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Saturday, August 13, 2022

Estonian Investly closes the funding gap for SMEs

Back in 2013 Siim Maivel decided to use the outstanding Estonian tech and regulatory environment along with his finance education and experience to create a peer-to-peer (P2P) lending startup focused on small businesses – Investly. Backed by one of Estonia’s richest businessmen Sonny Aswani, Startup Wise Guys and a few angels from Estonia and Germany, the company ran under a beautiful moto ‘businesses financed by people’ has so far attracted over 100 private lenders to fund 7 Estonian businesses with an average loan of €7,000. Investly now has its eyes set to UK and other countries.

‘Many small companies find it hard to access the funds they need to grow, despite being creditworthy businesses.’ explains Siin. We aim to connect these businesses to investors; people with some spare money in their accounts that are looking to get a good return on their investments. Connecting these two groups in a secure environment enables them both parties to benefit.”

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Siim has a strong team to back up this promise. CTO Vishal Sahu has more than 5 years background in software engineering, with particular focus on Grails and Hibernate that are the heart of Investly. Moreover, he has experience with P2P equity platforms. Marketing Director Ruth Chamberlain has background in marketing, communications and product management in the UK, one of most desired markets for each fintech startup. Government supports P2P lending in the UK and banks refer customers to P2P lending platforms.

With the market so attractive, there are already other companies out there including Funding Circle is offering P2P loans in the UK, while MarketInvoice provides invoice discounting. There are more local companies in other European countries too, particularly bigger countries like Spain, France and Sweden. With the space being that crowded, Ruth still sees a real opportunities for Investly.

‘Our key advantage is clear focus on presenting reliable SMEs and low entrance barriers for lenders,’ she explains.’While other P2P lending platforms have considerable minimum amount thresholds, we let our lenders start from as little as 10 euros. We ensure less experienced lender protection by thorough screening of companies that we admit to Investly. Using input from academics and industry experts and Siim has crafted our bespoke credit risk assessment models specifically for this purpose.’

The features of Investly show intimate familiarity with daily struggles of a small business. For one, Invesly has an auction feature that allows lenders to bid for preferred companies and thereby reduces the interest rate for the business. They also integrate with cloud accounting platforms, so that once the business does its accounts, it can immediately use the same information for verification at Investly.
The next big development underway is the adding invoice discounting product to the mix, launching in the next couple of months. Investly will let businesses sell their invoices and unlock the cash caught up in accounts receivable. The invoices, like the loan offers on the platform are then put into an auction for investors to bid on. The company gets the money minus a discount as soon as the auction is successfully complete. The investors will then get retuned their investment when the invoice is paid plus a percentage.

The platform keeps its security and functionality at top level. CTO Vishal Sahu proudly explains the technical side of Investly:

“The application is robust and quickly scaleable, while keeping the security at its highest. We use Grails as the backend framework. It is based on Spring Framework of Java, which is one of the most advanced frameworks for applications in finance. To connect with database, Grails uses Hibernate as the backend which is quite advanced and scaleable. For authentication, we use digital signatures so as to make sure only the authenticated person is signing the agreement. Our whole infrastructure is based on Amazon Cloud, which is the best in its domain.”

It is interesting to note that the team established Investly and was collaborating online for the first 4 months before actually meeting each other for the first time at Startup Wise Guys accelerator. Now Vishal has moved from India to Tallinn, while Ruth continues her work in the UK, with regular visits to Estonia. They also plan to take advantage of Estonian e-residency:

“Working as a virtual team turned out to be easier than I had first imagined it would be,” Siin reveals. “I had met them in person so I was confident we would work well together, I then introduced them to each other online. Without Skype and Slack I think things would have been tough, but using these tools and ensuring we scheduled regular meetings and responded to each other kept everyone in the loop. Vishal has now moved to Tallinn and Ruth visits on a regular basis, although we managed virtually for months it is really great when the team gets together.”

Here’s a video with Siim explaining why and how Investly helps to close the funding gap for promising SMEs:

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Marija Odineca
Marija Odineca
I cover Baltic tech startups sharing startup stories, data, insights, and opinions

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