Lendix
Auto Added by WPeMatico
Crowd-lending platform October hits pause on loan repayments
French startup October wants to reduce the pressure on small and medium companies going through the coronavirus crisis. In order to give them some headroom, companies that have borrowed money on October won’t have to pay back their loans for the next three months.
October works with small companies in France, Spain, Italy, Netherlands and Germany that need a credit line. One of the company’s key advantages compared to borrowing money from a bank is that it’s much faster. You can apply to a credit line and get an answer just a few days later. Usually, companies pay back their loans over time, with monthly repayments over three months to seven years.
October evaluates risk before handing out loans. It works with many institutional partners to raise funds and deploy capital in those loans. Some retail customers also invest on October directly on a company-by-company basis.
But many small European companies that have borrowed money on October won’t generate revenue for a little while. They could face cash flow issues and they could have issues repaying those loans.
That’s why October has decided with its institutional partners that it is postponing all outstanding loans for the next three months. Companies won’t have to pay a huge sum of money after that; October is also postponing the end date of the loans by three months.
October then asked retail investors to vote whether they are in favor or against postponing loans; 99.42% of retail investors who voted followed October’s move.
October is also waving its own fees for the next three months, but companies will still have to pay interest on outstanding capital.
This way, fewer companies should go bankrupt over the next three months. It should minimize the impact of the current economic crisis on the overall default rate of October loans.
Powered by WPeMatico
October lets 11 public companies borrow money on its platform
French crowd-lending platform October (formerly known as Lendix), wants to educate more people about new ways to borrow money. That’s why the company is launching a project called Grandir Ensemble (grow together).
11 big companies are borrowing €100,000 each on October at a 2.5 percent interest rate. October users will be able to lend as little as €20 to one of these companies.
If you look at the list of companies, all those names will sound familiar to French readers and beyond. Most of them are public companies, most of them are originally from France — AccorHotels, Adecco Group, Allianz France, Arkéa, Edenred, Engie, Iliad, JCDecaux, Suez, Unibail-Rodamco-Westfield and Webhelp.
According to October, annual revenue of those companies ranges from €1.8 billion to €122 billion, with Allianz generating more revenue than anyone else.
At a press conference, October co-founder and CEO Olivier Goy explained the idea behind this project. Those credit lines won’t change anything for big public companies. But many of those companies work with small and medium companies.
Today’s partners will be able to refer small companies. October will wave the application fees for those companies up to €11 million in loans.
Thanks to this vote of confidence, you could imagine small companies applying to October because a big company they trust has done it before.
France’s Economy Minister Bruno Le Maire recorded a video message for the press conference, saying that he supports October and today’s campaign.
One of October’s key advantages compared to borrowing money from the bank is that it’s much faster. You can apply to a credit line and get an answer just a few days later. This is quite useful if you need to move quickly to launch a new product, open a new office and more.
October currently operates in France, Spain, Italy and soon the Netherlands. I already covered the company in depth back in June if you want to read more.
Powered by WPeMatico
Lendix raises $37 million for its lending marketplace
French startup Lendix has raised a new funding round of $37 million (€32 million). With this new influx of cash, the startup has one goal in mind. It wants to become the leading lending marketplace of Continental Europe.
Idinvest and Allianz are leading the round, with CIR SpA (De Benedetti’s holding firm) also participating. Existing investors Partech, CNP Assurances, Decaux Frères Investissements and Matmut are also participating once again.
As of today, people living in France, Spain and Italy can sign up to lend money to companies established in those three countries. But the startup is already working hard to expand to the Netherlands and Germany before the end of the year. Next year, Lendix plans to operate in 7 countries.
And it seems like it’s becoming easier to launch new markets. There are now quite a few users and institutional investors on the platform. Lendix doesn’t need to attract Dutch users to start lending to Dutch companies. French, Italian and Spanish users are already willing to put some money in Dutch companies. It’s a true European user base because everybody uses the same currency.
With today’s funding round, it’s going to be easier to launch in Germany. “When you want to open in Germany — and that is our current plan — it’s harder to recruit if you don’t have a German brand name behind you,” co-founder and CEO Olivier Goy told me.
That’s why Allianz is going to be more than just a financial backer. For instance, the insurance company is going to promote Lendix to its corporate clients so that they think about Lendix if they need to borrow some money.
It’s another proof that Lendix doesn’t want to be a French company that operates in other countries. The company also has opened an office in Madrid and another one in Milan with local teams.
Lendix is still a drop in the bucket compared to traditional bank loans. But the company wants to differentiate its product offering from regular banks as much as possible.
Right now, when a company requests a loan, the company’s algorithms are going to work on a basic credit scoring. After that, somebody calls the company to ask a few questions. The Lendix team can focus on more specific information.
“We also have developed a tool called Iris,” CTO Benjamin Netter told me. “It is going to become the biggest intelligence database for European companies.”
France is leading the way when it comes to open data. You can now access the registry of commerce, the identification number database and important incorporation events. But it’s a mess if you want to access this data. There are different file formats, and the same database uses different fields depending on the region of France.
Lendix has been parsing all this data to turn it into an actionable database. This way, Lendix can get a clear overview of companies that apply for a loan.
The company doesn’t plan to stop there. You could use Iris to detect some fraud patterns. For instance, a person could keep incorporating new companies and shutting them down quickly.
Eventually, you could reach out to companies before they need to apply for a loan. Netter mentioned a restaurant called Street Bangkok. They’ve opened three restaurants over the past six months. It’s clear that they might need some money at some point to invest in new restaurants. Lendix Iris could spot those patterns.
Lendix is still nowhere near as big as Funding Circle. But the company thinks there’s enough room for multiple players in this space. Both can grow at the same time by competing with traditional banks.
And it starts by being faster than a traditional bank. Companies get a rate within 48 hours. “Our goal is that you should be able to get a rate within half a day,” Goy said. Banks will have a hard time giving you an answer so quickly.
Disclosure: I share a personal connection with an executive at CNP Assurances.
Powered by WPeMatico