In 2014, Simon Amrein observed that several projects were been financed on the internet. As a senior research associate at the Luzern Business School, he became interested and tried to gain some insights. It resulted in the first Crowdfunding monitor publication describing the newly emerged crowdfunding phenomenon.
For the first episode of our new podcast, “Do you speak crowdlending?”, I had the pleasure to interview Simon, who generously provided a lot of insights about the crowdlending industry. He explained the process of being financed via a crowdlending platform, shared his thoughts on the current situation of crowdlending in Switzerland and also gave some advice for lenders and borrowers.
In the following parts, I summarized the main points from our full conversation, which is available here.
Crowdlending? PtoP? Peer to Peer? What is crowdlending, according to Simon?
All of these terms refer to debt, financed online. Some terms are more used in some countries than in others. Nowadays, the term “marketplace lending” is more common. For instance, in the UK, PtoP lending is much more popular, while Crowdfunding is a broad term that describes the fact of financing different projects or ideas online. Several big funding platforms in the United States, such as Kickstarter and Indigogo, are typical Crowdfunding platforms.
To avoid the confusion between different verticals of crowdfunding, one should focus on what the investor is getting back for his funds. If it’s a product, it’s crowdfunding. If it’s equity then it’s crowdinvesting. If there is nothing in return, we are speaking about crowddonating and last, if the investor gets back interest, then it’s crowdlending.
How to get financed from a crowdlending platform?
Essentially you need to find the right crowdlending platform and apply for a loan. It can be a consumer loan or an SME loan. Real estate transactions are also possible via some of the platforms. When applying for a loan, you’ll need to prove that you can repay the loan by sharing your financials, as a company for example. If the platform accepts your application, you can then get financed by one or multiple investors.
What are the crowdlending figures in Switzerland?
When we compare the three advanced countries figures, we see that in the United States, the average invested capital per capita is around CHF 120, in the UK CHF 90 while in Switzerland, we are a bit behind with an average of CHF 30 per capita. The figures of the Swiss market are smaller compared to these two leading countries but if we compare to neighbor countries such as Germany, France, Italy, and Austria, we are doing better. The total brokered volume in 2018 was CHF 262 Million and we are expecting CHF 400 Million in 2019.
What would you advise lenders and borrowers to do before joining this industry?
For an SME or a private person who is looking for a loan, as a first step, it’s better to determine the crowdlending platform credibility and re-check if the platform is a reliable partner. For the investor, it’s necessary to study the transparency of the platform.
“Do you speak crowdlending?”
This podcast present by Acredius: Covering the Crowdlending industry! Our mission is to provide you with all the insights from this market and help you make informed decisions. I’m delighted to host this podcast and hopefully bring value to all our listeners.