interview

Interview with Brian Dally, CEO and Co-Founder of Groundfloor

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What is Groundfloor about?

GROUNDFLOOR is taking private real estate lending public. We’re paving the way to open a new $70 billion lending market to all – and that’s in single family home renovation and construction lending alone. You can read more about how we’re doing that here.

More broadly, we like to think of the company as an exposition on a theory of capital markets. We believe the broadest base of capital wins—because it’s faster, cheaper, more flexible and more efficient.

What are the three main advantages for investors?

  1. GROUNDFLOOR makes real estate investing more accessible than ever before. We create new investment opportunities for non-accredited investors; a group of Americans that have never had access to these types of investments before.
  2. Our typical loan term is dramatically shorter than what you see with P2P lending products like Lending Club. Our average term is 6 or 12 months, compared to 3-5 years for typical deals elsewhere.
  3. We offer dramatically higher returns than traditional investments. During our one-year pilot in Georgia, the average annualized yield for our investors was over 12 percent. For context, that means that GROUNDFLOOR outperformed the compound average annual return of Charles Schwab’s mutual funds between 1970 and 2014.

What are the three main advantages for borrowers?

  1. It’s fast and simple to get funded on GROUNDFLOOR. You can submit a project by checking your rate in less than 5 minutes. Projects have 30 days to fund, but most projects fund much sooner once they are posted. The closing process is quick and painless using the same closing attorneys you already use.
  2. GROUNDFLOOR is a reliable source of capital. We fund construction, renovation and other loan types that are typically difficult to bank finance, and we offer low fixed interest rates starting at 6% (not including fees).
  3. We offer terms that fit borrower needs. Most of our loans run from 6 to 12 months. Borrowers can repay their loan at any time to reduce borrowing costs, and personal guarantee and cross-collateralization is not required in most circumstances.

Brian DallyWhat ROI can investors expect?

GROUNDFLOOR backs independent builders with secured loans that pay 5-26% annually. During our one-year pilot in Georgia, the average annualized yield for our investors was over 12 percent.

What is the background of Groundfloor? Who are your seed investors?

GROUNDFLOOR was founded in February 2013 and is based in Atlanta. We have raised $2.5 million in seed funding from angel investors including Michael D. Olander Jr, Bruce Boehm, Tibor Nagygyorgy, Mark Easley Sr. and Inception Micro-Angel Fund.

Brian Dally is co-founder and CEO. He has spent his career building disruptive technology startups during stints in Silicon Valley, Boston, London and the North Carolina Triangle region. Previously, he led the launch of Republic Wireless to take on the big four cellphone carriers to international acclaim.

Nick Bhargava is co-founder and EVP of regulatory affairs. An expert in securities law, Nick was heavily involved in the JOBS Act as an early pioneer who advanced the concept of equity crowdfunding. Nick and Brian met through Groundwork Labs in the Triangle-area startup hub the American Underground. His years in finance have included work for the Financial Services Roundtable, SEC, FINRA, TD Waterhouse and RBC Financial Group. Continue reading →

Interview with Martins Sulte, Co-Founder and CEO of Mintos

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What is Mintos all about?

Mintos is a marketplace lending platform that brings together investors and borrowers by enabling various loan originators to use a marketplace lending model in funding loans. Previously loan originators established their own platforms; now Mintos offers a single platform to those non-bank lenders that seek to sell loans. This means non-bank lenders do not have to make major investments in establishing and maintaining their own platforms. By connecting to the Mintos platform non-bank lenders get an instant access to investors that are looking to purchase marketplace lending assets. Thus, non-bank lenders can focus on their core skill of originating loans.

What are the main advantages for investors?

At Mintos investors can invest in loans that are originated by various non-bank lenders that use our platform to fund their loans. The main advantage for the investors, accordingly, is that they get an access to much broader investment opportunities as part of a single platform, both in geographic terms, and in terms of various loans originated by various non-bank lenders. Investors on the Mintos platform can invest in mortgage loans, secured car loans, small business loans, and soon also unsecured loans. Loans are currently originated in Estonia, Latvia, Lithuania, and we are about to add loan originators from Finland, Georgia, and Spain. This, combined with the fact that the minimum investment in one loan is EUR 10, means that investors can easily build very well diversified investment portfolios. Also, as a result of having various loan-originators and many investors on one platform our secondary market is very liquid.

