Germany’s Smava raises $ 65 million to expand consumer loan portal – TechCrunch
While Google dominates the world when it comes to search, portals for those looking for products and services in specific niches continue to have a place in our online world. In one of the latest developments, Smava, a German start-up that has created a marketplace / portal for people to find and take out loans, has raised $ 65 million to expand its business across Europe.
The funding comes from Vitruvian, a UK-based private equity firm that had also funded Skyscanner (a vertical research giant in the travel industry, now owned by Ctrip) and announced last June it was closing its ‘a new fund of 2.4 billion euros, also with participation from the previous backer Runa Capital and others. To date, Smava has raised around $ 135 million, and while the startup does not disclose a valuation, sources say it is around $ 300 million with this round. Smava has been profitable for a year.
Smava originally started in 2007 as a peer-to-peer lending platform, where those who want to borrow money can appeal to those who want to lend it. Smava would provide big data analytics to assess the creditworthiness of both parties, bypassing banks and their high fees, long wait times and a more conservative credit rating.
Ironically, the startup then expanded to include banks in the range of loans it was offering, as it began to realize that this would be a much larger and ultimately cheaper source of funding than could possibly be the case. The P2P business, because the majority of its customers could be called âprimaryâ borrowers – with high credit scores – would therefore be eligible for cheaper bank loans.
âTraditional banks and lenders were much cheaper than private lenders ever could be because of the low refinancing costs,â said Alexander ArtopÃ©, founder and CEO of the company. âThis was the starting point for our growth. P2P is still part of the mix, but accounts for less than five percent of all loans, he added.
It turned out to be a huge boost to the running of the business. In 2012, Smava made 40 million euros in loans via its platform. This year, the figure will be 1.2 billion euros, including 3 billion euros over the life of the startup with around 300,000 customers.
(And while Smava doesn’t disclose any revenue, the company has about a four percent hold on its loans, which would mean around $ 48 million in revenue from those products.)
While Smava’s original product relied on big data analytics to analyze your financial history and online profile to create a credit score for you, today the company is expanding that to the other side of the world. market by matching your credit rating with a sorted list of loans that best match your profile.
There are a number of portals on the market today that bundle loan offers and other financial services, based on the idea that the aggregator generates affiliate income every time a user clicks on a product. and make a purchase. The difference with Smava, ArtopÃ© said, is that it applies more intelligence to the mix rather than just listing loans based on basic criteria.
Smava typically offers the average customer a selection of around 70 loan offers, from a larger selection of offers from 25 banks and other private lenders, with multiple interest rates and other costs added.
Smava claims that its algorithms result in greater efficiency in the process. On average, the waiting time for clients to obtain a loan can be reduced from 10 days to 10 minutes, and the savings compared to going directly to the bank amount to around â¬ 2,000. âWe provide a transparent overview of the market,â he said.
While it may seem against a bank’s interests to allow its loans to be listed alongside those of its competitors, the upside is that Smava helps funnel more people to their lending products from. a new channel, thereby attracting customers that banks might otherwise have. lack. Indeed, Smava says its approval rates increase by around 80-85%, compared to 50% when banks assess directly.
Now the idea will be to apply this loan model to more use cases.
One area where Smava will work more is partnering with e-commerce sites to enable loans for the purchase of larger items. One of these partnerships, which will begin this month, will be with eBay in Germany, where Smava will finance its automotive portal (by seizing the opportunity of one of its competitors, the massive offer aggregator Check24 ).
It was the combination of smart algorithms, working with banks, and connecting with clients with strong credit histories that attracted the funding.
âWe are delighted and delighted to partner with Smava and support a company that is playing a pivotal role in transforming the financial services industry in Germany,â said Jussi Wuoristo, partner at Vitruvian Partners, in a statement. âSmava has proven that its market model combined with continuous technological innovation dramatically improves the available alternatives and the experience for consumers. Smava brings strong added value to product suppliers by providing an attractive direct online channel to high quality preferred customers. The online penetration of personal loans continues to grow rapidly in Germany and smava is uniquely positioned to accelerate and take advantage of this trend.
Currently, Smava has limited itself to providing loans in Germany, and will continue to expand this as well as evaluate other countries.
âThe German consumer credit market is huge,â said ArtopÃ©. âOverall, the market we are looking at represents 174 billion euros in new loans each year, but only 10% of that market is online today. This means the best is yet to come, especially when you consider that other markets such as e-ticketing and food delivery, online penetration is more like 45-50%.