pavel kohout, symfonie capital, llc - finance-edu.cz · p2p and crowdfundng – the revolution in...

P2P and Crowdfundng – the Revolution in Finance

Pavel Kohout, Symfonie Capital, LLC

London: 16 High Holborn, London WC1V 6BX l Prague: Klimentska 1216 / 46, 110 00

T: +44 20 8616 7311 F: +44 20 8616 7499 T: +420 724 260 952 F: +420 222 191 200

This publication has been prepared by Symfonie Capital, LLC (Symfonie) for information purposes only. It is not an offer or solicitation

for the purchase or sale of any financial instrument. The publication and its contents are subject to changes. The timing and substance

of any changes are at the sole and absolute discretion of Symfonie. Symfonie bears any obligation nor makes any commitment to inform

any person of changes made. Investors should not rely on this document in the course of making any investment decisions and neither

Symfonie Capital bear no responsibility for the decision of any person to rely on this document in whole or in part. Reasonable care has

been taken to ensure that the information contained herein is not untrue or misleading, but no representation is made as to its accuracy

or completeness. This document is confidential and proprietary to Symfonie. Transmission or publication of this document without the

express prior consent of Symfonie is strictly prohibited. Symfonie Capital reserves all legal rights in connection with the publication of

this document. © Symfonie Capital, 2013.

The Opportunity in P2P Finance & Crowdfunding

• Central and Eastern Europe is a market of 92

mn people

• EUR 877 bn in GDP

• Approximately EUR 50 bn in consumer debt

• About EUR 600 bn in commercial debt

• About EUR 6 trillion invested in mutual funds up

by about 200 bn last year

• About EUR 3 bn per year goes into venture

capital funds, about 50% is early stage

• Debt/GDP in Central and Eastern Europe is

about 50% of debt/GDP in Western Europe.

• GDP growth is generally higher than in Western

Europe while unemployment is generally lower

Private and conditional. Unauthorised distribution strictly prohibited. ©2013 Symfonie Capital LLC. Source: Symfonie Capital, European Central Bank, Lipper analytics.

Private and conditional. Unauthorised distribution strictly prohibited. ©2013 Symfonie Capital LLC 3 3

Peer to Peer Lending Concept

• Evaluates borrowers and assigns a risk

score

• Approves or rejects borrowers

• Verifies borrower data

• Posts borrower demand to website

• Matches lenders and borrowers

• Payment processing and loan servicing

Peer to peer lending uses internet technology to create a marketplace of

borrowers and lenders. But the P2P platform must have deep understanding

of the credit process.

• Lenders earn higher rates

of interest than they could

earn on bank deposits.

• Lenders can diversify

across many borrowers.

• The concept works for

consumer loans and

business loans.

• Borrowers save money

by borrowing at rates

less than what they

would pay to banks and

finance companies.

Lenders /Investors P2P Internet Service Borrowers

Private and conditional. Unauthorised distribution strictly prohibited. ©2013 Symfonie Capital LLC 4 4

Intermediation Contractual Structure

• Intermediation contract with

borrower and lender

• Loan servicing contract with

lenders

• Power of attorney to restructure

loans under certain conditions

• Take-over of loans in default for

more than certain period of

time

• Processing payments among

lenders and borrowers

• Implementation of legal loan

recovery process

• Contract on intermediation

signed with P2P provider

• Loan servicing agreement with

P2P service provider

• Structured notes with terms

passing through interest and

credit risk of the underlying

loan

• Intermediation contract with

P2P provider

• Loan agreement.

Lenders /Investors P2P Internet Service Borrowers

Designing the right contractual structure is critical to success for a P2P lending

platform.

Equity Crowd Funding Models

Marketplace and matching

(Angellist, Gust, Matchboard)

Brokerage / Intermediation

(Seedrs, Crowdcube, Equitynet)

Managed investing

(Symfonie and other angel funds)

Banking and Regulation Regimes

• Social funding, rewards, sales can fall within payments processing directive. Most of these sites use licensed credit card companies to process the transactions.

