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German Peer-to-Business Lender Eyes World Domination

Zencap – a high growth peer-to-business lending outfit from Germany – is looking to take the world of SME lending by storm.

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Zencap was launched in March 2014 by the prolific Rocket Internet – with an initial focus on the German market. But the SME loans provider is now also active in both Spain and the Netherlands, and has ambitions to branch out further afield in due course – in the style of the consumer-focused Lendico – which is also Rocket Internet-fuelled. Zencap places an emphasis on speed and efficiency, as well as on delivering strong returns to its investor base.

Ahead of the fast-approaching AltFi Europe Summit 2015, at which Dr. Matthias Knecht (CEO) will be speaking, we caught up with the aggressively ambitious platform in order to learn about its plans for the future.

Can you give us a brief introduction to the Zencap platform?

Zencap is the fastest growing online lending marketplace in Europe. Via the Zencap platform small businesses receive access to loans of up to 250,000 EUR that enable growth and investment. The lean and simple application process takes only minutes to complete and borrowers receive their credit decision within 48 hours. While Zencap is focused on highly efficient processes, we provide a personal account manager to every borrower. Our marketplace thereby directly connects borrowers and investors with clear advantages for both sides. Fast and flexible SME loans as well as attractive yields.

In which countries is Zencap currently active? Is the German market a core area of focus? Do you have any plans to branch out to the UK?

We are a truly pan-European marketplace with a presence in Germany, Spain and the Netherlands already. We have started our platform in Germany and our headquarters is located in Berlin. Therefore, Germany will remain our largest market for some time to come. However, we are actively scanning other markets to add to our portfolio. Our international footprint enables us to leverage synergies across different geographies which drives down unit cost and allows for best-practice sharing.

Tell us about the regulatory framework that applies to peer-to-business lending in Germany.

Unlike in the USA and UK, the German government has not fully grasped the potential of digitalization and technology for the financial industry. The current regulatory framework is rigid and focused more on protecting what exists than fostering what could emerge. I am a strong advocate of a unified European regulatory framework based on the model of the UK. As this takes time, we have built our organization and infrastructure to be able to cope with the different regulatory regimes in different European countries.

Does the platform intend to open up cross-border investing products?

As a truly pan-European marketplace, we want to offer all of our investors a wide range of potential investment opportunities. Cross-border investing is therefore one of many items on our roadmap.

Let's talk about the specifics of how the platform operates. What are the borrowing rates, fees and average interest yields?

With regards to our largest market, Germany, small businesses can borrow funds starting from 3.99 %. Our fee structure depends on the loan term. Maximum investor yields are up to 14.64% in Germany and the Netherlands, and 20.00% in Spain. Average net yields are currently between 6-10%, depending on the country.

Does the platform operate an auction-based model or are investor funds auto-diversified?

Our investors can invest into individual loans directly. We do not offer a reverse-auction system like other platforms as investors tend to underestimate the risk involved and, by bidding too low, might incur net losses. For the credit decision and interest rate setting, we rely on our experienced local credit analysts and the proprietary ZenScore model, our advanced risk scoring technology. An auto-investment tool is on the horizon which makes it even easier to build a customized portfolio.

What is the minimum and maximum loan sizes that Zencap can accomodate?

With regards to Germany the minimum loan size is 10k and maximum loan size is 250k which we recently announced.

What is the minimum investment amount?

Investment minimum is 100 EUR in Germany and 50 EUR in Spain.

Please tell us about the benefits of having been spun out by Rocket Internet?

Rocket Internet has an incredibly strong network of firms across the globe which we can leverage in different ways, from market entry to customer acquisition. Furthermore, the Rocket expertise in areas like building a scalable IT infrastructure, improving online marketing, and setting up a mobile platform is unparalleled. We have launched in 3 countries within 10 months only – this would have not been possible without our amazing team and the strong Rocket backbone.

Where do you see the platform in a year's time?

We aim to become the leading global marketplace for business loans. This requires a strong European footprint as the basis for a truly international presence. On the product side, small business loans are just the start towards a balanced portfolio of products that help businesses to grow and invest. We won’t reach all our goals in one year. But you will see additional steps towards this long-term vision.

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Matthias Knecht

Founder and CEO


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