Episode Details

For me Alternative Finance is the most exciting sector in Fintech by far in terms of near term impact as competition for the “Old FS” and as choice for both borrowers and lenders.

In this episode I am delighted to be joined by Christian Faes CEO of Lendinvest. In the world of Fintech froth that has been 2014 Lendinvest and Christian are the real deal.

In this episode we “kick the tyres” of P2P and have an organic conversation exploring some key angles in the sector right now.  There is plenty of “linear” content out there (eg this concise YouTube explaining Lendinvest), and conference panel discussions (eg this LendIt one with Christian on the panel) – and they are all great.  However as usual on the podcast I aim more for the kind of conversation that one might have with the insiders in the bar after the formal conference.

This is also a special episode in being rather longer than normal – there is so much to be discussed as the sector is very active right now and the future is busy taking place with lots of seismic shifts happening beneath our feet.

We discuss a whole variety of topics as we kick the four tyres around the car – Lendinvest; penetrating the subsector’s opaque/confusing terminology; understanding the risks; and the future of the industry.

In editing the podcast (which means I listen to it many times) I progressed my own thoughts on how I see the risk in P2P and how to describe it simply.  So for the avoidance of doubt I put the risk thoughts in a “Postscript” section down below to make it obvious that these are my afterthoughts and language (Christian’s comments are in the podcast).  However I think that the terminology will be helpful in listening to the podcast so it’s not an “unrelated” mini essay

In the AltFi awards Lendinvest was ranked as the best UK fintech-real estate platform (which has done over £166m of deals to date). Recently I heard a leading Fintech analyst describe them as the best dark horse bet for London’s first major fintech IPO. They have grown organically from being a “non-digital” real estate lending business to the world’s largest real estate platform. And all of this without raising any VC money.

Since 2008 they have returned (in one incarnation or another – more on that in the show) over 6% to investors via secured short-term bridging loans (1mt-1yr) with LTV’s (loan-to-value ratios) of around 60% and no capital losses. More recently they have added a 1-3yr buy-to-let mortgage product.

Lendinvest also have a (relatively?) unique twist to their business model in that their (financially separate) fund management company Montello pre-funds/underwrites the deals they list on their platform.  In other words they put their money where their mouth is – if no investor buys that asset Lendinvest’s sister company is left holding it “themselves”.

For the borrower this means there is no uncertainty as to whether a loan will be funded (whereas on a typical platform they have to wait to see if it gets funded). For the lender its a whole extra dimension of confidence above and beyond “we rate this X” – rather it’s “our sister company has already bought this asset – that’s how much confidence we have in it”.

A recent bank line application led to the bank’s Head of Credit saying that Lendinvest’s credit quality procedures (that the bank audited) were better than the bank’s