Since March 2020, Grupeer has suspended all payments to investors. If you still don’t know what happened with Grupeer, make sure you read all about it on the Grupeer Armada website.
Grupeer Platform Quick Review
Last Update (01.01.2020)
In August 2019 I realized that I’m investing for 12 months on Grupeer. Being one of my Top 10 P2P CrowdInvesting platforms, I felt this to be the right moment to share my experience and explain why investing in Grupeer offers a consistent source of fixed returns to my portfolio.
Grupeer is one of the most stable players in the P2P lending business ecosystem. You can invest in real estate projects and business loans and earn around 13% per year in interest. The minimum investment required is €10 and all loans in Grupeer have a buyback guarantee in case of borrower’s payments is delayed for more than 60 days (if the lender can’t pay, the loan originator company repurchases the debt).
Available to the public since February 2017, Grupeer works on a business model similar to Mintos: they are a marketplace where loan originators offer their pre-funded loans to investors like me. By doing this, they have more money available to fund new loans so they can leverage their businesses. Making a checkbox on my investment principles, Grupeer only fails one: early exit. I know they are working to have a secondary market available, but until then it is important you know that you cannot cancel or sell your investments once you commit to them.
Nothing wrong with that if you as an investor follow a strategy that does not require quick liquidity on your investment assets. In my particular case, Grupeer is the only platform present on my Top choices that do not provide early exit and even so is among my favorites. It is a great way to invest your money in medium-term loans in a totally automated manner. It could be an ideal starting point for a new P2P lending investor, but it’s all about what works for you!
Creating a Grupeer investor account is very straight forward and it’s very easy to invest. The website is very simple and easy to navigate, invest and manage your portfolio. The auto-invest tool makes investing at Grupeer truly passive.
During the first year, Grupeer provided me with €598.83 in interest for a total investment of €4.043,72. A return of ~13% in 12 months.
You can read my additional observations about Grupeer after the account update below.
Grupeer Account Update
Investment Start Date: August 2018
Total Deposits: 4.545,35€ (Dec 2019)
Asset Value: 5.364,06€ (Dec 2019)
|Analysis Topic||Personal Take|
|Real Estate | Business|
|No (under development)|
|Yes, you choose|
|3 to 36 months|
|Since March 2020, Grupeer has suspended all payments to investors. If you still don’t know what happened with Grupeer, make sure you read all about it on the Grupeer Armada website.|
My Grupeer Account
Grupeer Monthly Income
Grupeer Asset Value Graph
The first question to answer with any crowdlending player is who they are and where they came from. Grupeer is a Latvian registered company founded in October 2016 by Alla Kisika and her brother Andreja Kisiks, but only launched their peer to peer lending operations in February 2017. Both come from the construction industry, granting specific industry knowledge on the core investment opportunities provided by Grupeer: development projects and real estate loans.
The Grupeer founders experienced a serious project failured related with the construction and commission of a thermal power plant. During the financial planning of the project, only a small investment amount was missing, around 3 million euros. The founders found one investor interested in investing €500K and other €1.5M, however, these particular investors were not friendly with each other and the project colapsed because of this personal mismatch. The founders conclusion was obvious: human relationships shouldn’t influence the successful implementation of viable projects. They realized that a platform such as Grupeer is now could provide answer to this problem. That was the starting point for Grupeer.Description based on interview to Alla Kisika. Source: P2P-Banking
Grupeer Core Team: Andrejs, Alla, and Vladislavs
As described above, Grupeer was founded by two brothers: Andrejs and Alla. Alla studied finances in Latvia and interior design, marketing and international project management in Australia. She’s been interviewed several times by bloggers and there is plenty of information available for those that want to learn more.
Andrejs is a professional developer with long international experience in construction, residential real estate projects development, and operational commissioning of complex technical projects. He left the CEO position to his sister and remains as a board member. He presents a more discrete online profile.
During the P2P Conference, I had the opportunity to meet with Vladislav Filimonov that currently is executive vice president. He presents international experience in giants such as Mastercard and PayPal. A highly motivated professional that was very open about the company plans for the future.
Update December 2019: Vladislav Filimonov left the COO position in October 2019. I’m looking for clarification on the reasons for departure.
Grupeer Financial Track Record
On August 2019, Grupeer offered loan deals from 14 countries and 15 loan originators. The platform counted with 13,028 investors and funded loans worth over €50,868,819.