It is also important that non-bank lenders whose loans are available to investors on our platform are experienced in underwriting. The platform is used by Capitalia, for instance, which is the leading small business lender in the Baltic sates and has been lending for five years. All lending processes are orderly at the company, it has experience, and it has access to historical data. That is essential for investors who can be sure that the detailed credit analysis are preceding the granting of a loan. Moreover, the loan originators on the Mintos platform are required to retain a part of each loan on their books, i.e., to have “skin in the game” to align their and investors’ interests.

Finally, all loans on the Mintos platform are prefunded by the loan originators; thus investors can start earning from the moment of the investment and there is no cash drag. At the moment more than EUR 1 million of loan inventory is readily available for investment on our platform.

What about borrowers? What are the advantages for them?

Mintos does not issue loans, but it is important for us that the loan originators who use our platform at the end of the day can offer cheaper rates to borrowers. Also, the lending process is much more convenient at these loan originators. When borrowing money from Capitalia, for instance, a small company can expect the money to arrive in its account in just a few days’ time, usually even faster. At a bank, by contrast, that could take several weeks. Finally, some of the loan originators who use our platform provide loans and services to those borrowers who might not have had an access to affordable credit before. For instance, among clients of Mogo, the largest non-bank car loan provider in the Baltic region that is also on our platform, there are those who are seeking a car loan, with the average requested sum being around EUR 3,000. This segment is underserved by the banks.

Martins Sulte, MintosWhat ROI can investors expect?

So far the average net annual return for investors investing via the Mintos platform have been slightly below 13%. We expect the average net annual return to hover around the low double digits also in the future. However, investors should look not just at the return, but also the relevant risks. In the case of Mintos, investors can easily build a very well diversified investment portfolio across different loan products and geographies, thus reducing unsystematic risk within the marketplace lending asset category. Also, the Mintos platform was the first with a buyback guarantee where some of the loan originators buy back non-performing loans from investors, thus substantially reducing risks for investors.

What is the background of Mintos?

We started to work on the idea in mid 2014 and launched the platform in January 2015. I come from the investment banking where I spent six years before going for an MBA at INSEAD. That, actually, was the first time I heard about the peer-to-peer lending because I borrowed from Prodigy Finance, a platform that provides funding to international postgraduate students attending top-ranked business schools, while also delivering competitive financial returns to institutional and private investors. The other Martins, Martins Valters, our CFO and also a Co-Founder, has 11 years of experience from Ernst & Young where he audited some of the largest financial institutions in the Nordic region.

To fuel our growth we have raised EUR 1 million in venture capital to date. That has helped us in forming a strong team and an experienced board of directors. In a bit more than six months since the launch, more than 2,400 investors from 30 countries have registered on the Mintos platform and funded more than 1,500 loans for a total of more than EUR 4 million, of which EUR 1 million in the last month alone.

Is yours a bespoke platform?

Yes. We began work on the platform half a year before we launched it to the public, and we developed it in-house from scratch. Each marketplace lending platform has its own nitty-gritty approach, so it is best to design the platform ourselves. The Mintos platform is used by various non-bank lenders, and so we see ourselves as a technology company with a strong finance background. Currently, we have eight software developers in our team. We listen carefully to what investors say and appreciate their feedback as it greatly helps in improving the platform. Continue reading →

Interview with Laimonas Noreika, CEO of Finbee

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Laimonas Noreika is the CEO of Finbee, a p2p lending service that launched last week and is open to international investors starting today.

What is Finbee about?

FinBee is about borrowing for less and earning more when investing. We also are most user friendly p2p lending platform in Lithuania.

What are the three main advantages for investors?

Firstly, our loans have high interest rate – from 10 to 40 percent. That means, that investor can expect higher return of investment, compared to other p2p lending platforms. Secondly, we have reliable software, that is developed by UK based Madiston. That means, that it is tested and extremely user friendly from day one. And finally, we pay great attention to selection of borrowers, so that the risk for investors is minimized as much as possible. On top of that, we invest 10 percent on total sum into each and every loan, so we share the risk with investors. In the near future we also will introduce compensation fund that in an unlikely case of borrower defaulting on its loan will compensate lenders their investment.

What are the three main advantages for borrowers?

I would say that first and foremost, we offer cheaper loans than most of the players in Lithuanian market, including banks, payday loan companies and credit unions. This is achieved by implementing auction principle when borrowing. That means, that borrower can set interest rate ceiling, for example 15 percent. Lenders then are able to offer lower interest rate, therefore making loan interest rate for the borrower as little as 12 or 13 percent. This is free market at its finest, when the market sets the real interest rate for the benefit of the borrower. Secondly, we are very consumer friendly. We talk, look like and do our business like majority of our clients. We know, what they want and we are doing our best to meet those expectations. Lastly, we have a fair commission policy. That means that if borrower has high credit rating, our commission is lower.

