Note: Unfortunately, without regulation, it is hard for investors to know the veracity of these crowdlending businesses, even though some of them might be legitimate. The recent scams like Envestio and Kuetzal were hard to diggest, and now Grupeer, one of the most popular ones is also in the list of suspects.

Disclaimer: Please still do your own due diligence before investing in any P2P lending platform. I am just an investor trying to bring some value to the crowdlending community.

Date of interview: 03/02/2020

Alla Kisika, Grupeer’s CEO

Interview with the CEO of Grupeer– Alla Kisika

1 – What’s the value of Grupeer in terms of investors, loans funded and actually interest paid to investors? Are there a lot of default loans?

Almost 25 000 investors from 91 countries are already earning with Grupeer. Total loan funded value is 43M EUR, 3,8M EUR was paid to investors as an interest rate. Grupeer has zero-default rate at the moment. 

2 – What kind of due diligence do you make before choosing a loan originator?

Grupeer pays special attention to the due diligence procedure, mainly because it is in our interest to check the partner, otherwise our risks will grow. More than 70% of all loan originators that apply to Grupeer are rejected, because they did not meet our requirements. 

Due diligence consists of several steps: first of all, we check the legal structure, AML, then we monitor beneficiaries, examine the financial statements and the client’s portfolio volume. After that the audited annual report is checked. In case the audited report is not available, Grupeer’s representatives visit the loan originator for an additional check. And finally, all loan originators pass the special questionnaire.

All this information is a base for Grupeer’s internal scoring. Rating scoring model analyzes 30 different criteria, which can affect overall risk level. So, after this strict procedure we can be sure that the loans offered to our investors come from reliable loan originators. 

3 – How often do you visit these loan originators and make sure they’re wisely using the funds lent by investors?

Updated due diligence procedure involves a mandatory visit to our new loan originators. We want to point that out, earlier the visit was optional. So, Grupeer representatives visit all loan originators at the moment when the cooperation agreement is signed. Further we carefully monitor our partners’ business activity and if we notice any red flags, Grupeer’s representatives might go to visit and check the loan originator.

4 – Where can we see the proof that you’ve actually been doing research and due diligence on your loan originators?

The Grupeer’s internal scoring model is a company’s intellectual property and we can’t give the exact procedure algorithm. Besides, according to the Non-disclosure agreement that we sign with all our loan originators, we have no right to share this information with third parties. But we want to assure you again that the strict due diligence procedure is necessary first of all for the company itself, because this is the only way to keep zero-default rate.

5 – Have you stopped cooperating with any loan originator so far? What was the reason behind it and what can you do in the future so there’s a reduced chance you’ll have to deal with similar situations?

Grupeer had this experience, we have stopped cooperation with a few loan originators, the information about these situations is available in Grupeer’s blog.

For example, last November Grupeer terminated loans offered by Monify JSC. Companies came to this decision when Monify decided to change its strategic business plan. 

A little bit earlier Grupeer terminated cooperation with the Russian loan originator Kviku. The company went through a severe due diligence process, we were excited by their business model too. The only reason for us to stop Kviku’s loans was the lack of interest from our investors, because our investors are Grupeer‘s top priority.

So, as you can see the reasons for stopping cooperation are connected to business purposes, even though Grupeer and the loan originator agreed on terms of cooperation, the plans could change. We recognize our partners right to act according to their business purposes and at the same time we have to meet the interests and wishes of our investors.

6 – Have you shared all of the default projects so far? Can we see anywhere in your company’s website information about projects that didn’t go so well? I think this is important for investors too, i.e., to see transparency from your side.

We did not have default projects so far, so there is no information that we can give on this topic.

7 – I noticed that most of my investments are Business Loans and all with big amounts (around €20 000). Is this total amount then split among many borrowers? In short, who is the investor actually lending their money to and how the buyback is working in the background process? 

Grupeer has two types of Business loans. First type is the business loan given to the micro-financial organisation. (MFO) MFO uses funds to issue loans to individuals as a payday loans or instalment loans. Such loans have an indirect structure and are given through the Finsputnik Platforma. The Second type are regular business loans, these are given directly to borrowers and clients can see the borrower description in “Loan Description”. Both types of business loans have a BuyBack guarantee, where the loan originator is responsible.  

8 – Are you doing something in order to accelerate the regulation of Crowdlending in Europe? How important is it for you?