• Lending sites – in some countries only banks can be in business as lenders, so P2P companies, in other countries (e.g. UK, Poland, Czech, Slovakia any company can be in the lending business. In the US lending sites face banking regulations as well as securities regulations. Nowhere in Europe is P2P investing classified in securities regimes. It usually is sale and purchase of receivables or is payment processing, depending on contractual structure.

• Equity sites – usually regulations apply to sale of private securities. The US and UK have specifically allowed crowdfunding for small companies and startups.

• Every site must determine a business model

that fits into the legal and regulatory scheme in

the country where it is domicled.

• The internet breaks down national borders,

since any citizen of any country can

The Road Ahead

• The industry is vulnerable to changes in regulation

• P2P lending continues to move into the main stream for borrower and investors

• Crowd equity funding is untested – we don’t know what returns (%) investors will receive on average

• For investors will “Diversify by making many small sized investments” translate into “make the same small mistake lots of times”?

• Startups fail far more often than they succeed. Will crowdfunded startup be more successful?

• At some point many investors will lose a lot of money due to some fraud or poor corporate governance. How will the industry and regulators respond and how will investor behavior change?

•

Symfonie P2P and Crowdfunding Approach

• SymCredit – P2P lending platform founded by Symfonie to make P2P loans

starting in Czech Republic and Poland.

• SymVest – allows investors to co-invest with the Symfonie Angel found in startup

and early stage companies. Most crowd funding models are brokerage models.

SymVest is an investment management model, which should give investors

greater confidence in the investments they make.

Appendix

London: 16 High Holborn, London WC1V 6BX l Prague: Klimentska 1216 / 46, 110 00

T: +44 20 8616 7311 F: +44 20 8616 7499 T: +420 724 260 952 F: +420 222 191 200

This publication has been prepared by Symfonie Capital, LLC (Symfonie) for information purposes only. It is not an offer or solicitation

for the purchase or sale of any financial instrument. The publication and its contents are subject to changes. The timing and substance

of any changes are at the sole and absolute discretion of Symfonie. Symfonie bears any obligation nor makes any commitment to inform

any person of changes made. Investors should not rely on this document in the course of making any investment decisions and neither

Symfonie Capital bear no responsibility for the decision of any person to rely on this document in whole or in part. Reasonable care has

been taken to ensure that the information contained herein is not untrue or misleading, but no representation is made as to its accuracy

or completeness. This document is confidential and proprietary to Symfonie. Transmission or publication of this document without the

express prior consent of Symfonie is strictly prohibited. Symfonie Capital reserves all legal rights in connection with the publication of

this document. © Symfonie Capital, 2013.

10

Peer to Peer Lending Around the World

LendingClub

Prosper

Circleback

FairPlace

Cumplo

Prestadero

Zopa

FundingCircle

RateSetter

Smava

Auxmoney

Kokos

Isepankur

Lubbus

Comunitae

Babyloan

Friendsclear

ZltyMelon

Country Name of website

North & South America Europe Asia


CreditEase

Ppdai

Aqush

Maneo

Zopa

DhanaX


More than 35 providers around the world, more than $3bn in loans annually, growing at least 50%

per year.

Source: Symfonie research

11

Crowdfunding Around the World

Equitynet

CircleUp

Circleback

Starupvalley

Earlyshares

Rockthepost

Seedrs

Crowdcube

Banktothefuture

Companisto

Innovestment

Gambitious

Symbid

Invesdor

Fundedbyme


North & South America Europe


More than $1 billion in project financing. Continual emergence of new sites.

Source: Symfonie research

Asia


Seedrs

Wujudkan

Perdumak

Togatherasia

Relatively Low Private Debt Stock

Private Sector Debt / GDP

0

50

100

150

200

250

300

350

LU IE PT

BE

DK

SE N

LES

MT

UK FI

EU FR A

THU

EE IT G

RDE S

LLV C

Z PL

SK LT

EU Countries

De

bt

/ G

DP

(%

)

Source: EU statistics database, Symfonie Capital estimates.

Private and conditional. Unauthorised distribution strictly prohibited. ©2013 Symfonie Capital LLC

Lending to Polish SME Sector - EUR 40 bn

Source: National Bank of Poland and Symfonie Capital estimates. PLN translated into EUR at constant rates.

