How would you describe Debitum Network platform?
Debitum Network is an online lending platform that gives investors an opportunity to invest in safe, short-term loans for small businesses and earn attractive interest. An average loan term on our platform is 53 days, an average interest rate is 10.5%, most assets have a buyback guarantee, amounts are flexible and an investor may leave at any point in time.
We aim to be a decentralized online marketplace and therefore, we also connect additional parties in a lending process: risk assessment and insurance providers, as well as debt collectors, in a single, transparent, trust-based and easily accessible ecosystem. This ensures that the lending process is not controlled by a single party as it is done in a more traditional lending process by banks (which has failed as a credit gap for SMEs globally ballooned from 2.6 trillion USD in 2016 to 5.2 USD trillion in 2018) or by alternative lenders.
What are the three main advantages for investors?
Firstly, a quick turnaround of money (starting from a few days, and an average of 53 days) used for investments ensures compounding interest. Secondly, all investments support business growth and are backed by collateral that can be sold or used to regain investments by lowering risk to a bare minimum, still providing good returns of around 10.5%. Lastly, most assets have a buyback guarantee from a loan originator if the investment is not repaid within 90 days after the repayment term.
What ROI can investors expect?
Currently, annual interest rates for short-term investment assets on our platform vary from 7.5% to 11.5%. Taking into account that average maturity term for a loan on our platform is 5 weeks, an investor can expect the rates to increase by 0.2%-0.5% (within a year and accelerate exponentially if money is reinvested long term, aka compounded interest). An auto-invest feature will come handy here, as ‘set and forget’ possibility will relieve the investor of doing the selection of assets manually. That is not to forget, that we are actively working to onboard more Loan Originators with higher interest rates onto the platform, allowing our investors to earn increased returns.
Is the technical platform self-developed or using white label solution?
Our platform is fully self-developed by our development team based on our long experience of lending to businesses as well as our innovative technological experience. In addition, to the core platform, we integrate various third parties like risk assessors to get data from them directly onto Debitum Network.
How reliable is the credit rating/credit history data available?
We provide a unified credit score and its’ changes (monitoring) throughout Debitum Network. The provided credit score, or in our case letter system (indicating the probability of default for the company in the next 12 months), helps lenders understand the probability that the loan will be repaid in time and without any hustle.
Credit score on our platform is provided by a third-party trustworthy credit rating agency for each market, for example, by Scorify for Lithuanian businesses. Using third-party risk assessors is a benefit as they are specializing in doing credit score for many companies in the particular market, not only the ones asking for a loan for a specific lender. That way Scorify has issued more than 380’000 credit score ratings over the last year.
Asset credit rating is continuously renewed, especially linked to important events during the loan timeline (i.e., repayment term, grace period) to better reflect the current state of the borrower and provide investors with a possibility to monitor the status of any given loan.
How is the company financed?
The Initial capital of 17 million USD was raised in crowdfunding for the development of the project (the creation of an online decentralized lending platform). In the first 6 months, the company was able to deliver a live and fully functioning product, thus fulfilling given promises. The raised capital was distributed to a minimum of a 3-year run-rate. Simply put, not only we have the capital to continue our operations but more importantly to expand Debitum to foreign markets and be a step closer to becoming a global P2P platform.
Are you open to international investors?
Yes, most definitely. We are a global P2P marketplace and we are open to investors from any part of the world. Currently, we accept deposits in euro (EUR) from SEPA network, deposits can be done in British Pounds (GBP) from local accounts, and US Dollars (USD) from US-based accounts. All investments in assets are currently carried out in Euros.
Is your platform regulated?
Debitum Network operator is established in Latvia, where P2P lending market (business activity) is not regulated and where other well-known platforms like Mintos and Twino come from. However, we are aware of possible changes in the market, that is why we have our legal team is in Latvia so that Debitum Network would always be fully compliant with Latvian legislation.
Where do you see your platform in 5 years?
Our initial plan is to help finance business loans on a pan-European scale by the end of 2020 and proceed to countries with high lending potential outside of the Continent with a target of 29 markets in EMEA & Latin America in five years time with local Loan Originators target markets uploading assets our platform.
This year we are planning to update our platform and website’s design, create a reserve fund, start offering direct loans (more similar to crowdfunding), implement more integrations with loan originators and risk assessors, introduce a secondary market, which we expect to grow exponentially in the upcoming years, while providing investors with additional liquidity in re-selling loans.
How do you see the competition in the markets you operate?
Competition in the field of P2P remains sharp as there are such well-known players as Mintos, Grupeer, PeerBerry, or Assetz Capital who have been in business for years and are well known to P2P market enthusiasts and investors. It takes time to be noticed, to gain investors and customers’ trust, develop the platform to be able to stand up to the leaders in the market.
However, we see our advantages over other platforms that we exclusively deal with business loans (more guarantees that debts will be repaid), and the fact that all loans are short-term (which ensures quick turnaround of capital with a possibility to quickly reinvest both principal and interest).
We also believe that platforms which offer safer assets will gain more popularity and those that are not able to reduce default rates on the loans (will eventually lose customers’ trust and market competitiveness) may become extinct in the nearest future.