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Equity
This is an equity investment opportunity. Through equity crowdfunding you can invest in a start-up or small business and profit from growth in the value of the business.
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Koen The team 8
Koen The Rotterdam, NL

Lendahand - 2nd funding round!

Since raising €60K last time, Lendahand has grown rapidly. We create economic value while improving the lives of many. Become part of our success!

$446,750 INVESTED
100%
$446,728
Required
100%
Equity
Small_thumb_profile Lendahand - 2nd funding round!
INNER CIRCLE
The concept

Lendahand is a Netherlands-based online lending platform. But we’re not your average crowdfunding platform. We are the only platform that provides funds to small & medium enterprises (SMEs) in emerging economies. Think the Philippines, Ghana, Colombia, Mongolia, etc. Positive social impact with financial return.


After raising €60,000 from 48 investors last year, our platform has experienced exponential growth. Our continuously growing lender base (850+) has lent close to €3 million to circa 400 small businesses in developing countries, creating 700 jobs. More than half of that has been lent in just the last 6 months.


Lending to SMEs in developing countries leads to attractive financial returns, but above all it generates a huge social impact. In developed countries SMEs are the main drivers of economic growth and employment, but in less developed regions SMEs do not appear as often. This is not because the people there are less entrepreneurial or forward-thinking. It’s because there is a lack of financing needed to grow the business. Start-ups and micro-businesses have access to micro-finance and larger companies have access to bank loans, but SMEs find it hard to obtain funding and are therefore not yet the engines of growth and employment that these countries need. They are known as the ‘missing middle’.


Lendahand unlocks the potential of these (missing middle) SMEs. Via our platform crowdfunders can help SMEs grow while receiving a fair and attractive interest rate of 3-4%. This enables the SMEs to employ people within the community and contribute to social development.


You might be thinking, isn't lending to small businesses in developing countries risky? It certainly is. And that’s why we do things differently. We make use of local partners. Our local partners are solid financial institutions that, like Lendahand, feel it’s unfair that SMEs in their country do not have access to affordable financing. They are registered with their central bank and have extensive experience in lending to SMEs. They select and monitor them, visit them regularly (often monthly), and take appropriate action if needed. Also, they take on the full risk of non or late payments by the SMEs, as well as the foreign currency risk. It’s about local impact using local expertise, but on a global scale!


We are currently active in the Philippines, Ghana, and Colombia. Soon we will be active in Mongolia and Zambia. Lendahand’s online platform went live for the public in 2013 and almost €3 million has already been lent by 850 crowdfunders. More and more people find their way to our platform and regard us as a good – and do-good – alternative between saving and investing directly in SMEs.


Check it out yourself at our website!


Unique Selling Points

On our platform crowdfunders can lend to SMEs in emerging countries via a network of experienced local partners. We offer a unique risk/return profile that is in between saving and high-yield investing. At the same time lenders obtain social returns as their money directly leads to job creation. This is a unique proposition.


And the proposition works. Growth is exponential and so far we have had no problems raising capital in order to fund our operations. Lendahand has clearly passed the proof-of-concept in the Netherlands. We have built – and are building out – a loyal and enthusiastic lender base.


The management team is a mix of professionals with ample experience in investing, banking, marketing, and technology. The Lendahand team also consists of 2 rock-star juniors straight out of college. Each team member has a unique set of skills and altogether we cover all bases. But one thing we all have in common: we are ready to work hard to be disruptive in an area where it matters: poverty. We are passionate about reducing poverty and we're doing all we can to make this happen with Lendahand.


Lendahand has the right product, a proven track record, and the right skills and experience. It has the passion to do good, and do it differently.

1) First online lending platform for small businesses in developing countries
2) Proven concept over 2 years of business, 850 lenders, circa 400 SMEs funded with close to €3 million
3) Highly scalable model with new countries being added all the time
4) "Think global, act local" philosophy - loans secured by strong local partners
5) Combines positive social impact with sustainable financial return
6) Growing rapidly, large potential upside for investors (35% annual ROI according to conservative estimates)
7) Highly experienced team


Revenue model

The local partners borrow money against 7-8% per year (and on their turn lend it to promising SMEs). The crowdfunders are paid 3-4%. The difference is Lendahand’s gross margin. In 2015 the average margin has been 3.9%.


Achieved so far

1) Via our platform 850 crowdfunders have lent to circa 400 small & medium businesses in the Philippines, Ghana and Colombia. This led to the creation of 700 jobs

2) In 2014 €850,000 was lent via our platform, while this is already close to €2 million for this year. In 2015 it took 6 days for a loan with an average size to get fully funded. Compare this with 55 days in 2013 (the year the platform went live for public)

3) Accrued revenues exceed €50,000 year to date.

4) The media has picked us up as we have been mentioned and profiled on, amongst others: BNR, Financieel Dagblad, De Financiële Telegraaf, Bloomberg TV, OneWorld, Libelle, and Consumentengids

5) We have secured investment from a number of angel investors including successful entrepreneurs, financial professionals and social investors

6) The subsidy: Lendahand was the only for-profit business that was granted the SBOS (subsidy for citizenship and development aid), all the others were non-profits


Required investment and purpose

Lendahand is seeking €350,000 in funding in order to capitalize on its recent exponential growth.


