Bondora is opening its doors to international investors. Previously labelled a “pan-European” platform, the move implies a refocused global vision. AltFi spoke to - Jevgenijs Kazanins – Chief Marketing Officer at Bondora – to discuss the move.
As of September, accredited investors in the US, Canada, Mexico, Brazil, South Africa, India, Hong Kong, Singapore and Japan will be able to access the investors available on the Estonian platform. The link between these countries may at first appear confusing. Mr Kazanins explained:
“These countries agreed to the EC Anti-Money Laundering Directive, which allows us to service investors from these geographies in line with the EU laws.”
Furthermore, he continued with why Bondora had decided to look globally:
“Our vision has always been “Lending beyond borders”, and opening up borders in Europe is just a first step towards that. What we envision is a truly global marketplace that brings together creditworthy borrowers and investors irrespectively of their location. It’s an ambitious mission, but we are committed to making it happen.”
Under the expansion, whilst residents of these new countries will be able to invest in the Bondora platform, they will not be able to borrow from it. Our next question focused on why these international investors were not eligible to borrow as well as lend:
“Unfortunately, expanding lending practice across borders is a complex and slow process, as each and single market operate under different legislation. In order to start issuing loans in a new country we need to acquire necessary licenses, ensure access to credit registry, and install collection and recovery process. We are looking to expand into new markets, but that will require longer time.”
Of course, investor sentiment can have a marked difference between countries, and can vary greatly across the geographical distances that Bondora now covers. Mr Kazanines emphasized the benefits that having investors with different return expectations and risk levels can have for ensuring an efficient provision of capital:
“By serving investors from over 30 countries, we learned that capital is not equal. Investors’ preferences vary heavily in terms of the risk levels, investment horizon and return expectations. We see that European investors tend to be more risk averse, while investors on the US platforms are taking higher risk exposures. Therefore, we expect international investors to compliment investors from Europe rather than compete against each other.”
By providing an international market, entrepreneurs can access far more investors with an appropriate investment profile. In fact, Mr Kazanins commented on the particular benefits of investing in the European market:
“Many European markets can offer premium returns due to local banking system specifics. For instance, in the markets that we operate in, banks enjoy the lack of competition and absence of alternative financing options and charge the borrowers unacceptably high rates.”
Moreover, being able to invest internationally brings further benefits. Investors are always advised to diversify their portfolio, none the least in peer-to-peer where information is far from perfect. By giving investors the ability to invest internationally, however, Bondora allows investors to lower the level of systematic risk and provides diversification impossible in a single country portfolio.
Bondora – by its own admission – has an ambitious vision. It was only in March that the first cross-border fundraise was closed on the platform. Fast forward six months and Bondora is looking globally. Unsurprisingly, they are not the only platform to be looking internationally. AltFi recently had a conversation with Lasse Mäkelä – Invsedor CEO – and discussed their MiFID license and their European operations. The benefits are clear, promoting their services in countries which aren’t used to P2P may be their biggest challenge.