One of my favorite asset types is Peer-to-Peer lending, which consists of lending money to individuals or companies via online platforms, in exchange for payment of interests over time. Peer-to-Peer lending has a high-yield, can be completely automated, and also has a low level of risk if you do it right.
In order to diversify my portfolio and reduce the level of risks of my investments, I am always looking to invest in new Peer-to-Peer lending platforms. In this article, I will review Crowdestor, a business crowdfunding platform based in Riga, Latvia. I heard many people saying good things about them, so I really wanted to try out the platform myself. I also had the chance to meet the team in Riga, which was really awesome and helped me to better understand how the platform works. Let's start the review!
I have to say that I was really pleasantly surprised when trying Crowdestor. Not only the platform is great and proposes high-quality deals with excellent returns, but they also have an awesome team that is really passionate about what they are doing. So if you are starting out a portfolio in business crowdfunding, or if you want to add excellent deals to your existing portfolio, I really recommend trying them out.
Crowdestor is a business crowdfunding platform based in Riga, and that focuses on financing business, real estate, transports, and startup projects. For investors, it translates in returns from 12%, and it's not unusual to see returns up to 18% on the platform. Most of the deals you will find on the platform are in Latvia, especially in the region
As I mentioned before, I had the chance to go Riga to visit the team (thanks again for the opportunity and the warm welcome!) they could show me some of their current & future projects. Here is a picture that was taken in the streets of Riga, with me, Janis Tima (CEO), and Gunars Udri (Service Product Manager):
It was awesome to meet the Crowdestor team there, and I met great people that are really passionate about what they are doing. They showed me some of their previous projects that have been financed by the platform, current projects, as well as future projects. It really helped me to better understand how such a platform works, and I can assure you that they are highly motivated to make it work for their investors.
As for all Peer-to-Peer Lending & real estate crowdfunding platform, there are risks coming with investing in Crowdestor. The main risk is that a project you invested in goes to default, which can result in a loss of part of your capital. However, there are ways to significantly reduce the risk.
The first thing is to always diversify, by spreading your investment on as many projects as possible on the platform. This way, even if one project defaults, your overall yield won't suffer that much.
The other thing is that the Crowdestor team is really focused on the question of securities & buyback guarantees. First, each project comes with one or several assets as security, for example, a piece of real estate or money from the borrower himself. Then, the team at Crowdestor told me that they are building a Buyback Fund, which will be used to provide a buyback guarantee to pay the rest of the capital in case one loans defaults. It's important to note that compared to the buyback guarantees of some others platforms, this one will be covered by an actual fund & the amount in the fund will be displayed publicly, meaning much more transparency for the investors.
Let's now see how to actually invest on the platform. The first step, as for every platform, is to deposit money on the platform. This is really easy to do with Crowdestor, as you can simply make a bank transfer to the provided IBAN. If you don't have a Euro account, you can for example also use TransferWise to make the transfer.
As I do for all platforms now, I tested their withdrawal process - also went without any issues, and I had the money back in two days.
Once you have money available on the platform, you can then browse deals. At the time I wrote this review, one real estate deal was available, and one was opening in a close future:
Let's have a look at the first project by clicking on it, which leads to a page which much more details about the project:
On this page, which is available for every project listed on the platform, you will find all the information you need about the project, like a summary of the project, all details about the loan itself, and also why the project makes sense financially.
It is interesting to note that for this project I took as an example, I actually visited it myself with the Crowdestor team, and even had the chance to met with the person in charge of the development of the project. He is also very passionate about what he does, he showed me other projects that he built around the area, and I am sure that this project is going to be a success as well.
To actually invest once you selected a project, it's really simple as well: just click on the Invest button, validate your investment and you're done. Note that at the moment the minimum investment amount in each project is 100 Euros.
Let's now see what are my returns with Crowdestor. I started by investing in just one project in order to test the platform, which was a restaurant in Berlin:
Fun fact, I actually had the opportunity to eat in another restaurant of the same franchise, but in Riga (that was also financed by Crowdestor), and the food was excellent!
I since then invested in more projects on the platform, and I also received some interest payments (all were on time) since I invested in those projects and I expect to have a 14.6% return on my investment overall on the platform.
As for all platforms that allow to export data, I also decided to export the raw data from Crowdestor into TrackInvest, and here are my gains from the start:
As you can see, after a slow start I am now receiving steady gains from Crowdestor, and my current XIRR on the platform is at 6.94% and rising, as more projects are being repaid.
I will of course update this section as I get more returns & also invest more capital on Crowdestor.
I have to say that I was really pleasantly surprised when trying Crowdestor. Not only the platform is great and proposes high-quality deals with excellent returns, but they also have an awesome team that is really passionate about what they are doing.
So if you are starting out a portfolio in business crowdfunding, or if you want to add excellent deals to your existing portfolio, I really recommend trying them out. If you have any questions about Crowdestor or business crowdfunding in general don't hesitate to leave them in the comments below!