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.

Germany – Do Borrowers on Smava Differ From the Average Population?

A new study of the DIW Berlin (see page 3-9) (authors: Nataliya Barasinska, Nicola Jentzsch und Dorothea Schäfer) has analysed Smava loan data from the years 2007 to 2011 and found out that people who use p2p lending Smava for borrowing resemble the average population using conventional bank loans. Against expectations there was no major difference in age structure:

Regarding gender there is a gap, 28% of Smava borrowers are female; whereis in the comparison group 40% of borrowers are female. Regional distribution of borrower residence did not differ from average population. Continue reading

New VC round for Smava

German p2p lending Smava completed another financing round. The new capital raised comes from the VCs that already invested in earlier rounds.

Earlybird increased their investment from previously 39% of shares to now 56% and Neuhaus Partners increased their part from 12.5% of share to now 17%.

The original founders Alexander Artopé, Sebastian Rieschel and Eckart Vierkant now combined hold less than 8%.

Speculation is that the high customer acquisition costs (especially for borrowers) led to the need for another financing round. Estimates put the cost for borrower acquisition as high as 500 Euro. In certain customer acquisition partnerships, Smava pays the partner up to 1.3% of the loan amount (equals 650 Euro for a borrower with the maximum loan amount of 50,000 Euro). While Smava is growing, the growth rate has in the past months stopped to accelerate and is about 2 million Euro funded loan volume per month (chart).

P2P Lending Year-End Review 2010

As the end of 2010 approaches here is a selection of main peer-to-peer-lending news and developments covered by

(Photo by paul (dex))

Smava Subsidized Loan Promotion Ends With Little Success

Smava in the time from September, 15th 2010 to October, 15th 2010 offered subsidized loans to new customers (borrowers). The offer was limited to loan amounts up to 2,500 Euro and only available for 36 months loan terms.

Eligible borrowers could take out a loan at an APR of 2.99%. Since lenders received “normal” rates (typically between 5 and 13% nominal depending on credit grades) Smava subsidizes the difference. Over the duration of 36 months this will cost Smava about 150 to 300 Euro per loan.

According to Wiseclerk stats about 150 loans with a total volume of 350,000 Euro closed at the reduced rate.

Reasons for this marketing promo

Smava did not comment about the motives behind this offer. While the resulting CPO of this offer is higher then with other marketing channels, Smava could have speculated that the press picks the special offer and that the traffic from the generated press coverage leads to additional loan requests that are not eligible for the offer. Furthermore the rate of 2.99% APR could place Smava prominently ranked on loan price comparison sites.


In my opinion this offer had low success. Judging by economic facts it might be considered a failure. Little additional press coverage was generated by this special offer. The total loan volume funded per month did not rise compared to previous months. The offer might aid the positive image of the Smava brand though.

Smava Enters Marketing Partnership with Cortal Consors Bank

Smava has entered a marketing cooperation with Cortal Consors bank. Cortal Consors will promote Smava as a new asset class to it’s customer. Smava will pay Cortal Consors referral fees for referred lenders and borrowers.

Newsworthy is that this is the first marketing deal a bank has entered in with a p2p lending service. The implications of the deal itself are rather unspectacular as the information is buried deep inside the Cortal Consors website where few are likely to see it.

In other news Smava has redesigned the website and changed the slogan a couple of days ago. The former slogan was “Kredite von Mensch zu Mensch” which roughly translates to “Loans from human to human”. The new slogan is “Direkt Kredit” (engl. “direct loan(s)”). The motivation of this change according to Smava was to enhance the message that loans are direct, easy, and competitive. Smava says borrowers had wrong associations with the old slogan, thinking that long negotiations with individual lenders would be necessary.

Published feedback by users (lenders) on the new slogan critisizes that the new slogan resembles those of impersonal financial institutions – an image that p2p lending services aimed to differentiate themselves from.