3 Marketplaces Join Forces to Form Crowdfunding Alliance in Singapore

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Today marks a significant chapter in Singapore’s fast-growing crowdfunding industry, as crowdfunding platforms CoAssets, FundedByMe, and New Union announce an alliance that sees the three platforms combining forces to develop the local and regional crowdfunding industry.

singapore-flagAll three platforms – CoAssets, FundedByMe, and New Union – today have international reach of investors and campaigns. Together the alliance recorded over S$200 million dollars raised through crowdfunding campaigns in 2014, with growth expected to accelerate over 2015.

Said Getty Goh, founder and CEO of CoAssets, “As an individual company, there is only so much we can do. Hence, I am excited and honored to be a part of this three-way alliance. However, this is just a first step and we hope that more stakeholders will join this alliance so that it can eventually pave the way for Fintech trade association. As Fintech is a burgeoning sector, the best way forward is to come together and engage the authorities collectively. Akin to the Singapore Venture Capitalist and Private Equity Association (SVCA) or Real Estate Developers Association of Singapore (REDAS), having a Fintech association is not only a good way to promote self-governance, it can also bring greater awareness to what this industry is all about.”

“We are excited about this development with likeminded partners in the industry. There’s so much more we can do together, once we focus on developing the market here and globally in 2015. Crowdfunding is definitely on an uptrend –– we experienced over 600% growth in 2014 year-on-year –– and expect that the next wave of growth will exponential especially considering this alliance, coupled with surging Asian demand,” said Daniel Daboczy, founder and CEO of FundedByMe.

“Technology and the world-wide-web have become irreplaceable to our daily life, and every day business — and today, this alliance represents the emerging wave of financial services that meet crucial needs in the business community. Our commitment is to work closely with government agencies and financial institutions to spearhead a progressive and trustworthy crowdfunding environment,” Jeremiah Lee, Founder and Managing Director of New Union.

The three platforms plan to launch their first combined crowdfunding project in Q3 of this year, as well as joint conferences over the months following their alliance announcement. Continue reading →

Mintos Announces Buyback Guarantee for Car Loans

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Mintos LogoLatvian p2p lending marketplace Mintos today announced a buyback guarantee for all car loans issed by Mogo that are currently on the marketplace or will be listed on the platform until July 31st, 2015. The buyback guarantee applies for the lifetime of these secured car loan. Under the agreement Mintos concluded with Mogo, Mogo will buy back any of those loans that are 60 or more days delinquent.

All secured car loans are originated, pre-funded, and serviced by mogo. It means that similar to real estate backed loans, Mintos puts on the platform already funded loans (and most have had a number of successful payments) and investors can start earning interest from the moment they have invested in a loan. Mogo keeps 5% of each loan on its books.

This construct provides additional security to investors – a bit like the provision funds some UK marketplaces maintain; only that in this case it currently is a limit-time guarantee.

Mintos Buyback

Taaleritehdas becomes an owner of the P2P lending company Fellow Finance

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Taaleritehdas invested 2 million EUR in the peer-to-peer (P2P) lending company Fellow Finance Oy and, at the same time, sold the entire stock of its Financing Company Lainaamo Ltd to Fellow Finance Oy as a share exchange. Lainaamo has a consumer credit portfolio of approximately 20 million EUR  with thousands of consumer customers. After the acquisition, Taaleritehdas owns 38.4% of Fellow Finance Oy. In addition, Taaleritehdas has an option to increase its holding in the company by 7.3%.
Fellow Finance’s founders, Jouni Hintikka and Teemu Nyholm, each own 18.4% of the company. In total, Fellow Finance key persons have a 57.3% holding in the company.

According to its vision, Taaleritehdas aims to develop the Finnish capital market. Taaleritehdas believes that increased direct financing will be one of the most significant changes in the finance industry in the future. The focus in financing will increasingly shift from the bank-centric approach towards direct financing. Another strong megatrend in the financing sector, as seen by Taaleritehdas, is digitalisation. Both Fellow Finance and Lainaamo offer their services completely online. Ownership of Fellow Finance enables Taaleritehdas to offer its customers a new investment form and to utilise digitalisation in its own activities, as well. The merger of Lainaamo and Fellow Finance will not affect the position of borrower
customers or investors. Continue reading →

Bitbond Raises 600K Euro

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Bitbond LogoBitcoin lending platform Bitbond today announced an angel funding round of 600,000 EUR. The round brings Bitbond’s raised capital to a total of 800,000 EUR.

