Sunday, 8 May 2016

Moolahsense - growth of fintech companies



I have been tracking the fintech scene in P2P lending since early last year with a view to invest as an angel investor. 

You can find an interesting article here about P2P lending with a more detailed "Money of the Future" report here

Examples of P2P lending companies in Singapore include:
  1. Capital Match
  2. Funding Societies 
  3. Moolahsense
  4. Fundedhere (for accredited investors only)

  

I think Moolahsense became more "legit" and the "de-facto" leader this year after it reported a tie up with DBS Bank. The fact that a listed company has raised funds through the platform also helped boost its profile. I enclosed the news announcement below:


There has been a lot of brickbat about Epicentre "borrowing" money at 13.5% through crowdfunding but if you bother to look through the actual effective interest rate paid, it is around 7.5% (based on my recollection and yes, I am one of the lenders). You weigh that against the administrative hassle and the time you need to deal with banks and the opportunities are lost. In fact, banks are probably known as people who will lend you an umbrella when you don't need one. 

Why Crowdfunding?

Crowdfunding meets an unique niche within the banking ecosystem with great potential to disrupt the financial ecosystem. This threat is real and it can be disruptive. We already see it happening in United States, Europe and China.

For the entrepreneurs, borrowing from the crowd is probably better than maxing out the credit cards. The interest is definitely more palatable than borrowing from "loansharks", legal or otherwise. These are firms which are too small for our local banks who find them a hassle. 

Through P2P lending, I hope to help some of these entrepreneurs successful.  

For the investors, crowdfunding helps lower the risk as you only lend out small amount of money in return for a higher yield. The yield has to commensurate the risk you take. What investors need is a platform who is reliable in making due diligence on the companies and entrepreneurs who are not crooks. 

It is also important P2P platform will not "run away" with investors money as what happened in China recently. 

My Moolah account

Being the ever "high risk high return" investor who is open to new ideas, I tried out the Moolahsense account this year with a $20,000 initial funding. Have yet to make any "interest" yet as I just started recently. I will blog about my "P2P journey" here over time. If there is a default, I will also let you know. Lol. 


The nominal rate is around 15.05% but the effective is only 8-10%. I will roll over the P+I into new projects and see if the money will compound over time. 

You can watch me from the side and see my "experience" first hand but please don't participate if you have low risk tolerance and definitely don't treat it as an endorsement from me either. It's more for me to share my journey with you. 

What to consider if I want to try out P2P lending?

Well these are the things to consider if i want to try out peer lending :

• it's money that I can afford to lose if any of the companies go bust. Keep to a cap on each loan and spread to many "loans" to get a diversification effect

• invest only in industries which you like or are comfortable with  

• invest in lenders whom you believe will repay you. Most of the lenders are required to provide personal guarantee to the loans they borrow from you. The more guarantors there are, the more "assurance" you have. While lenders who defaulted may not go to jail, it can still be a painful thing for most. 

Happy moolahing. ^_^
Related Posts Plugin for WordPress, Blogger...

Google Analytics