Important Update: Please pay attention regarding Grupeer! Details here
Last Thursday, a day before the P2P Conference, Grupeer was so kind to invite me to their new office in Riga, Latvia. I was excited to be able to get a closer look at the company and to talk to Vladislavs Filimonovs (Grupeer COO) and Alla Kisika (Co-Owner) in person.
I was there with three friends (the German bloggers Florian, Vincent and Sebastian). I believe we did a pretty good job asking them critical questions, hopefully they include some that you also wanted to have answered.
Updated (June 17th): I finally managed to write down most of the questions & answers from the interview and added time-stamps for easier navigation.
Since Vlad had to leave early during our interview in Riga, I also recorded a Skype call with the two of them yesterday, in which they answered two more questions about their biggest loan originators, Finsputnik Platforma and Primo Invest. If you’re curious about that as well, stick around until the end of the article or video.
I was very impressed by Vlad and Alla (they also did a great job at the P2P Conference), as well as the rest of the Grupeer team. Not only did they invite us to their office, answer all the questions we threw at them and let us record it on video, but they even took the time to Skype with me yesterday to finish the interview.
Alright, enough talk. Let’s get into the video!
Grupeer Q&A with Vlad and Alla
I tried my best to write down all the questions & answers from our meeting and also added the time-stamps from YouTube, so you can jump straight to the part you’re interested in.
Please note that I’m paraphrasing Vlad and Alla’s replies, not citing them one to one. So please don’t be surprised if a word here or there is different in my writing.
01:20 What makes Grupeer better than other P2P lending platforms?
- Everything you see on the platform was built from within the company
- We know that there are still a lot of things that can be improved, but we are very customer-oriented.
- We don’t offer only business loans, but also real-estate loans, so you’re able to better diversify your investments. Alla: I understand construction, so that’s how I like to invest.
- The people behind the platform. We have some people from KPMG doing the audits, the management has a lot of expertise in real-estate and finance, our marketing department is a top notch team from both a local as well as European perspective and we have very loyal people in the company. The team works 24/7 if needed and we have very positive employees that are excited about the future.
06:27 Are you planning to add the financial statements of your loan originators?
We’re working on it, financial information on each loan originator will be added in the future.
07:44 Grupeer is working on a platform aggregator
We’re working hard on building a platform aggregator, so you can diversify on many different platforms via Grupeer. We would like to be a one-stop shop where you can simply register once and invest on many different platforms. We’ll have specialists who are going to do scoring for the platforms and you’ll be able to spread your investments widely via the aggregator. We’re trying to change the rules of the game for the entire market of P2P lending. That’s another way we would like to differentiate Grupeer.
09:07 Plans to move to Ireland
Grupeer is planning to move to Ireland in the coming years, because of a more favorable jurisdiction, infrastructure, great talent in many different languages and because Ireland is slowly turning into the ‘Silicon Valley’ of Europe. Vlad: Plus, I lived there for 8 years and know the country.
10:18 Auto-Invest shortcomings – Will it be improved?
Me: I’m glad you have an Auto-Invest function that reliably re-invests available funds on the account very quickly. I also like that you have a lot of different loans from different loan originators and countries on Grupeer, so in theory you have a lot of options for diversification on Grupeer. But here is one of the main problems that I heard from other investors and that I also faced in the past: Your large real estate development projects are split into a lot of tranches and different loan IDs. As a result, someone who selects all the loan originators and turns on the Auto-Invest, often sees a big portion being invested in a single real-estate project, which defeats the purpose of diversification. Are you planning to add an investment limit per development project as well? I think a lot of people would really appreciate that option.
Auto-invest improvements are coming, you’ll be able to choose if you only want to invest in business projects, only construction (real-estate) and you’ll be able to diversify more easily. We understand that there is a problem right now and you’ll be able to more effectively spread your investment over many different projects in the future.
You’ll be able to set a limit per project as well (since one project is spread out over many tranches with different loan IDs).
14:10 Why do you split your development projects into so many different loan IDs?
In construction, you don’t want to give them the whole sum at once but rather, to keep the people involved with the construction ‘hungry’ for more money. That way everyone is more motivated to deliver on time. If I’m sending them these portions of money, I’m able to control them more effectively.
15:00 Do you control every single step of the construction?
Yes, we also use our internal staff or contractors that are in the country where the project is being built, controlling every single step of development and reporting to us. Our level of control and involvement as well as our experience with construction works is also the reason why we’re able to offer some of the highest interest rates in the crowdlending space (+ buyback) for real-estate projects.
22:15 Is your evaluation or auditing process the same for every project?
No, it’s always different. It depends on the type of project (business loans, real-estate projects,..) and the country. We always want to maintain control and to watch over the loans and the originators on our platform. In some cases that can even mean that it’s easier to control loans from Africa that are very transparent and we can see everything right via their bank, while in some European countries we have to regularly visit them locally to make sure that everything is going as planned. In the end, it’s about our reputation and our investors’ money and we never take that responsibility lightly. We have to be very precise, as every project is different, depending on the company and the size of the loan we’re dealing with as well.
