract lenders and borrowers? Can you share the projected acquisition costs per customer?

Daric intends to acquire both lenders and borrowers through internet based marketing initiatives. However, we feel the most powerful way to acquire users is through word of mouth. If we provide great value and service to both our lenders and borrowers, we hope they will tell their friends about us. There is no marketing tool that is more powerful than a positive referral from someone you know and trust. Continue reading →

Interview – 4 Years Zidisha

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I have been following and using Zidisha for years. Today I am glad to be able to publish another interview with Julia Kurnia, Director and Founder of Zidisha Microfinance. An earlier interview conducted 2011 is here.

Zidisha celebrates its fourth birthday. What is the current status?

Four years ago, Zidisha launched as the first direct P2P lending platform to bridge the international wealth divide: We linked economically disadvantaged individuals in some of the world’s poorest places directly with individual lenders and allowed them to transact each other directly.

This went against conventional wisdom because it had always been assumed that this demographic could not use web-based services and needed local organizations to serve as a go-between.  For example Kiva, which pioneered online fundraising for microfinance, contracts with intermediaries in each country to manage the loans and communicate with lenders on the borrowers’ behalf.  Before Zidisha, nobody had attempted to connect people in developing countries to the international P2P lending market.

What we have learned in the past four years is that direct P2P lending across the international wealth divide is not only possible, but that the benefits are even greater than that of domestic P2P lending services.  Banking services in developing countries are so inefficient that borrowers routinely pay interest rates of 50% or more, if they can access loans at all.  With Zidisha, borrowers pay a transaction fee of 5% and can then choose to offer interest of 0% to 15% to lenders.

We’ve funded over 3,000 loans in the past four years, and so far their repayment rates are a bit better than those of small business loans in the United States.  To date, 90% of the loans that are due to have been repaid have been repaid with interest, 5% are repaying late, 2% have been forgiven by lenders who opted out of repayments and 3% have been written off due to default or catastrophe suffered by the borrower.

Compared to p2p lending services Zidisha’s growth/loan figures are moderate. What reasons do you see for this difference?

The moderate pace of growth is mainly due to the fact that we are pioneering something that has never been tried before: a P2P lending community that connects people directly, without any intermediaries, across previously impregnable barriers of location, social group and culture.  There is no precedent for this, no established best practice to follow.  So we are scaling slowly, and continuously adjusting our lending model in response to experience.

How difficult is it to enter a new country to allow more borrowers to use Zidisha?

That varies a great deal, depending on the ease with which we can integrate with local money transfer services in each country.  In Kenya, we use the M-PESA mobile banking service to send the loans directly to our members’ cell phones, and that is really an ideal solution.

We do not have brick-and-mortar offices or employees in borrowers’ countries; all of our application review and payment transfer services are provided remotely over the internet.  Volunteers – both international interns and local community members – frequently visit borrowers and offer information sessions, but they do not manage loan transactions in the way traditional loan officers would.  So once we are able to open a cost-effective electronic payment channel, that is really all we need to enter a new country.

Is the currency risk an important factor in Zidisha’s operations?

At Zidisha, lenders assume currency risk: they can lose money if the borrower’s currency depreciates against theirs over the course of the loan.  One would expect that this would cause lending volume and interest rates to rise and fall in response to exchange rate fluctuations, but this had not happened for the most part.  I think the reason is that lenders consider participation in Zidisha to be a philanthropic activity.  They pay more attention to the social impact of the loans than the financial returns.

Continue reading →

P2P Lending in India – Interview with i-lend

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VVSSB Shankar, founder & director of i-lend, answers the questions of P2P-Banking.com.

What is i-lend about?

i-lend is an Internet based P2P lending platform in India which went live two months ago. Presently this service is available in Hyderabad, Andhra Pradesh. The portal connects the two sets of customers i.e. borrowers and investors who register online, undergo a verification process, list their requirements on the portal and agree for a mutually beneficial financial transaction.

Tell us about how your target customers traditionally seek loans?

Typically most of our borrowers have recourse to either personal loans from banks or resort to credit cards usage. These personal loans are available only to a selected segment working in some top 500 companies. Most people who are not a part of the above mentioned segment have to resort to private borrowings on which interest rates are very high more like 21 to 28%.  Moreover a vast majority of urban India who otherwise are gainfully employed are denied credit for various reasons. Personal loans are also very expensive in India attracting rates between 16% – 24% by banks.

Is there a reliable credit scoring model in India?

CIBIL – a credit rating institution was established a few years ago and today it is the de facto body which maintains credit scores. However the credit rating eco system is evolving.

What other challenges did i-lend face to introduce p2p lending in India?

