Some months ago I published an interview with Kris Koik, Founder and CEO of Flender. The platform just launched some months ago und we only saw slightly more then 10 loans on the public marketplace until now. Public marketplace? Yes there is a private market place as well, confused? I’ll try to explain:
How flender works
Flender has a special feature, which comes from the basic idea, which wants to offer a platform to friends. This is where the name Flender, has its origin. It is composed of “friend” and “lender”. The idea behind is that if someone needs money (no distinction between private or sme loans), the borrower has the possibility to launch a private borrowing project firstly, which can only be seen on invitation. Should the loan not be completely funded by friends and relatives, the borrower can still decide if he wants to make the project available to the public. This has not happened to consumer loans yet and I don’t know how many there have been in total. I question it generally if this works with these kind of loans. If I am in need of money, then I would ask my best friends directly, and would not go via a marketplace (although the advantage would be that there is a contract in place). I can very well be wrong about that and there is demand for such a service. Would not be the first time to be wrong for me. 2011 I did not believe that tablets had any chance in the market… look at the development now.
I still think the idea of flender is great, but I see it applicable more in the area of sme loans. If a friend would ask me for a loan for his business, then I would like to have it done through a platform, where the rules are clear and binding. For my friend it would have the advantage that he could ask several people for funds and can share his presentation with them. In most cases the friend funding would not be enough, and such projects could still be added to the public marketplace. In my opinion this is a huge advantage for us investors, a psychologial one. The borrower has already got funds from his personal network and should therefor be more motivated to pay in time. Who wants to deal with angry friends who did not get their money? If I invest in such a project I strongly believe the repayment moral is higher, I see that as additional, but of course intangible, security. As the borrower pays a monthly installment, none of the lenders can be preferred. I know, this is all theory, but I believe this model can function. Speaking for myself I can say that I would have a much better feeling for a project where friends of the borrower already have invested. Of course this is no guarantee, but I see it supportive. You can’t see if any friends are involved, but you can always ask 😉
Until now I have funded 4 projects
Four projects received funding from me, but only one has so far a duration of more then one month. This project has already made 2 payments on time. The other three projects are due to redeem in September. Then I will see if they pay on time.
What else is important?
At the moment the funding period is pretty long (and there is no interest for this period), this is due to the lack of investors (help flender grow and register now). I hope this will get better during the next weeks. At the moment there is only one project open for funding, but you can always ask the support if there are more projects (in private mode). You’ll get then a link to an additional project in which you can invest. One criteria with the credit check is by the way that the borrower must prove that they can pay the first three installements from their liquidity. This is nice, although it can change during the loan.
Wishlist to flender
I wish myself a secondary market 😉 This would assure me that I could pull the plug in a case of emergency when in need of the money. Before this would be realised I would be glad to get a better overview of my logged in area. A portfolio view would be nice. The funding period of the loans should become shorter, or if not, I would like to see some sort of cashback for the waiting period. The single most important factor to me is though that the payments will be on time and that the credit check is performed rigorously (if this is not done properly the platform is soon out of business, but the guys in charge know that. Linked Finance already proved that it is possible to operate in the Irish market with low default rates. Irish borrowers are amongst the best payers, what led to that Ireland was pretty quick through with the European debt crisis, although it was one of the PIIGS countries. Last but not least I wish that the support stays as quick as it is. When founders are so keen to get the job done, this sends a strong signal towards the investor’s community. Please keep up the great work. Click me to register with Flender.
I will report back in approximately one month to give you an update if all investments go as planned. If there are questions, please post them.