23:42 Do you have external help for the audits?
Yes, of course. For us it would be difficult to control projects overseas, as we can’t go there and check in there every day ourselves. That’s why we have an outsourced company that helps us maintain control.
24:15 Any specific projects that you’re working on right now that you’re excited about?
Alla: Yes, I’m excited about the stability fund. You’ll be able to purchase a share of a building and receive part of the income the real-estate object generates on a regular basis. No matter whether the economy goes up or down, you’ll still own part of a stable asset (real-estate) that generates income. But I can’t tell you an exact date yet on when it will be ready.
26:23 What about the secondary market on Grupeer?
We know a lot of people are asking for that and we’ll definitely add it to the platform, but we can’t commit to a date at the moment.
27:09 From an investors perspective, is there a difference in risk when investing in business loans from overseas countries like the Philippines, compared to Europe for example?
I wouldn’t say so, we have our own scoring system. We always maintain control over the loans and loan originators on Grupeer, by regularly looking at their bank statements, following where the money goes etc.
29:33 Are you investing your own money on Grupeer as well?
Yes, of course. But not only Grupeer, for me it’s important to be invested on several different platforms for market research: That way I can see the interest rates being offered, how easily I can get my money back and stay up to date with what other platforms are doing.
31:43 Do you have an official business report for Grupeer?
It’s coming. It’s already done and will be published soon.
32:05 Any countries or loan originators that you’re adding to Grupeer soon?
Yes, we signed a few contracts for loans from new countries, so already this month you’ll see some new loan originators.
Note: The Estonian loan originator Credito was added to Grupeer after my visit.
32:36 What’s the process that helps you decide if you’re going to add a new loan originator to Grupeer or not?
First, we have our scoring system. We check their bank statements, how they work, how many years they’ve been in business, their annual reports,.. Then, we visit the company, check their accountants, look at their paperwork.. It’s a pretty long process every time until we make our decision.
34:35 What’s the advantage for an investor to invest in business or real-estate loans instead of consumer loans?
It depends on the company and the investor. Alla: For me, I understand the real-estate business, so that’s where I feel the most comfortable when it comes to investing.
36:32 Connection to Finsputnik Platforma
Me: You have a lot of loans from the loan originator Finsputnik Platforma as well as development projects from Primo Invest on Grupeer. Are these companies owned or managed by Grupeer or is there a connection to those companies?
We’re working only with business loans and our investors’s security is our top priority. That’s why we’re not adding small, single loans to the platform, where a small percentage could fail. Instead, we’re looking at every single loan originator as a portfolio, which is why we have the affiliated company Finsputnik Platforma, which for example merges many different payday loans from an originator into one big business loan, which is given to that specific company.
We feel that it’s more secure this way and here is why:
If you look at many lending companies, their interest rate is very high, but some loans will fail to be paid back on time or default. We don’t want our investors to have to deal with non-performing loans. That’s why we have some business loans worth 50.000€ for example on Grupeer, which are actually made up of 100 single loans. This way, even if single loans within this aggregated business loan are not paid back, it won’t affect our investors at all, as the total that is paid back in interest within the large business loan more than covers the interest that is paid to investors.
38:55 Connection to Primo Invest
Yes, we have a share in Primo Invest, as it’s easier to control the real-estate construction sites from within the company and to ensure these large projects go according to plan. By fully controlling the company from inside-out from a financial perspective, from their operating expenses to their capital expenditures and so on. We feel that if we want to position ourselves as a secure platform, this is the right thing to do.
40:59 Stikcredit loans – Why is Finsputnik listed as loan originator?
Me: You also have loans by a Bulgarian lender Stikcredit, for example – why are they not also appearing as loan originator, like on Viventor and instead your affiliated company Finsputnik Platforma is listed as originator and offers the buyback guarantee? Is there a particular reason for that?
The loans on Grupeer are fully segregated from those offered on other platforms. In the initial evaluation of the loans the company provides, we’re looking at the same criteria that we mentioned before, especially when it comes to security and loan performance. Also in this case, we’re bundling a hundred or more personal loans from StikCredit into one larger business loan, so investors don’t risk losing money on single loans and instead profit from the high average interest rate that is paid back in total. Because of our due diligence and since the company is profitable, we feel comfortable providing the buyback guarantee via Finsputnik Platforma.
That’s it for the interview! A big thank you again to Vlad and Alla for taking the time to answer all my questions, in person and via Skype.
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Very nice interview. I found it very interesting and it give to me lot of informations that I was searching so far.
What are your feelings about the situation in their offices in terms of feasibility of their projects of growth (i.e. to move to Ireland)? I think Grupeer could became one of the top european platforms, they seems to have the right marketplace structure and theorically the right plans of growth, also if the volumes at today are not still comparables with the actual top players.
thank you! I also think they could become one of the top players in Europe, if they add a secondary market, improve the auto invest and improve their transparency on the website further (‘about’ section with pictures, story and financial data for Grupeer and the loan originators). That would also make people more confident to invest large sums of money, as many do on Mintos. Their team left a great impression on me, so I think they have a lot of potential.