Private and conditional. Unauthorised distribution strictly prohibited. ©2013 Symfonie Capital LLC

39.337.9

30.230.3

-

10.0

20.0

30.0

40.0

2009 2010 2011 2012

EU

R B

n

Private and conditional. Unauthorised distribution strictly prohibited. ©2013 Symfonie Capital LLC 14

Interest Rates Provide Opportunity for P2P

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009 2010 2011 2012

Ra

tes (

%)

Consumer Loan Rates Deposit Rates

r

• Czech bank rates on consumer loans are about 14% while deposit rates are less

than 2%.

Source: Czech National Bank, Symfonie Capital estimates.


Interest Rates Provide Opportunity for P2P

• Polish deposit rates are less than 5% while base consumer lending rates

are more than 15%

Source: National Bank of Poland, Symfonie Capital estimates.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2009 2010 2011 2012

Rate

s (

%)

Consumer Loan Rates Deposit Rates Consumer RSPN (%)


Czech Savings and Investment Base

Source: Czech National Bank, Symfonie Capital research and estimates. CZK translated into EUR at constnat rates.

48 5361

68 71 75 78 80

3232

35

3435

3537

39

-

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012

EU

R B

n

Bank Deposits Securities & Mutual Funds


Polish Savings and Investment

Source: National Bank of Poland, Symfonie Capital research and estimates. PLN translated into EUR at constant rates.

92.3100.6

113.7122.9

24.8

28.6

27.4

35.3

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

2009 2010 2011 2012

EU

R B

n

Bank Deposits Mutual Funds

Contacts

Symfonie Capital

Michael Sonenshine

Tel: (London) +44 20 8616 7311 (Prague) + 420 222 191 008

[email protected]

Pavel Kohout

[email protected]

mailto:[email protected]

mailto:[email protected]


Disclaimer

• This document has been prepared by Symfonie Capital Investment Management LLC (“Symfonie Capital”) for persons reasonably believed by Symfonie Capital to be persons of the categories to whom Symfonie Capital are permitted to communicate financial promotions. This document does not constitute or form part of any offer or invitation to sell, or the solicitation of an offer to subscribe or purchase any investment. Symfonie Capital believes that the information it provides is accurate as at the date of publication, but no warranty of its accuracy or completeness is given and no liability in respect of errors or omissions is accepted by Symfonie Capital or any partner or employee of Symfonie Capital. Past performance is not necessarily a guide to future performance.

• This presentation is for illustration and discussion purposes only and is not intended to be, neither should it be construed or used as, financial, legal, tax or investment advice nor an offer to sell, nor a solicitation of any offer to buy, an interest in any of the funds managed by Symfonie Capital (the “Funds”). None of the Funds have shares registered under the U.S. Securities Act of 1933, as amended.

• This presentation is as of the date indicated and subject to change without notice.

• Any indications of interest from prospective investors in response to this material involves no obligation or commitment of any kind. Subscriptions can be made only on the basis of a Confidential Offering Memorandum to qualified investors. The investment objectives and methods summarized in this document represent our current focus and intentions.

• There is no assurance that Symfonie Capital or the Company will achieve its objectives. Investors may lose money upto the full value of their investments. No representation is made that the Company will achieve its objectives or that any investor will or is likely to achieve results comparable to any that may be shown. There can be no assurance that any investor will make any profit at all or will be able to avoid incurring substantial losses. Past performance is no guarantee of future results.

• This presentation does not take into account the particular investment objectives or financial circumstances of any specific person who may receive it. Before making any investment, you should thoroughly review the the Company’s Confidential Offering Memorandum with your financial and tax advisor to determine whether an investment in the Company is suitable for you in light of your financial situation.

• This presentation is subject to revision and updating. Certain information has been provided by third-party sources and, although believed to be reliable, it has not been independently verified and its accuracy or completeness cannot be guaranteed. This presentation is confidential, is intended only for the person to whom it has been delivered and under no circumstance may a copy be shown, copied, transmitted, or otherwise given to any person other than the authorized recipient. Symfonie Capital is solely responsible for the content herein.

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