Grupeer is a self-financed company. The CEO was quite open in multiple interviews to share that until the moment Grupeer didn’t manage to generate profit, but they expect to reach break-even during 2020.
Grupeer follows a highly conservative approach to loan originators and states to present a rigid scoring that eliminates nearly 75% of the loan originators interested to place projects on Grupeer. This is the type of approach I like on a P2P platform and I will discuss this point further below.
Grupeer is completely free of charges, including service fees and depositing or withdrawing fees.
Move to Ireland
Grupeer has relocated to Ireland this year. The objective of such a decision is to be able to work under a more well-known jurisdiction and have a broader international capacity to operate. But I imagine that also financially could make sense.
Grupeer Loan Originators
Grupeer presents on its website information on loan originators that currently work with them.
As you can see on the image above, only basic information is provided, such as country, loan type, the term of loans, skin in the game, and average returns. Financial statements are not available, but the Grupeer team plans to add them to the website in the future.
Grupeer Loan Originators Skin in the Game
As you can see on the image above, all loan originators except one have 5% of skin in the game of every loan available on Grupeer.
Grupeer Direct Control over Loan Originators
Grupeer started to work early with real estate companies and realized that in order to better control the use of funds and projects execution, they would need to expand the control and oversight over them.
One example of how Grupeer operates in this regard is First Primo Invest. Grupeer decided to become a shareholder in the company to gain not just shareholder control, but the capacity to decide on the use of funds, as well as oversight in all financial operations.
Grupeer also promotes internal audits on loan originators and projects in every single country where their partners operate, with weekly reports on project status.
Another aspect that every investor needs to be aware when investing is that Grupeer divides the total amount of a loan originator funding project into smaller amounts that investors see on the platform. That helps Grupeer to keep project developers motivated to execute project on time and on budget.
Another strategy that Grupeer follows is to aggregate multiple personal loans into a single business loan. For example, let’s see how Finsputnik operates since it is a Grupeer vehicle. Imagine the following scenario: Finsputnik invests in 150 loans to individual borrowers in Russia, but cannot guarantee that all of them will pay the money they owe back. Finsputnik joins these loans together into a business loan presented to Grupeer investors, but only after assuring that the business loan financial model is profitable, even though their is a high default rate of individual loans.
These approaches show how Grupeer is building a long-term sustainable plan to operate in the market. Instead of choosing to grow very fast by on-boarding a big number of loan originators, and then see what works or not, they decided to evolve at a slower pace, but controlling the entire loan lifecycle to ensure projects execution and funds security.
Grupeer Loan Default Levels
So far, none of the loans listed on Grupeer has defaulted, achieving an impressive 0% default ratio since the launching date in February 2017.
Behind this success is for sure the approach described above, but also the loan originator due diligence process followed by Grupeer.
Grupeer Due Diligence
Grupeer Loan Originator Selection
Grupeer presented the following rules to select a loan originator for the platform:
- Loan collateral value and liquidity. The Grupeer financial auditing team evaluates the collateral market value, as well as assess the asset market liquidity if it can be sold quickly.
- Legal aspects and ownership over the collateral. The Grupeer legal team performs an analysis to check any possible juridical problems that may affect the liquidity or value of the collateral.
- Background check on the borrower. The Grupeer team checks the background of the borrower through different sources and always meet the borrower beforehand.
- Project financial, team competency and business plan analysis. The Grupeer team promotes meetings with the project teams to verify if the plans are realistic and evaluate how competent the project team is to execute the project. This also includes checking the financial background of the promoter and the analysis of the business plan to evaluate how realistic it is, how the borrower plans to repay the loan and if the financial plan for repayments will work.
In order to execute this due diligence steps, Grupeer counts with both in-house resources and external ones. One of the reasons Grupeer presents to work with externals is their interest in understanding the particular aspects of every single country that they work in.
Grupeer Buyback Guarantee
All loans listed on Grupeer offer buyback guarantee.
In the case a project defaults on the interest payments for a period over 60 days, the loan originator must buy back the loan and return the principal and accrued interests to investors. Grupeer offers, as an additional guarantee for some loans, collateral, like corporate assets or shares, real estate objects, cars, and personal guarantees, among others. The loan-to-value rates can vary significantly, from 20% to 70%.
The green symbol at the right means that the loan is covered by the Buyback guarantee. The orange symbol (umbrella) means that the loan is also secured by collateral (first three loans).
