On the peer-to-peer equity market Crowdcube (see earlier coverage) the first business succeeded in raising the desired funding in exchange for equity. Yesterday bodycare business Bubble & Balm hit its funding target of 75,000 GBP. The amount was funded by 82 investors which will in return receive 15% of the equity of the company.
I am one of those, albeit with a symbolic amount of 20 GBP invested, which means that in the future I will own a whooping 0,004% (=1/25000) of Bubble & Balm, once the transaction is legally finalized.
Investing so far was very easy – I contributed my 20 GBP (plus fees) via Paypal. There is the option to pay via bank transfer too. After uploading the money to the account I then selected the business to invest to.
For the moment it is fun to participate in this first public p2p equity process in the UK and I see it as an experiment with the ability to gain first hand experience how it proceeds.
I selected Bubble & Balm as an “investment target” for three reasons:
It was clear that this pitch would be the first to fully fund
It is an established business that already operates since 2009, not a startup with a mere idea
The information provided in the pitch is sound (business plan, financials, background of founder)
The bodycare business will use the investment to expand its award-winning product range, increase marketing activity and to meet increasing demand from retailers such as Waitrose, Oxfam, Planet Organic and a growing number of independents.
Recently Zopa UK removed the ‘Listings’ functionality that allowed borrowers to list individual loans. Listings were introduced in October 2007 as a add-on to the original Zopa markets model.
Here is the official announcement of Zopa regarding the removal of the Listings function:
You might know that Zopa is a little unusual amongst the now 30+ peer-to-peer lending companies running worldwide in that we facilitate the vast majority of loans through the Zopa Markets; almost all the other peer-to-peer lenders make all their loans using something more like our Listings. Indeed, we weren’t first-to-market with the Listings approach, adding them to our site about two and a half years after we first launched. Since then some 700 Zopa borrowers have received loans totaling £4.3m using Zopa Listings and there’s been some great ones in there; from guitar re-stringing, to a planetarium, a few bits of plastic surgery and of course plenty of cars.
Sadly though, while those figures sound quite good, they only represent a very small proportion of total Zopa lending and that proportion is declining too, while the rest of our business is growing rapidly. Couple that with Listings being much more long-winded to underwrite and we hope you’ll understand why we’ve taken the tough decision to draw Zopa Listings to a close.
… we’ll remove the functionality from the site that allows borrowers to create a new Listing. All the Listings that are already live before this point will of course be allowed to continue to their natural conclusion and once they’re all finalized, we’ll remove all references to Listings from the site.
If you’ve taken part in any lending via Listings, you’ll still be able to keep track of them and monitor how they’re being repaid in My Loan Book, where you can now find a link to your borrower’s original Listing page in the detail page of the loan in My Loan Book (click on the borrower’s username to open this view).
Ever wondered how p2p lending is regulated in the US in detail? The new GAO report ‘Person-To-Person Lending: New Regulatory Challenges Could Emerge as the Industry Grows‘ has all the details and covers the situation of Prosper, Lending Club and Kiva. It also reviews possible regulatory changes.
Symbid was first covered in the P2P-Banking blog two weeks ago. IÂ interviewed Korstiaan Zandvliet to get a deeper insight into the service.
What is Symbid about?
Symbid is the first online investment platform where the crowd directly invests in the equity of a start-up or existing company! Everybody can be an investor, each part has a nominal value of 20 EUR and you decide how many parts you would like to invest. The minimum is 20 EUR, the maximum is 2,500,000 EUR! The Symbid way of directly investing in equity is unique. It makes investors partial owners of the fully financed (newly founded) company. Entrepreneurs use Symbid as a quick, simple and fun new way to obtain start or growth capital with help from the crowd. Additionally, once fully funded an entrepreneur has the luxury to interact with his community of investors within a closed online collaboration workspace!
How did you get the idea for Symbid?
During my master degree in Entrepreneurship and new business venturing I noticed that many of my classmates did have an entrepreneurial dream but were reluctant to act upon it due to financial constrains. On the other hand I noticed that people became more connected using social networks such as Facebook and Twitter. By combining these ideas I came to the conclusion that social networks could also be used to communicate investment propositions to a large audience.
What’s the process for entrepreneurs?
