Last summer Forbes Finland wrote about Grupeer’s success story. We are sharing this article on our blog so everyone can read how we have started and our adventure to become one of the most loved p2p investment platforms.
Grupeer- a p2p investment platform is not only earning one of the highest interest rates 14% for its investors but also trying to solve a bigger problem. Sure, the p2p platform is not a new phenomenon and there are several big players in the market, but unlike a faceless loan conveyer, Grupeer introduces a human factor to the industry. On one hand, Grupeer places promising projects on its platform, who are prepared to pay above the market interest rate in order to be able to realize their dream. On the other hand, it serves as a “moderator” for investors. Many investors request an exclusivity agreement, meaning that they want to be the sole investors or product partners, but this is a serious brake on the business project development. When many people are involved we can observe the classic “prisoner’s dilemma” from game theory, meaning, it is beneficial for everyone to cooperate, but unfortunately it rarely happens in real life. Grupeer’s mission is to solve this problem too, and just over a year, Grupeer has managed to issue more than EUR in loans.
To give you an example of the minuses of exclusivity agreements, think about Apple. When the tech giant came up with iPhone, it first had an “exclusivity” agreement planned with AT&T, the US mobile carrier. However, if the agreement would go ahead in 2007, iPhone wouldn’t be the same as we know it and it would slow the sales. However, to everyone’s advantage, iPhone wasn’t exclusive as the agreement was never finalized.
It all began when experienced and successful development businessman Andrejs Kisiks was working on a power plant project. His career track record included working on the development projects in different countries, winning and completing government contracts. The power plant he was working on was supposed to generate the green energy and definitely would bring a high return on investment. Everything was going fine, but a hole in the budget appeared and Andrejs needed to collect additional 3-4 million in investments to complete the project. He approached his circle of friends, former colleagues and other contacts in his network. The potential investors saw how promising the project was, but everyone was prepared to contribute Eur 1-1.5 million. This is a normal business practice to pull the investments together, but what was a disappointment when all these potential investors wanted to be exclusive and backed out when learned others would be involved. The human factor played a role and Andrejs has lost the project when time ran out. Andrejs not only didn’t lose motivation when he lost the project but as a seasoned entrepreneur, he saw an opportunity in this fiasco.
When Andrejs looked at this situation soberly, he thought- “how many promising projects fail, when the required sum is not collected?” That’s how an idea of Grupeer was born. Grupeer is a fintech p2p platform where investors can fund a project that satisfies their investment criteria without even seeing each other. Sure, there are already several platforms existing in the market, but Andrejs saw a niche and despite the fact that he didn’t have any IT background, he had a clear vision how the product should look like in the end and what features to offer. In other words, Andrejs is a strategist and is capable of seeing the big picture, the rest he decided to leave to professionals. He has built a team of talented IT people describing what the end product should look like, so they decided to build a brand-new platform and not to copy an existing solution in the market. The end result was much better than expected as the software was akin to high-security banking core systems. Andrejs’ sister Alla Kisika, who have spent several years working in the UK as an executive project manager in the construction business, decided to participate in family venture. After around a year of hard work, Grupeer was officially launched in February 2017.
Welcome to a safe environment
So, how does it work? All loans offered on Grupeer’s platform are issued by business professionals, and when the investor buys a share of a particular loan, the claim right for the loan payments transfers to the investor via cession agreement. Unlike other platforms, Grupeer offers multiple products on its platform- credit deals, development projects and soon the new product will be launched. If the payment for the loan is late for 60 days, then the buyback is triggered when the loan originator is obliged to BuyBack the loan and pay out all accrued, but not paid interest. For additional peace of mind, some loans are secured by collateral.
The Grupeer did not only design and operate the platform, but also created a “safe environment” for investors, who can relax when investing their own money and be sure that Grupeer “did the homework for them”. Grupeer does its own strict due diligence of every project and partner that approaches the platform for funding. It includes auditing the financial statements and checking if the projects are actually taking place in real life and making sure the loan originator is capable of satisfying BuyBack guarantee. Due to such strict procedures, approximately 80% of the projects are dismissed and never are offered to the clients. Additionally, Grupeer has a strict AML (anti-money laundering) procedures in place.
What’s the difference?
One of the key advantages that Grupeer offers is diversification- on the platform investors can find business loans aimed at financing various business activities and real estate projects which fund the construction of residential and commercial properties. Besides loan types, the diversification is in different geographical locations, be it local Latvian deals or Norwegian real estate financing. The high-interest rate is based on the types of borrowers- usually, they have a short track record, so it is hard for them to get the traditional financing, but Grupeer aims to find jewel project and help to bring their idea to life. Sure, the companies can be young, but the professionals behind them have a solid track record in their professional area.
The uniqueness of Grupeer is based on their customer-centric approach, as they position themselves as “human company”. It is mirrored in their relations with employees and active conversation with investors to understand what they really require and what can be improved.
The investor profile
Despite the recent presence in the p2p market, Grupeer has a lot of good reviews on specialized forums and publications. Current and potential clients are actively discussing advantages and disadvantages and Grupeer is actively participating. A famous German blog p2p banking has conducted a survey where p2p investors rated their favorite platform and Grupeer was among the top 5. Surprisingly, Spain by far is the biggest investor country on the platform. One of the explanations is that Spanish clients trust more alternative investment platforms than their local banks for investments. Second, come the famous German savers. A pleasant surprise is that UK customers are also quite active without special targeted marketing and absence of possibility to invest in GBP. Currently, customers are 95% private and 5% are legal entities.
Grouper is currently working on the development of its own payment system, so in the future, the deposits by investors will instantly be available for investment. Additionally, Grupeer has plans to introduce a currency exchange on the platform which will convert major currencies based on market spot rate. Grupeer is also developing a centralized hub on their website, with live data so that the clients can transparently see the statistics. Lastly, in the near future, Grupeer plans to launch an innovate product- “Grupeer Stability Fund”- a possibility to buy a square meter (literally) in real estate, with a simple click of the button. This way an investor will be an owner of a fraction in the office building or any other development project and will receive a stable rental income from 4% to 8% yearly (which already generates income. This option is perfect for investors with a long term horizon. Many people want to benefit from stability investments in real estate offer, but don’t have desired amount, but “Grupeer Stability Fund” will solve this problem.
Grupeer’s target-driven team has set a goal – to become a leader in the alternative investment market in the EU by 2020. This is an ambitious plan, but small steps already are taken. Pulled investment can help achieve big goals, but exclusive investment agreements can actually hurt the business, so it looks like the fintech platform has a lot of potential in the future.