Led by Bitbond’s earlier seed investor Point Nine Capital, a number of business angels contributed  to the round. Among them were Florian Heinemann, Uwe Horstmann, Christian Vollmann and Felix Jahn. Bitbond will use the additional funds to grow its user base and to increase its activity in emerging markets which are underserved by traditional lenders. The platform went live in July 2013. Since then over 600 loans were originated through the platform.

Founder & CEO of Bitbond Radoslav Albrecht said: “The additional resources will help us to continue realizing our mission which is to make lending and borrowing globally accessible. We are happy to have such experienced investors supporting us on this exciting journey.”

According to the IFC (International Finance Corporation of the World Bank) the global credit gap of microenterprises and small and medium sized businesses is around USD 2 trillion. Bitbond seeks to help solve this problem by creating a global market for small business loans that is accessible to everyone via the internet.

Since its first external funding in August 2014 Bitbond introduced a number of technological advancements. These include exchange rate pegged loans which allow borrowers and lenders to mitigate bitcoin price fluctuations.

CEO Radoslav Albrecht wrote the guest post ‘Bitcoin P2P Lending – a Primer in 8 Steps‘ in Dec. 2014 for P2P-Banking.com.

Editor’s comment: My personal opinion is that cross-border lending based on bitcoin is currently a high risk proposition to investors. While I appreciate some of the technological advantages the platform pursues, I think further development is needed, especially in debt collection processes.

Mintos Starts P2P Lending in Lithuania

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MintosLatvia p2p lending marketplace Mintos announced today that it expands and now offers p2p loans – secured by cars as collateral to borrowers in Lithuania. This is the third country Mintos operates in after Latvia and Estonia. Mintos is open to international investors from Europe – the website states 1,200 registered investors from 26 countries.

The car loans in Lithuania are originated in cooperation with Mogo – a partner Mintos is already using in Estonia, where they together funded 250 car loans for a total of 300K EUR.

When investing in secured car loans investors enter in a direct contract with a borrower – similar to real estate backed loans the contract with respective borrower is transferred from Mogo to investor based on assignment. According to assignment agreement, part of the interest that borrowers pay is not assigned to investors and remains with Mogo to compensate it for loan origination and servicing. Continue reading →

P2P Lending in India: A Concept Ahead of its Time

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This is a guest post by an author working in the financial sector in India.

Consumer Peer to Peer or P2P lending (where consumers lend and borrow from each other with the help of an intermediary) has become an important part of the financial services sector in many countries globally. Companies like Lending Club and Prosper in the US, that only started a few years ago are now worth billions of dollars. Many success stories in the west have been replicated in India, making it a belief amongst many that P2P Lending is no different. However, as proven multiple times before, a credit business isn’t the easiest to clone and depends on multiple factors including the regulatory environment, end-user mindset towards credit and intermediaries such as credit bureaus, verification, collection and recovery agencies.

  1. P2P Lending is not regulated in India

indiaThe Indian Banking Regulator, The Reserve Bank of India (RBI) has not regulated peer to peer lending in India. This essentially means that privileges enjoyed by similar platforms globally, namely, access and reporting back to credit bureaus (like CIBIL in India); are not available to a P2P platform in India. These have important repercussions on the performance of loans originated through these platforms and can lead to suboptimal results. For e.g. if lenders are not able to see credit reports, then they will be in an inferior position compared to banks and other financial institutions to make credit assessments. Similarly, without the loan performance being reported back to the bureau, some borrowers may not feel the pressure to re-pay their lenders. Lastly, borrowers looking to build and improve their credit rating do not benefit, as their loan performance is not reported to the credit bureaus (CIBIL).

  1. Little spread between risk-free rates and borrowing rates from banks and other regulated financial institutions (NBFC’s) provides no real benefit to borrowers

A huge difference between the west and India is the difference between the risk-free rate and the borrowing rate. In the US and UK the difference between the two is as much as 12-15 percentage points. In India, the risk free rate is at over 8% and banks lend money starting at 12%. With lenders looking to make returns between 15-16%, the rate for the borrowers gets as high as 20%+ when the platform fee is also taken into account. This makes it unsuitable for lower risk borrowers who can find cheaper loans from banks and non-banking financial companies (NBFC’s). Continue reading →