Grupeer Types of Loans
Grupeer offers three types of loans: business, real estate, and development loans. In all cases, the credit company remains the holder of the main debt claim, thus it is interested in following the payment schedule and repayment of the loan by the borrower.
For each loan offered on Grupeer, specific information is provided, including the purpose and amount of the loan, maturity date, type of payment schedule and availability of collateral.
Grupeer Development Projects
Grupeer development projects are usually quite big and present long maturity dates. As described above, Grupeer takes large loans and splits them into smaller chunks (e.g. €50,000) on the list. Take close attention to these, since both the duration and interest can vary, based on the project use of funds and financial execution timeline for the project. Development projects never seem to be amortized, which means whatever you invest in them, will be tied for the duration of the loan.
Grupeer currently offers projects from 14 countries: Spain, Russia, Belarus, Poland, Bulgaria, Latvia, Lituania, Norway, Estonia, Germany, Sweden, the Czech Republic, Nigeria, and the Philippines.
The projects offer interest rates from 10% to 13.5%. The loan terms range from 3 to 36 months and the minimum investment on each of them is 10€. All projects available come with a buyback guarantee. A reminder that Grupeer doesn’t have a secondary market where you could sell your investment before term, so consider that and your strategy regarding early exit.
Before investing, you can see the details of the project on the project/loan page (they are increasing the information and description available over time).
Grupeer Repayment Schedule
Investors are able to choose between different types of repayment. In practice, there are three options available:
- Amortized: As time goes on, more and more of each payment goes towards the principal and the borrower pays proportionately less in interest each month.
- Bullet: In this case the principal that is borrowed is paid back only at the end of the loan term. But you receive interest on the principal value each month.
- Balloon: This was added quite recently. In this case, there are monthly payments for an initial period, followed by the remainder of the balance (the balloon payment) in a specific date.
The main benefit of amortized loans is that your principal is returned to you every month. If your portfolio was €1,200 invested in 12-month loans, you’d get on average €100 of your principal paid back every month, plus interest. If you suddenly needed cash, there would be a natural source for it, without selling loans on the secondary market (not yet available).
Grupeer Worst Case Scenario
Let’s now consider the worst-case scenario, like the event of Grupeer’s or a loan originator’s bankruptcy.
What happens if Grupeer goes bankrupt? In this scenario, the investors can claim directly from the loan originators as the loan originators still have all liabilities towards investors that funded their projects. All claims are bound between the investor and the loan originator.
The bankruptcy of the loan originator. In this scenario, the claiming rights will belong to investors, not the Grupeer. However, the Grupeer team states that if this happens, all investors who have been affected by a failing loan originator will be represented as a group by lawyers appointed by Grupeer on the matter.
Grupeer assures that investors will get the opportunity to meet the lawyer, that will assume the role of point of contact until the problems are solved. The lawyers will communicate with the liquidator of the loan originator company and will ensure that the claimed rights of Grupeer investors are satisfied. Grupeer will be managing all issues connected to this process and will ensure investors’ interests are satisfied and handled in the best possible manner and invested amounts are returned in full.
Grupeer: How to Start
To start investing with Grupeer you need to set up an account, choose one of the available development projects/loans and the amount of money you would like to invest. It will take only a few minutes.
As Grupeer is focused on European projects all the investment accounts are in EUR currency. Only US nationals, China and sanctioned countries and entities by the European Union are not able to open a Grupeer account.
Here is a step by step instruction:
- Login or Register an investor account;
- Upload documents for personal verification process;
- Top-up your account with funds;
- Choose the project/loans to invest;
- As soon as you confirm your investment during the next 6 months you will get 1.25% on cashback.
In order to guarantee security, transparency, and reliability Grupeer only accepts payments directly to the bank account. The name you have used for registration in Grupeer must be identical to the name at your associated bank account.
My experience joining Grupeer
It took me less than 10 minutes to register on the website, upload a copy of my national card ID and a utility bill. Then I had to wait a few hours for my profile to be verified.
Grupeer account deposit and withdrawal
It’s only possible to fund your account via SEPA transfer. Transferwise was supported until August 2019, but due to anti-money laundering compliance rules, it was discontinued.
I use my N26 account, and the funds are available to invest 1 to 2 days later. Similarly, withdrawals usually appear on my account after two business days.
Grupeer’s User Experience
I must confess that I like the basic user experience provided by Grupeer. It’s easy to use thanks to the limited set of features available, with easy navigation and readability.
