Riga-based peer-to-peer lending platform Mintos announced today the closure of €2m in seed funding, led by local VC firm Skillion Ventures. Mintos will use the fresh capital injection to boost its product range, to expand its team and to accelerate growth in Europe, focusing on attracting more non-bank lenders to the platform. The company hasn’t said whether the 2 million euro funding is comprised of debt or equity but we suspect it's probably a mix of both.
Founded in Janaury 2015, Mintos lends money to borrowers across Latvia, Lithuania and Estonia. The loans themselves are backed by either homes or cars, and are not dissimilar in size and term to Zopa or RateSetter loans. The advertised return stands at 13.3% per annum to date. More than 3,850 investors from 32 countries are registered on the platform, with investment opportunities currently totalling more than €10m.
“Traditionally, non-bank lenders have financed their loans from their balance sheets. Now, with the help of Mintos, non-bank lenders have the opportunity to use the peer-to-peer lending model to diversify methods of financing loans. For investors, Mintos provides the chance to gain access to loans that were previously accessible to a very limited number of investors, or practically inaccessible at all.”
The fundraising follows on from the recent partnership with DEFIBO - an invoice finance online company based in Lithuania - that allows Mintos’ investors to purchase invoices issued by SMEs and by large corporations, therefore expanding their range of investment opportunities.
Mintos says it's disrupting not only the traditional financial world, but also the peer-to-peer lending space itself. “We have fundamentally changed the model of peer-to-peer lending”, argues Martins. The Mintos boss refers particularly to the relationship between investors and non-bank lenders. Indeed, Mintos provides both private individuals and institutional investors with opportunities to finance non-bank lender loans through its platform, as the figure below shows.
Before the launch of the platform, non-bank lenders that wanted to use the peer-to-peer lending model to fund loans were forced to each create their own investor-facing platforms. Now, non-bank lenders can simply join Mintos.
“This means non-bank lenders no longer have to spend huge amounts to create technology solutions and market their platforms to investors, instead they can focus on what they do best – originating loans.”