The beginning of this turbulent 2020 is proving to be quite a challenge for all P2P lending investors, with the fall of some high-yield platforms and the focus put more than ever before on factors such as trust, transparency and asset-backed operations rather than just pure annual return metrics… To make things more interesting, on top of that, in the last days all these issues have been relegated to the background due to the unstoppable advance of COVID-19…
In this context, there are a few companies that seem to fit in this new desired profile and are doing particularly well in the first months of the new year, and today we talk to Sergei Demchuk (CEO) from Debitum Network, one of the crowdlending platforms with the most solid volume / investor growth this year according to our monthly statistics.
ES – Spanish: Esta es la versión original en inglés, pero pulsa AQUÍ si prefieres leerla traducida automáticamente en español 😉
1 – Sergei, thanks for coming to TodoCrowdlending.com! First of all, for all readers that are still not familiar with your platform, can you please briefly summarize what is Debitum Network and how does it fit in the current P2P lending market?
(SD – Debitum Network): Debitum Network is an alternative investment platform where both retail and institutional investors can invest in loans European small businesses. Such a business model has important advantages that set it apart from other crowdfunding platforms. One of the key factors is: it has relatively low risk, yet attractive annual returns proved by buyback guarantee. We believe that investing in small business loans is much safer than investing in consumer loans. On top of that all our assets are backed by hard collateral, receivables or/and personal guarantee of business owners.
2 – I see that in the current context, after the dramatic fall of Envestio and Kuetzal, Debitum Network is being increasingly perceived as a very interesting platform to have in a well diversified portfolio, largely due to your focus on asset-backed operations, independent unified credit scores or your attitude towards protecting the interests of your investors (for example during the Aforti crisis a few months ago). In this context, what would you say it is the value you add compared to other platforms?
(SD – Debitum Network): Security and safety.
We are not chasing the highest return for our clients. Our primary goal is to keep our investors safe and provide them with a decent return.
We noticed there 2 types of investors: 1) If you want to invest 1K then for you it is more like gambling, you try to get 12 – 14% return. 2) If you invest 10K or 50K, then for you it is more important to make sure that you will not lose your money and get let’s say 8% return. So we mostly focus on second category type of clients – the more they invest, the more they care about safety.
Very strict Due Diligence process helps us onboard only reliable partners. Quarterly monitoring allows us to see deterioration of Loan Originator performance and react very quickly (that is how we decided to exclude Aforti and asked for earlier repayment – thus none of investors lost their money).
Independent 3rd party opinion: all assets are scored by independent 3-rd party risk assessment and investors can see and take their decision based on this information.
Safe, well-developed and flexible IT system leads users to great customer journeys on our platform.
3 – I have also noticed you have been very active in this 2020, introducing new interesting features and new Loan Originators which definitely add depth and diversity to your portfolio… Can you summarize the most relevant improvements and partners you have introduced in 2020?
(SD – Debitum Network): During three months of 2020 we onboarded three new loan originators with an impressive portfolio of loans.
For example Cardec factoring offers loans backed by receivables from the Netherland government. How it works: Dutch lawyers offer their legal services to their customers and get promissory notes from “Raad voor Rechtsbijstand” RvR (Legal Aid Board) that are fully backed by the government of the Netherlands. Thus you purchase assets which will be repaid by a government institution.
Triple Dragon Limited is a London based company that provides financing to mobile games and mobile apps developers. These loans are backed by receivables from Apple or Google. At any moment the collateral value is higher than the loan. Thus chances to lose money id only if Google or Apple will not repay.
Noviti Finance is SME lender that provides business loans up to 20 thousand euros in Lithuania since 2016. The European investment fund guarantees a portfolio of up to €10 million in loans issued by Noviti Finance. That means that in case of borrower default the EIF will repay a loan to Noviti.So as you see we try to bring to our investors the safest opportunity to invest in and get a descent return of 8-9% per annum.
4 – Taking a look at our monthly statistics, I see you have increased your volume invested and the amount of new investors quite a lot in the beginning of 2020… what are your goals for this year both in terms of growth and new functionality or partners to be included?
(SD – Debitum Network): In term of new partners our strategy is to bring onboard only SME loan originators in the EU and maybe Eastern Europe. We started with our home market, then we added some other neighbouring countries and during 2020 we will increase the number of Loan Originators up to 10-15. I think that will be enough to diversify the portfolio of our investors.
We also started working with professional (institutional) investors and some of them already invest with us. I believe this is a very good sign for all investors and it proves that we have the correct approach.
5 – Almost finishing, there is an increasing concern among P2P lending investors about the possible impact of COVID-19 (coronavirus) in the lending market, what are your thoughts / opinions regarding this?
(SD – Debitum Network): We did some actions already – from Monday we arranged remote work places for all employees as we do not jeopardize their well being.
Our team talked with our loan originators about the possible delays on the loans provided via the platform. We believe that the ones operating strictly in the B2B sector might see some delays. If that is to happen we believe in the covenants and our originators’ financial position to be able to ensure buybacks. All LO’s have enough liquidity to ensure buyback if needed.
We will switch from quarterly to monthly monitoring of each Loan Originator: to monitor the performance of Loan Originators, their financial covenants in order to ensure the safety of investments, to upload only the safest assets to Debitum Network. Some loan originators might actually be better off – Cardec Financing as they collect funds from the Dutch government and Triple Dragon as they finance the mobile game industry that should see a boost while so many people are at home.
More info in our blog post: https://blog.debitum.network/what-debitum-network-thinks-and-does-regarding-coronavirus/
6 – Anything else you would like to share with our TodoCrowdlending Community?
(SD – Debitum Network): I thank you very much for the interesting questions and possibility to tell you more about Debitum and our investment opportunities. I also hope that most of your readers decide to invest via Debitum.