Alternative Finance Crosses Borders

We are now seeing cross border activity starting to crop up in the alternative finance space, which businesses and borrowers access to investors around the world.

Lendico has platforms in many different countries in Europe and in South Africa but has now taken the step of lending from one country into another. It now allows investors to buy peer-to-peer loans across borders.

Lendico has identified the differing yields across European countries as an area it can exploit. German investors can now invest in Spanish loans, which have returns of up to 19.6%. Investors would be hard pressed to find yields this high from loans in Germany.

Dominik Steinkühler, co-founder of Lendico, commented:

“The fact is, the disparities between countries are much greater than those on a national level. Borrowers from high-interest countries are in need of foreign investment just as investors in low-interest countries are looking for loan investments with higher returns.”

Lendico has high demand for its loans, it has already received €500 million in loan demands in 2014 and continues to receive thousands of requests each week.    

It seems that cross border alternative financing is on the rise. In October consumer goods company WAFU launched one of the first cross border equity fundraises. WAFU is based in Montreal, Canada and listed its fundraise on the Canadian Optimize Capital Markets and in the US via CircleUp.

Gil Michel-Garcia, WAFU CEO, commented:

“We have launched this groundbreaking cross-border equity crowdfunding offering in order to allow our loyal consumers in the United States and Canada to be able to participate economically in the continued success of the WAFU products that they love.

“Given the ongoing success of our WAFU products and the recent listings of our products at Walmart Canada, Sobeys Ontario, Loblaw’s Ontario and Western Canada and Federated Co-Op in Western Canada, we thought that the time was right to raise additional capital in order to fully take advantage of these growth opportunities. Assuming that we raise the capital that we need, we expect that these new listings will allow us to deliver top line growth of more than 50% next fiscal year”.

WAFU sells Japanese style condiments, including dressings, sauces and mayos. It was founded in 2006 and is looking to raise about $1 million. It projects that it has the potential to capture about 5% market-share of the $4 billion dressing and mayo market in North America. By fundraising in both countries WAFU obviously has access to a wider range of investors but can also harness the PR associated with a fundraise to market the brand in both countries.

Gil Michel-Garcia explained:

“Equity Crowdfunding is an excellent way for us to not only raise the capital that we need to grow our company, but also allows us to increase our exposure with current and potential consumers of our products”.

As the alternative finance industry continues to gain momentum we should see more cross-border transactions and platforms opening themselves to foreign investment. This applies to both equity and loan financing as it allows investors to gain access to a huge pool of investments and also enables them to exploit otherwise unavailable opportunities around the world.