To share how this reflects into a limitation, you are not able to sort the available loans by clicking on a column (for example, to sort them by decreasing interest rate). You need to navigate the loans in a manner not ideal.
The statistics are very limited but work for me. You can export the account statement as an Excel file. But is rather difficult to truly assess diversification within the platform.
In order to automate as much as possible my investments in Grupeer, I would take full advantage of the auto-invest feature.
My Grupeer auto-invest program is the one presented in the image above:
- Create a customize auto-invest strategy with a clear name to remind that this is a 1-year portfolio strategy;
- Choose all Types of Loans, without exclusion (5 available);
- Choose all Countries of origin, without exclusion (195 available);
- Choose all Loan Originators, without exclusion (29 available);
- Choose the Interest Rate interval with 12% as the lower end (up to 50% just to have an absurd top limit);
- Define the Term Interval for loan maturity between 0 and 12 months;
- Define Auto-invest Limit to a value above your objective, to ensure reinvestment of interest;
- Limit the Maximum Amount per Loan to 100€;
- Accept all Repayment Type options (3 available);
- Establish the Deadline for the strategy to be valid until the end of 2020;
- And finally, confirm that only investments available in EUROS receive my money (to avoid currency exposure).
This approach will kickoff a source of passive returns over time. All loans available through Grupeer offer Buyback Guarantee. But keep in mind that Grupeer does not have a secondary market for an early exit. This limits the liquidity of your investments in this particular P2P lending platform.
Grupeer: Cashback & Bonus
I remind that during the first 6 months of investments in Grupeer you can get 1.25% from your investment amounts in immediate cashback on your account to invest in other projects.
Grupeer: Platform Future Steps
Grupeer platform technological developement is entirely self-developed without any outsourcing services being employed. The Grupeer team agrees that the platform is quite basic, and several improvements are in the platform development roadmap.
Grupeer Loan Originator Ratings
Grupeer wants to increase loan originators transparency through the publication of financial statements of both Grupeer and loan originators. This is expected to be delivered by the end of the third quarter of 2019.
Grupeer Reporting Interface Improvements
Grupeer also shared their commitment towards solving the issues with deposit and withdrawal processing time by the end of 2019. By the same date, Grupeer intends to improve the reporting interface showing investment statistics, general portfolio overview, account statements and all investments. Additional features such as scheduled payments information are expected to be released in the first quarter of 2020.
Grupeer Secondary Market
A secondary market is not available at the moment. Grupeer seems to be working on it since it is one of the major demands of investors. They expect the feature to be ready for market introduction by the end of the first quarter of 2020.
On the meantime, the investor must be aware that their investments will be locked in until the loans have reached the maturity date, so make sure you won’t need the money before investing with Grupeer.
Grupeer Plans for Later 2020: Credit Card Deposits and mobile APP
The next stage of improvements is scheduled for later in 2020. These include deposits via credit card and a mobile application.
Grupeer Stability Fund
One of the most interesting projects is what they call the Grupeer Stability Fund. It seems it will give the option to any investor to buy a square meter in a real estate property, becoming a shareowner of a building that it is already generating income. This model is similar to the ones presented by ReInvest24 or the group-buying option available in Bulkestate.
Grupeer New Platform Aggregator
Grupeer is evaluating the possibility of developing a platform aggregator, where investors will be able to diversify across different platforms via Grupeer, however, this project isn’t a priority now.
The idea with this aggregator is to transform Grupeer from a P2P platform to an investment platform. Grupeer wants to make available to investors more investment products. It also aspires to integrate several platforms into one. The ideal scenario would be that an investor could just press one button and invest in several platforms without the need of signing in to every single one and passing the verification steps again and again.
Grupeer Debit Card
Another aspect under discussion is the formalization of the legal and compliance steps towards offering a unified payment system. That would allow investors to use one debit card to invest in Grupeer but also use it for payments and daily expenses.
After one year of investing in Grupeer, the platform stands out as one of the most reliable and solid sources of passive income among P2P lending platforms on my portfolio. Even if past performance is not an indicator of the future, Grupeer management work, vision, and ambition allows me to plan to continue investing in the platform, as long as they keep their strategy.
Do you want to Invest?
Check among the P2P crowdlending opportunities available on Savings4Freedom, always taking into consideration that all information is entirely based on my personal experience.