What ROI can investors expect?

Laimonas NoreikaIt‘s all up to investors. Loan interest rate will be between 10 and 40 percent, therefore investors can decide for themselves if they want lower risk and lower potential ROI or higher risk with possibility of higher potential ROI.

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

FinBee started little over a year ago, when I quit my position as a CMO in one Lithuanian company and started everything from scratch: examining the market, getting know-how, attracting investors and partners, picking up experienced team members. Big breakthrough moment was when Madiston became our partner and we got a technological edge against our local competitors

Is the technical platform self-developed?

No, software is provided by Madiston, whose Tim Simon is also member of FinBee board. Tim has an extensive experience of delivering successful applications to the Financial Technology marketplace as a founder and CEO of Quotient plc and Mondas plc, listed on the London Stock Exchange and AIM respectively. Continue reading →

Interview with Eyal Elhayany, CEO of Tarya

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What is Tarya about?

TARYA is the largest Israeli P2P lending platform built from the ground up, whose aim is to provide an online (24/7), financially beneficial experience for both borrowers and lenders. At the foundation of the platform is an advanced credit-scoring model relying on big data underwriting algorithms based on fraud prevention procedures

The platform founders have previously worked in both technology and regulation, and observing the state of the economic environment – local and global events and trends, we sense that conditions are ripe for fresh, more beneficial financial offerings to be accepted by the general public.

TARYA is headed by experts in fraud prevention technology and regulation, and has become a major player in the Israeli Crowdfunding transformation in order to supply consumer credit without bias. We are tackling regulatory, business and cultural challenges and – being the leading company – are excited and satisfied of the progress made so far.

What are the three main advantages for investors?

Diversification, diversification and diversification. The key to successful investments in P2P is diversifying the investor’s portfolio by offering:

  1. Automated Investing and Reinvesting – the Investor defines risk and return preferences, while the platforms algorithm allows for a hands-free experience.
  2. Varied borrower types – TARYA continues to develop partnerships with employers and social projects across the nation, thus providing both solid and risky borrowers, from different sectors of the Israeli economy.
  3. Low minimum participation amount in loans – The minimum amount for investing in a loan starts at only 50 NIS (equivalent to 10 Euro).

What are the three main advantages for borrowers?

TARYA being an online financial service, provides borrowers an efficient and up-to-date approach for loan application:

  1. Transparency – The process is performed online, without having to “wait-in-line” at the bank. Payments, interest rates and terms are presented up-front with an emphasis on “consumer protection”.
  2. A FinTech Experience – TARYA is a unique and pioneering initiative that facilitates the direct connection between borrowers and lenders, using an online platform. This platform bypasses existing credit entities – banks and credit card companies, and allows borrowers to obtain credit at significantly lower costs. Interest rates range from 3.5%-8.0% depending on the borrower’s credit rank. Of note, non-banking (credit cards) interest rates for borrowers average 11%.
  3. Business Partnerships – TARYA’s unique model grants upgraded loan terms for borrowers whose personal details are authenticated by their employers. This practice benefits all employees of the organization, who can receive loans at rates above their personal credit rating.

eyal-elhayanyWhat ROI can investors expect?

Lenders investing in diversified and micro-financed portfolios average between 5%-6% returns after fees. Lenders pay a fee of 1.0% on returns.

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

We believe the venture has the potential to change the structure of the credit market in Israel: It is widely accepted that the Israeli banking sector is concentrated and not competitive, especially in regard to the household and small businesses sectors. Since setting up shop in May 2014, TARYA has been growing in borrowers, lenders and partner organizations.

TARYA is funded by private equity. Since establishment, we’ve received several applications from VC and institutional investors.

Is the technical platform self-developed?

The platform is developed internally, built from the ground up with underwriting and credit rating processes that combine banking know-how, statistical modeling and technology professionals with extensive expertise in online fraud and information collection from social networks and other sources.

The diverse expertise of our team and the advanced technology is giving us a competitive advantage and will enable us to confront upcoming challenges head on. Continue reading →

Interview with Ieva Ozoliņa-Bērziņa, Executive Director of Twino

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What is Twino about?

TWINO is a peer-to-peer lending platform that connects investors with some money they could lend and borrowers who need some money for making their dream come true — buying a new car, covering tuition or medical costs, for travel and leisure, renovating their house or starting a business etc. The money is lent without a pledge. This is a chance for borrower to get a loan with a lower interest rate than a bank or the various short-term loan providers would offer, while the investor can make direct investments without institutional intermediaries and receive a higher return on his investments.