As you know, Grupeer is registered in Ireland. We made this decision because the business climate in Ireland is very friendly. Even though Ireland does not have p2p regulation, the state is friendly and ready to assist all fintech companies. 

We are sure that the license is required to increase investors’ trust. The other reason is that the license might help to swap unhonest players out of the market. 

Since there is no recognized p2p licence at the moment, we want the Financial Regulator to implement p2p regulation as soon as possible. We want to work together with the Regulator, communicate and carry out all operations in accordance with the legal requirements.

While the regulation is not implemented, Grupeer is exploring the options of other licensing that could fit the type of business we hold.  

9 – What’s your strategy to guarantee that things will continue to go as planned in the event of a world economic crisis? Wouldn’t the crowdlending sector be particularly affected?

Surely, we cannot deny that the world financial crisis may happen again. Trade war between China and the US affects not only those two counties but the world economy in general. Political instability in Europe, Chinese epidemic causing drop of demand for oil and gold, monetary policy of top countries – any of these factors may launch a new wave of crisis. 

So, what could happen to the p2p industry in this case? 

The financial crisis of 2018 led to the phenomenal growth of the p2p industry. The first-ever P2P lending company Zopa, established in 2005, has brought 4% net returns to its investors, whereas all other asset classes have seen negative returns. 

During the crisis the demand for money is growing. After more than 10 years since the 2008 crisis traditional financial institutions do not seem to be prepared to cover this demand. The p2p industry over these years has become a worthy alternative to banks and can offer both borrowers and investors more convenient and favorable terms along with high-level security.  

Taking into consideration the fact that the interest rate in p2p lending is much higher than in any bank, it is advisable to invest in loans, after making sure of the reliability of the p2p platform. 

The other question that we want to cover is the industry crisis. Grupeer is really concerned with all that is happening in the p2p industry, we are sure that this situation will affect investors’ trust.  We share the concerns of p2p investors and do all the best to protect our investors and keep them informed about all that’s going on in the industry.

10 – Is Grupeer profitable? Where can we follow the quarterly and/or annual reports?

Let’s start with reports, they will be published in May.

Grupeer is not profitable yet. The platform was launched in 2017. The income statement for 2017 shows a rather small turnover of Eur 41,082. In the end of 2018, the picture changed dramatically – the turnover has increased significantly. 

During the last year Grupeer’s costs increased considerably. The company staff has grown, a lot of money was invested in development and improvement of the platform, the company pays a lot of attention to security measures, and marketing expenses have also grown significantly.    

You can see Grupeer’s statements in our blog:

11 – In the long run, would you like Grupeer to be listed in the stock market? Why?

Grupeer at the moment is focused on the business development and regulation, after all  planned projects are realized we’ll surely consider the opportunity of such a listing.

12 – Do you have any plans to start or increase cooperation with loan originators from the richest countries in the world? Wouldn’t it be a great opportunity to jump to those markets? (ex: USA, Canada, Australia, England, Germany, etc…)

We are working with the loan originator from the UK – CubeFinder. We are looking for new loan originators from the richest countries of the world, but the problem is that loan originators from developed countries can offer loans with low interest rates that do not meet our investors’ demand. So, loans with low interest rates even from rich countries will not be interesting enough for our investors. Surely, we do not exclude this opportunity, but it is necessary to estimate all pros and cons. 

13 – What are the long term plans for Grupeer? Do you have a vision for your company and would like to share it with us?

Grupeer is moving step-by-step to realize our near-term plans. We want to grow as a company, to add new loan originators, to improve investors’ cabinet and add new services. One of the things we want to pay your attention to is that Grupeer announces 2020 to be a year of transparency. We’ll do our best to keep our investors informed about everything that is going on in the company.  Speaking of long-term plans, we always have to keep in mind a high level of competition on the p2p market, that’s why we prefer to announce them right before the implementation. 

My Thoughts on Grupeer

Grupeer’s strategy and plans for the future make sense to me and I like the way they described their due diligence process. On the other hand, I think it would be good for Grupeer and its investors if the proof of this actual work with their loan originators could be shown in a more detailed manner.

Grupeer had a lot of costs in 2019 in some important parts of the platform such as security, marketing, etc and therefore is still not profitable. I understand the importance of these features but I hope to see better results in the near future along with the increasing number of investors.

Overall, I’m satisfied with the vision that Grupeer has chosen and I want to believe they will continue on their way to success.


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