How to invest with October (ex Lendix) to make 7% profit with SME
LENDIX IS AN INNOVATIVE WAY TO INVEST IN SME AND TO OBTAIN MEDIUM/HIGH RETURNS FROM YOUR SAVINGS. FINALLY, PRIVATE CITIZENS TOO CAN FINANCE BUSINESSES!
LENDIX ANALYSES AND ACCEPTS AN ENTREPRENEURIAL PROJECT, ESTABLISHES THE RISK AND THE INTEREST RATE, AND THEN IT MAKES IT AVAILABLE TO INVESTORS. FOR EACH PROJECT, THE MINIMUM INVESTMENT IS 20€, THE MAXIMUM ONE IS 2000€. IT IS AN INNOVATIVE P2P LENDING FOR BUSINESSES, SO LET’S TRY TO OBTAIN AN INDEPENDENT OPINION ABOUT IT.
Rime Arodaky is young and very pretty, she has just obtained 174,000€ for her business. In order to understand how Lendix works, we’ll talk briefly about her.
Rime has a delightful blog where she showcases her creations; her business has her own name. She designs extraordinary bridal dresses and she wants to enter the old market of bridal wear with an innovative offer. It isn’t easy, but she has an iron will and she swears she know what she’s doing. She already has a considerable experience in the sector and by reading what she writes and by visiting her blog, you’ll really want to invest in such a brilliant idea.
So Rime finds credit, Lendix acts as an intermediary and whoever has means to invest and adopt Rime’s idea comes into play with 7,75% returns. If everything goes well, everyone wins.
Lendix is a credit service available for businesses and private citizens, where both parties can benefit. For the businesses, the benefit is finding sustainable credit outside the banking system, while for the investing users, the main attraction is high interest up to 9,9%. Similar products are Smartika, LendingClub, FundingCircle, Borsa del Credito, Soisy and Prestiamoci. Also Mintos has some European business loans on offer up to 15% yield.
The website is extremely well done and pleasing to navigate; many statistical data are available, but to get in the detail of the most interesting numbers I needed to have an intense exchange of emails with Lendix.
When I test these new fintech tools, I always take care of making sure to know the liquidity of the system. Before investing, I always try to learn what would happen to my capital if I needed to opt out of the investment before its expiry date. I thus searched information about a possible secondary market on which to sell my financed projects; unfortunately, Lendix doesn’t offer this opportunity yet. This means that if, for example, you commit to finance a project that returns the capital within 24 months, then you will choose to use a capital that you won’t need for at least 2 years.
The variety of the projects is increasing greatly and, unlike other platforms of Venture Capital and of Crowdfunding, these are all understandable and detailed. We find chemical businesses, restaurants, bakeries, textile products, innovative brushes, inventions and mature startups – you really want to trust in many of these and the presentations are appealing.
The message on the homepage that warns us about the risk is clear:
“Warning! Lending money to businesses involves a risk of capital and it requires locking up your savings. Don’t borrow sums of money beyond your ability to repay.”
The risk to lose capital exists, because it is clear that, despite the very good intentions and the rigorous selection that Lendix does on the posted businesses, the likelihood that some of them won’t repay does exist. The average default rate once gone through the amount of Lendix’s projects with a B rating is 0.8%, while it goes up to 1.41% for C ratings. They are reasonable numbers, but it is always sensible not to focus the capital on few projects, but rather distributing it. The statistics and the data available on the website are updated monthly.
Lendix has French origins, it has paid out more than 150 million loans, so it’s not amongst the biggest companies in its sector – as for now, it is surpassed by Funding Circle, but not from Smartika.
Users’ opinions about Lendix are almost all in French and the majority of the projects are French. For now, Lendix has an excellent rating on TrustPilot.
In my opinion, Lendix is really promising, but for now the returns aren’t high enough to justify risks that in some cases aren’t really estimable with certainty. The projects with shorter length are more appealing and it is reasonable to invest only in a small amount on C ratings.
I also find it amazing to be able to get passionate about an entrepreneurial idea and to strongly finance it, while at the same time knowing to be doing well for your own country by injecting resources right where they are needed, in the real economy.
Lendix offers a 20€ bonus for those who wish to register from this link when investing at least 500€. There is still, then, a considerable barrier for those who wanted to just try it out, precisely because you can’t quickly opt out of the investment.
Whoever wanted to make sure they can sell and opt out of the investment within a reasonable amount of time, can get more information about Bondora (in 15 languages, loans, high returns), or about Mintos and way less quickly with Fixura (mortgages and loans, in English). They are still all tools to invest long-term – we’ll go to the stock exchange to speculate!
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NOTE: The indications contained in this analysis are to be considered mere information tools and do not intend to constitute in any way financial advice, solicitation to the public savings, suggest or promote any form of investment.