According to a recent report by Cambridge University and EY, Finland ranked 8th in terms of volume of alternative finance transactions in 2014 (on a table of 16 European countries), registering a total transaction volume of €17m. The country performed slightly better on a per capita basis – with €3.1 per person – placing slightly behind the UK, Estonia, Sweden and The Netherlands. Market wide data for 2015 has not been published. However, in terms of marketplace lending, The Liberum AltFi Volume Index Continental Europe reveals that Finland accounts for 0.76% of the European market (including the UK) and 4.98% (excluding the UK), as of 21 April 2016.
Summary of the main platforms
Finland is home to 4 marketplace lending platforms – 3 locals, Fellow Finance, Fixura, Vauraus.fi and 1 foreigner, Bondora. The country houses 5 equity crowdfunding platforms – 2 locals, Invesdor and Innovestor, and 3 foreign competitors, Fundedbyme, Kickstarter and Indiegogo. For the purpose of this article, we will focus on the local platforms.
Marketplace lending Platforms
Fellow Finance. Founded in 2013, Fellow Finance is one of the biggest lending platforms in Finland, and is joint-owned by its founders and by an OMX Helsinki stock listed company called Taaleritehdas Plc. Fellow Finance uses internal and external data points and marks each accepted loan with a rating score from 1 to 5. This Funding Circle-like ratings model has proven popular amongst the platform’s investors, who may shape their portfolios according to their risk appetite. Opening an account is free of charge and losses are capped to 30% of the invested capital, meaning that investors will – in theory – always get back at least 70% of their principal on non-performing loans. To find out more click here.
Vauraus.fi. Founded in 2013, Vauraus.fi is a marketplace lender that services small businesses. Loans are issued without security. Business owners can set the interest rate on a loan and the length of the repayment period. Borrowers may apply for a loan either anonymously or publicly. Small businesses are considered for loans only if they are registered in Finland and if they have a sound credit history. The minimum investment is €2,000 and there’s no upper limit. To find out more click here.
Fixura. Founded in 2010, Fixura is one of the pioneers of the online lending industry in Finland. The platform offers unsecured personal loans, with interest rates ranging from 6% to 27%. Borrowers have to pay a brokerage fee of 2% per year of the initial loan amount and an account management fee of €5.50 per month. Investors are subject to different fee structures, depending on the amount they invest. An investment of less than €100,000, is subject to a subscription fee of 2%. Higher investments will be charged a subscription fee of 1%. Investors also need to pay a withdrawal fee of €4 to transfer funds into their bank account. To find out more click here.
Invesdor. Invesdor is a Helsinki-based equity crowdfunding platform that operates in Finland and in other several European countries, including the UK. Target fundraisers can be registered in either in Sweden, Estonia or Denmark – as well as in Finland. Invesdor does not charge management fees for investors. The minimum investment amount is €20 and no upper limit is enforced. Start-ups may post their crowdfunding campaign only if they meet specific requirements. The company provides entrepreneurs with guides, illustrating the mechanics of the crowdfunding process before, during and after each campaign. To find out more click here.
Innovestor. Founded in 2014, Innovestor targets investors willing to invest large amounts of money, with minimum investments starting from €20,000 to €50,000. Start-ups usually launch crowdfunding rounds ranging from €500,0000 to €5,000,000. The platform’s fees consist of 5% of funds raised plus a 2% of equity stake in the funded company. To find out more click here.
The Finnish Government has recently submitted a proposal to introduce the Crowdfunding Act – a new law that aims to improve crowdfunding regulations in Finland. In a note released by the Ministry of Finance, the policymakers stated that the objective of the Crowdfunding Act is to clarify the responsibilities of various authorities in the supervision of crowdfunding, to improve investor protection and to diversify the financial markets. The primary goal of the Crowdfunding Act is specifically to ease regulation in relation to equity crowdfunding, although the new law will also have repercussions for the marketplace lending industry. To find out more click here.