Triin Jõeleht – Estateguru – Interview 2020

In the midst of these challenging times where a virus seems to have taken control of our daily actions and business activity is slowing down into alarming levels, there are still some brave companies that try to take this chance for the better and pushes forward towards new goals while maintaining a very high activity even in the middle of this Covid-19 crisis.

Today we would like to take this opportunity to interview Triin Jõeleht, Head of Investor Relations of Estateguru, one of our favorite platforms which has just launched (and successfully reached the goal in a few days) a crowdfunding round in Seedrs while keeping a constant flow of new operations in its marketplace even during the worst time of the crisis. Thanks for coming to TodoCrowdlending.com!

ES – Spanish: Esta es la versión original en inglés, pero pulsa AQUÍ si prefieres leerla traducida automáticamente en español 😉

1 – I have to say I am impressed by the level of activity that Estateguru has shown throughout all this coronavirus crisis… You have just surpassed the 200 million euros lent and you are flying towards the 50.000 investor milestone… how has Covid-19 affected Estateguru operations? and how have you managed to maintain that amount of activity in your marketplace?

(TJ – Estateguru): EstateGuru’s main office is based in Estonia – the country that is well known as one of the digital leaders in Europe. Moreover, real estate is a localized business, thereby mitigating the risk of closing down the borders. Due to the COVID-19 crisis, our team is working remotely and we are offering a digital solution that enables investor’s activity to be 100% online. While there have been mild changes in investors’ appetite, EstateGuru has swiftly adapted to the situation and adjusted its risk assessment and loan criteria accordingly. Today we can already see that investors’ interest in property lending is increasing again. Furthermore, alternative property-backed financing is a much-needed tool for companies in these turbulent times, as it provides the perfect solution for creating liquidity and executing business plans.

2 – On top of that, as mentioned at the beginning of this post, you have just launched a crowdfunding campaign in Seedrs, which has objectively had overwhelming support, being already in overfunding after just a few days… What are the reasons and goals behind this campaign? why doing crowdfunding when you have access to other forms of attracting capital? and why launching it now, in the middle of the worst crisis in years?

(TJ – Estateguru): Planning a crowdfunding campaign for EstateGuru already started a year ago. The fact that we launched it now is a result of the long process of setting up such a crowdfunding campaign, as it takes months to plan and prepare everything. The private mode for our own investors was launched on the 28th of May. Their high interest showed us the strong belief in our business model from investors that have known us for years. We have always been a growth-focused company and, as we have been able to keep our business results positive even during the crisis, there was really no reason to postpone our campaign. There are many businesses that are struggling but we are firm believers in our business model and processes and we are convinced that EstateGuru is a strong partner for those companies in need of capital.

For years now, our investors have expressed their interest to join EstateGuru’s success story as equity investors – this gives them the opportunity to do so. Also, as we are a member of the crowdfunding network, we are strong proponents of this business model. Moreover, the public crowdfunding campaign will also help us in general marketing activities – as our message will be brought to thousands of people across Europe with the intention to invest in different products, whether equity or debt.

3 – Seeing the success of this raise of capital… What are your growth plans for the coming years? As investors of the marketplace, what new features, countries, operations can we expect to be implemented in 2020?

(TJ – Estateguru): We are planning to raise up to 2M Euros through Seedrs for international expansion, institutional investor product, and technological developments.

As our goal is to finance 5 billion euros annually by 2025, and that requires aggressive expansion, we are concentrating on big markets. In the first place we are planning to enter the German market and create a local team. Already today, the size of the German investor community is roughly equal to the Estonian one.

4 – Changing topics, during this crisis I have seen many fellow investors withdrawing money from other lending platforms but very few (or practically none) withdrawing money from Estateguru, on the contrary, I have seen quite a few increasing the amount of money invested. Personally, one of the things I value most is how you handle defaults and how you have managed so far to recover money from all defaulted projects and avoid any loss for investors in all these years… Can you tell us more about this due diligence/recovery process? what is the secret for this extraordinary level of success?

(TJ – Estateguru): 95% of EstateGuru loans are backed with real estate in the form of a first rank mortgage, and this is how we have managed to recover defaulted loans and haven’t lost any investors capital. Real estate is not comparable with any buyback guarantee, because in case something happens with the borrower we have the right to get back investors money through sales of the collateral and real estate has historically been one of the most stable asset classes.

At EstateGuru, we have a strong risk team that is responsible for the risk assessment and due diligence of the loans. Every loan application will be approved by EstateGuru’s credit committee, who double-checks the borrower, the business plan, and approves every external evaluation report to determine if the price of the collateral is set fairly. We do have a very strong team of experts working on these topics on a daily basis. As some investors would like to see more loan updates on each of those problematic cases, we do aim to improve on that front, however, we let the track record speak for itself. We are heavily focused on continuously finding solutions to protect the investors’ interest.

5 – And lastly, what is your view regarding the current situation of the P2P lending market with the plummeting volumes of investment in many platforms and the emergence of several alleged cases of fraud? how long do you think is going to take to recover investment volumes and confidence similar to those pre-crisis?

(TJ – Estateguru): We can already see the recovery of the investment volumes and I can honestly say that our investors never lost trust in our business model. Crowdfunding, born as a result of the last major financial crisis, will play an essential role in easing the current situation by helping companies to raise much-needed financing easy, fast, and online. Even if the crisis lasts several more months and some of our borrowers face some difficulties, our main focus is to keep investors’ funds safe and offer flexible financing options for our borrowers even during the crisis period. This is why we:

• remain conservative and our LTV is kept low to ensure an extra buffer
• mainly finance against first rank mortgages with very few exceptions
• concentrate on strong borrowers and liquid collaterals in metropolitan and growth areas
• prefer residential real estate and liquid commercial real estate

Our whole team is monitoring the markets and situations on a daily basis and our business model enables us to act fast if needed.

Regarding the alleged case of fraud by other platforms – EstateGuru’s point of view has always been to support the local regulatory bodies in creating a common regulation for P2P service providers. Our COO is the head of crowdfunding work group Finance Estonia, EstateGuru has shared its thoughts and contributed through this entity towards creating the regulation, and we have applied for existing regulation licensing in Lithuania and the UK (and also received them) to provide additional security for our clients. We do believe that one common Pan-European regulation will help in cleaning up the industry in general. While it is saddening to see that the reputation of the sector is suffering due to the activities of certain platforms, we are convinced that P2P is a strong asset class if you choose the correct partners to manage your investments.