Symbid provides an online platform where companies and individuals are able to submit a business idea (proposition). When you register your idea at Symbid, you indicate how much capital is required to start or grow your business. Users search for ideas they believe are viable in generating future profits. Investing is possible from €20,- per part and payable through all accepted payment methods.
Symbid uses a secure separate bank account for all investments on the platform. This way investors and entrepreneurs are assured that investments are used for no other purpose than the financing of business ideas. Until the funding goal is met, an investor has the possibility to freely withdraw his investment from Idea A and for example invest it in Idea B. This situation could occur when an entrepreneur has not made the right adjustments to satisfy his investor. When the target amount is met, the total invested amount, investments are fixed and can no longer be withdrawn.
When an idea is fully funded and all the final investors are known, they are gathered in one legal entity. The process occurs online and is completed when the entrepreneur and investors are being granted access to a secured online collaboration community. Subsequently, the entity buys the predetermined amount of shares with the attracted funding. People within the collaboration community can join forces to bring the newborn company to a successful organization. This online community offers various collaboration tools to actively manage and monitor the progress of the company and interact as one with the entrepreneur or management team. Every individual share is tradable, which makes it even more interesting to invest through Symbid and become a shareholder in a newly founded or existing company.
How is Symbid more attractive than other potential sources of capital (VCs, business angels, banks, …) for founders?
With Symbid, entrepreneurs are able to onboard a large group of shareholders combined into one entity. This group of people can be used for market research but also as launching customer group. By giving away equity to his investors, the entrepreneur can make sure all incentives and motivations are aligned from an entrepreneur perspective as well as from an investor perspective. Hereby an entrepreneur’s crowd becomes a think-tank for the respective company.
In comparison to the cost of capital, the 5% success fee is for most businesses lower than the average costs of receiving capital via a bank. If these businesses would get financing from the bank at all.
Who is able to invest? And what are the advantages?
Symbid allows investments from 20 Euro onward. Everyone can invest however for the moment we only serve Dutch companies. All investments done via Symbid are transferred into shares with voting rights, direct transfer- ability and dividends. This leads to the highest chance of a sound financial return, financing success and liquidity.Continue reading →
I have been aware of Trustbuddy for some time. They are (at least internationally) pretty unknown since they do not do much marketing. I have only once written about them before, in order not to give publicity to a company which charges interest loans for rates in a height, that I deem could be called usury (on moral grounds not on legal grounds). According to their own published figures on the site the current ‘Effective annual interest’ for a one year loan varies between 219% and 852% (733% to 5102% for a one month loan). While Trustbuddy calls itself a p2p lending service, their rates are somewhat closer to Wonga (see Need a loan at 2334 percent APR).
Why do I now write about Trustbuddy then?
Well ignoring them, won’t make business models like these disappear. And it seems to be profitable for the service as well for lenders as per the numbers that Trustbuddy supplied P2P-Banking.com.
But the main questions I ask lenders is: Do you feel it is ethical to earn the 12% p.a. interest rate given the costs the borrowers are charged? If you answer this with yes for yourself, then Trustbuddy may be a good choice for you.
Furthermore Trustbuddy is one of few companies in this business that have a drive for international expansion. Remember they bought Loanland operations earlier.
The following is information supplied by Trustbuddy:
TrustBuddy AB (2009), a Swedish P2P lending facilitation company. Using in-house developed and proprietary mobile-/web-based financing solutions, it facilitates smaller short-term loans between private consumers. The company does not lend out its own money; pooled loan-portfolio investors provide funding. TrustBuddy has already reached close to 40,000 registered members, of which more than 20,000 are active customers, in Norway and Sweden alone. This is done with virtually no marketing efforts, showing how popular the product is. Continue reading →
Peter in an article over at SocialLendingNet has collected some interesting statements showing that Lending Club is close to be able reaching break even on cash flow terms.
Renauld Laplanche told him, that Lending Club has topped 1 million US$ monthly revenue and could thereby cover it’s operating expenses, if investments in the future (technology, marketing) are disregarded.
Lending Club is the second major p2p lending service after Zopa to approach break even.
Lending Club is still a long way from making profit as it has a long way to go to redeem the money invested in the platform over the past years. But the growing volume and the ability to cover expenses a very good signs that p2p lending services can scale to profitability.