Before establishing a P2P model in India, it was essential that we understand the complex regulatory environment. We had ensure that we were following various laws governing the banking sector, financial institutions and other state laws with respect the money transaction. With this information, we then worked on a viable business model for P2P lending in India.

We also had to modify the model such that both borrowers and investors found it attractive. For instance, i-lend does 100% physical verification of all details provided by the borrowers at both his residence and workplace reference. We also collect Post-dated cheques from borrowers for the loan tenure.

What are the three main advantages for lenders?

– Higher returns (at least 3 times more) on idle money compared to Saving Account – The return on savings account in India is 4% while i-lend offers a minimum returns of 12% on loans given to borrowers.

– Monthly returns on money invested through borrower EMI payment – While other investment options have a lock-in period, p2p loans will give investors monthly returns i.e. liquid cash

– A new investment option – where investors can decide whom they wish to invest in, their desired interest rate and spread their risk by investing in multiple borrowers – Min. investment amount is Rs.5,000.

What are the three main advantages for borrowers?

– Lower interest rates starting at 12%. Typical bank rates are anywhere between 17-19% and offered to select few

– No prepayment charges – Banks charge anywhere between 2-4% of the principal outstanding as pre-payment charges

– Flexible loan amounts – Rs.25,000 – Rs.300,000: Banks typically offer loans from Rs.100,00 only.

What interest rates do you expect to see on the marketplace?

We expect the interest rate to be anywhere between 14-16%. Continue reading →

Interview with Sophie Coles of Squirrl.com

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On Wednesday the new p2p lending marketplace Squirrl.com launched. For an introduction on the concept read the article ‘Squirrl Launch – Secured Loans to Suppliers‘. Now Sophie Coles, Squirrl’s Director of Business Development answers my questions.

What is Squirrl about?

Squirrl.com provides an online finance platform for well established commercial organisations (Suppliers) that have a business model where assets are provided to their customers and paid for over a period of time through Pay for Use Agreements.  Examples are the motor industry, industrial machinery, office equipment etc….  If this type of organisation has no other financial arrangements it must pay for the assets at the start of the contract, and only receive its money back over the life of the agreement.  Few commercial organisations can suffer the impact of this negative cash flow, yet customer demand for this service model is growing.  Investors using the Squirrl.com platform can lend money to this type of Supplier in return for higher interest rates than they would get from the high street banks and have their loans secured.

How did you get the idea for Squirrl?

Since the banking crisis of 2007/2008 the flow of money available to commercial organisations to finance Pay For Use Agreements has almost dried up yet there is a huge demand from all sectors for such contracts. Traditional funders have become increasingly inward looking and preservation of their balance sheets their primary concern. There had to be another way to fund these contracts that are often underwritten by high quality customers and supported by highly reputable Suppliers. If someone was prepared to lend to another person on an unsecured basis as demonstrated by the P2P marketplace then surely that same person would lend to a good quality business secured against the cash flow of the Pay For Use Agreements. That was the trigger moment that occurred in 2011 and for the last year the site has been under development.

What are the three main advantages for lenders?

  1. Squirrl savers can achieve higher interest rates than saving through high street banks typically between 5-15%.
  2. Loans are made to established commercial organisations and then secured against the cash flow from a pool of a minimum of at least 20 Pay For Use Agreements. There is always a substantial buffer built into the security so that on average there is £2 of cash flow available to repay £1 of loan.
  3. A 13 point risk mitigation programme is designed to reduce risk to the investor as much as possible.

What interest rates do you expect to see on the marketplace?

Typically the interest rate savers receive will reflect the level of risk associated with the investment opportunity.  Initially Squirrl.com will only accept the lowest risk organisations so interest rates will vary between 5-7%, which is still a great return compared to what the high street banks are currently offering.

Which marketing measures do you plan to attract lenders?

Initially we are planning a very soft launch for Squirrl.com and will not be over promoting the concept.  Savers do not have to pay any fees to join and start bidding apart from a one off £5 fee to cover the costs of user identification to comply with Squirrl.com security and Money Laundering Regulations.  We want to stick closely to the community feel of social saving so we want to make the user experience as good as possible and Squirrl.com will continue to evolve through user feedback.  After the initial launch we will start to seek other suppliers who could benefit from gaining finance using Squirrl.com, but we will only work with reputable companies who have high quality, structured Pay for Use Agreements in place.  We can also act on a consultancy basis to help companies develop their structure to meet our criteria.  Ultimately we want Squirrl.com to represent high quality, low risk, high return saving for the community so finding suitable suppliers to fit the bill will be crucial in maintaining this quality and reassurance to our squirrl savers. Continue reading →