Latvian P2P lending marketplace Mintos that won Rietumu Fintech challenge earlier this year just reached €2-million mark of investments made through their platform. The company also released attractive growth stats.
The service is now offering secured loans from Latvia, Lithuania and Estonia to 1700 investors in 27 countries across Europe. You can see their slide deck here. Stats released by the company show a steady month-on-month growth, reaching €2 million investment mark today. It is interesting to note that before January 2015 the platform was dominated by loan originators, however, in 2015 investors joined in and have quickly taken up a massive share of 2/3 of all loans in just about six months.
Most loans are used to finance car purchases – 78.7% by number and 48.8% by amount. The system also services loans for home improvement, mortgage or other major purchase and even debt consolidation. Only 1% of total funds were borrowed for business, however Mintos revealed that they see great potential in funding SMEs and consider possible moves in that direction.
“We have built technology that makes it easy for non-bank lenders to adopt marketplace model in funding their loans.“ comments Martins Sulte, CEO & Co-Founder of Mintos. “In Lithuania and Estonia we cooperate with MOGO, car loan provider which originates and services loans that are put on our platform and thus available for investors to invest in. In this way we bring together investors and borrowers.”
Mintos has previously raised €1 million from Skillion Ventures and its current revenue would make the company profitable, but the team has greater ambitions. Mintos keeps reinvesting profits into growth, and their next milestone is sourcing loans from more countries in Central and Eastern Europe. Additionally, there are tangible opportunities to expand investor base beyond the EU countries. Mintos currently limits itself to Europe to ensure high anti money-laundering standards. However, the team already evaluates investor applications from other reliable jurisdictions such as Singapore.
P2P lending has so far been mostly devoted to unsecured loans. Frankly, the sole reason behind it is that unsecured loans are easier to manage. Some players (Folk2Folk, LandBay, LendInvest) have ventures into secured loans, but only cover the UK as their big and lucrative home market. Mintos has grand ambitions to be in the upper right corner – a marketplace for secured P2P loans operating internationally.
“We did our homework and built a great product” Martins remembers. “Our investors treated us as equals to alternatives with several years of operations, and demanded to meet the same expectations. We really focused on doing that and now we are at the mark of 1700 investors, all acquired through trust and word of mouth.”
Once upon a time Mintos was not dubbed a definite success and was even rumored to shut down due to regulatory constraints. However, when regulators approached them, the team did not give up and is now advising on P2P lending regulation in Latvia.
‘It is just natural for any big innovation,’ explains Martins. ‘Uber has to deal with regulation, AirBnB has to deal with regulation, drones have to deal with regulation. Regulation tends to lag behind innovations, and when your startup has anything to do with finance, regulation is essential. However, the most important thing for you at this point is to see regulators as your potential partners, not enemies – explain, educate and collaborate. This is what we did at Mintos.’
Additional aspect to keep in mind when dealing with regulators in Europe is that any new regulation you develop must be consistent with EU-wide regulations. For Mintos it works in their favor, as Europe is interested to decentralize risks so that unsuccessful investments of bigger institutions do not become a burden for European taxpayers.
“We have the vision to finally put to good use the idle cash sitting in Western Europe and earning close to zero interest – funnel this cash to economies in Central Eastern Europe,where borrowers have limited access to credit at reasonable cost.” Martins explains. “We do not see banks as competitors at this point. In fact, we see interest from banks to join our platform as investors.”
Mintos keeps making investments on its platform easier – at the moment you can start investing as little as 10€, pay no service fee and make use of a buyback guarantee provided by Mogo on secured car loans. With average net return of 13.17% is certainly looks like an attractive alternative to holding your cash in a bank.
Mintos is not actively raising funds at the moment, however they review offers. What they are doing actively is hiring – you can now join them as a Country manager in Poland and Developer in Latvia. Having grown from 0 to 14 employees in just a year, Mintos shows no intention of slowing down.