What are the three main advantages for investors?

First and foremost, it is as chance to get significantly higher return on your investment than in a bank. Our financial solution allows omitting complicated financial operations that require high administrative expenses; therefore, it is possible to provide the service for a lower cost.

Secondly, so far, TWINO has been the only company in European market to offer opportunities to invest into consumer loans with buyout guarantee that completely minimise the risk of investor.

Finally, you do not need to meet face to face or sign heaps of documents to become a TWINO investor — you can save yourself the precious resource of time! You can live anywhere in the world and become a TWINO investor, you physical location does not matter. All the investor has to do is to e-mail a scanned ID document  to prove his identity.

What are the three main advantages for borrowers?

The Latvian households similarly to the ones elsewhere in Europe are victims of the frozen economy after the crisis. If they want to make a larger purchase but can not put money aside from their monthly income, they have two options. They can borrow the money in a bank, but very often banks are not willing to credit these people due to strict crediting terms or they can get a short-term loan with very high interest. This is why TWINO is almost the only way of borrowing money with reasonable interest.

The borrower can fulfil any of his needs with the money, including investing in his future — paying for tuition or essential assets or even starting a career in business or a investing in a start-up, thus supporting the local economy. It is very topical people living in the countryside regions and to those, who cannot access bank loans and cannot get a short –term loan with low interest.

Finally, borrowers should not be afraid that they will not be able to evaluate their borrowing capacity adequately — TWINO has an experienced team that evaluates every borrowing request separately according to the rules of the Consumer Rights Protection Centre and they follow the progress of giving back the borrowed money. If the TWINO team sees that the borrower has encountered unforeseen difficulties, we look for solutions together with the client. This means that you must not be afraid that you will not receive consultations and help just because this is a financial technology. The TWINO team members are ready to help you any time by providing consultations and looking for solutions together with you.

Ieva Ozolina BerzinaWhat ROI can investors expect?

Out investors earn roughly 10-20% per annum. Of course, this can fluctuate depending on their investment amount.

What is the background of the company running Twino?

Finabay is an innovative online finance company founded in Latvia almost 7 years ago. It is also providing short-term loans and has developed its services in Poland, Czech Republic, Russia, Poland, Georgia and Denmark. This year it will launch its services in Spain

Is the technical platform self-developed?

Yes, the technical platform has been developed in Latvia by the experienced FinaBay IT Solutions Team.

What has been the greatest challenge so far in the course of launching Twino?

Currently the greatest challenge for TWINO is explaining what a peer-to-peer lending platform is to potential investors and borrowers. While this sector has been active in various European countries for almost 10 years now and it has lent 4.5 billion EUR to customers from 2012 to 2014, it is still a new service in Latvia and the Baltics. However we have to admit that this is not a burden, because peer-to-peer lending platforms are rooted in the economy of sharing, and through such peer-to-peer platforms it proves itself as a functioning model of economy — not only does it affect the well-being of individuals, it has a potential to stimulate the economy of regions and even countries. Continue reading →

Interview with Peter Schierenbeck, CMO & co-founder of Lendify

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What is Lendify about?

Lendify is the first and leading peer-to-peer lending platform focused on prime borrowers in the unsecured consumer credit space in Sweden. We have handled loan applications for over SEK 350 MM and more than 3,000 lenders and borrowers have signed up since launch in August 2014.

What are the three main advantages for investors?

  • High risk-adjusted returns.
  • Access to unsecured personal loans extended to prime borrowers in a very low-default rate market (Sweden) with many years of well documented historical data.
  • A new type of investments that further diversifies a mixed investment portfolio.

What are the three main advantages for borrowers?

  • Personalized interest rate.
  • Transparent (all interests and fees are clearly presented and available to all site visitors)
  • Simple and fast process for applying and monitoring (borrowers can log in and see status of payments etc.)

Peter Schierenbeck, LendifyWhat ROI can investors expect?

It is still early days for P2P lending in Sweden but we expect 7% on average.

Lendify received 2M EUR in funding recently. Who are the backers?

Fredrik Wallenberg, Hans Westin & Sten Schröder where the two latter have a great track record in the Swedish consumer lending space.

Is the technical platform self-developed?

Yes, everything is developed in-house.

What was the greatest challenge so far in the course launching Lendify?

Being the first in a market is great, but it also provides challenges out of a marketing and regulatory perspective. Not many people in Sweden are aware of the concept “peer-to-peer lending”, and we work hard to educate people of the concept. Continue reading →