The proceeds will be used as follows:

  • Ongoing operations: ~€150,000
  • Securing AFM license: ~€100,000 (most of this is needed as a reserve required by the regulator)
  • First steps of international roll-out: ~€50,000
  • Hiring full-time Chief Digital Officer: : ~€50,000


For the investor

The investor will be an important part of Lendahand’s growth. Our revenues are growing but we are not yet profitable and still depend on outside capital. We need the investment to scale up and continue supporting developing countries in a sustainable way.


Investing in a young company that is generating revenues but is not profitable yet is, of course, risky. At the same time the upside potential is huge. The expected annual return on the investment (accounting for dilution) is 35% in a conservative scenario, higher in the base case scenario, but you could lose it all in the worst case scenario where Lendahand defaults.


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Important remark on the valuation:

The valuation above (EUR 4.6mn) includes the funds that we raise in this round:

  • EUR 350,000 via Symbid
  • EUR 176,500 (max) of an existing convertible loan which may be converted from debt to equity
  • EUR 75,000 from investors that invest alongside the Symbid cooperation (e.g. existing shareholders that want to buy additional shares)
Excluding these funds the valuation is EUR 4,000,000.
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Peter Heijen
Founder & CEO

Ever since I was a little kid I wanted to change the world. I needed a career in finance (Mn Services, Theodoor Gilissen) to find out how I could achieve that: by connecting social capital with inspiring entrepreneurs in emerging countries! I started Lendahand a few years back by myself but now it is owned by many others. I hope you will become one of them!

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Koen The
CFO & COO

If Peter Heijen thought he needed a career in finance before he found his passion then I needed half a lifetime in finance to figure it out (BNP Paribas, Goldman Sachs). I have lived and breathed financial markets and am happy that I can use all that to give poor people in poor countries a shot at a better life.

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Peter Stolze
CMO

In the past I've helped T-Mobile NL formulate and execute its corporate as well as its business strategy and Cordaid in marketing its microloans product. So all the way from very commercial to a NGO. And now I'm right in the middle of the spectrum with Lendahand, a social enterprise. I strongly believe in stimulating self-reliance by providing fair loans to enthusiastic entrepreneurs.

The product

Lendahand runs an online platform where people can lend money to SMEs in emerging countries via a network of local partners. We call our product meso-finance.


Unique Selling Points

We are the only online platform where people can invest in small & medium businesses in emerging markets while obtaining a fair interest rate.


Selection and monitoring is done by local financial institutions that have extensive experience in this field. They hold buffers in case a company cannot repay the loan, reducing the risk on non-payment to the crowdfunders (the crowdfunders basically assume credit risk to the local partners).


Overall Lendahand offers a unique proposition that is in between saving and investing directly in SMEs, where people are in control of their money and create social impact.


Scalability

We are about to submit our request for a license from the AFM (Dutch financial regulator). Such a license will help us expand internationally (e.g. to the UK) as we can ‘passport’ the license to other EU countries. As an online platform it’s fairly easy to offer our products in other countries. Most of the marketing takes place online.


Next to the crowd we are aware that (small) institutional investors and corporates would also like to use our platform to invest in emerging markets. We may have to expand our product offering in order to cater them, but rest assured that product development is something we are good at.


Current status

We prepared a breakdown of the current status of our platform in the form of an infographic.

Planned developments

First up is our request for a license from the AFM.


Together with Strategy& (formerly Booz & Company; they helped us on pro bono basis) we are determining a solid international roll-out plan. In 2016 we will enter 2 or 3 new markets.


We are confident that we will have obtained sufficient scale at the end of this year to start engaging with small institutional investors. Our CEO has allocated time to do this himself.


Crowdfunding, social impact investing, fintech… Lendahand is operating at the intersection of some interesting and fast-growing industries and is well positioned to benefit from these exciting developments.


Target group

Our main target group are the baby boomers. In the Netherlands they own 88% of financial assets.


Moreover we use a targeted approach aimed at HENRYs (High Earnings Not Rich Yet) who may not have much wealth but have high income, and YUCCIEs (Young Urban Creatives) who are socially engaged and vocal.


Market size

Our product appeals to investors, savers, and donators. These are numbers for the Netherlands only (no reliable North-European data):

  • Foreign investments by private investors: EUR 50 billion
  • Private savings: EUR 400 billion (of which EUR 14 billion is considered sustainable)
  • Private donations for international aid: EUR 450 million

Furthermore the global crowdfunding market is expanding rapidly: from EUR 12.5 billion in 2014 to an expected EUR 30 billion in 2015.


Competition

We are the only online meso-finance platform in the world and unique in our combination of social impact and financial return.


Our closes competitors are Kiva (www.kiva.org) who do online micro-finance and do not pay interest on the loans, and MYC4 (www.myc4.com) who do micro-finance (only) in Africa.


Inclusive finance funds from asset managers tend to be in micro-finance space as well (e.g. Triodos Fair Share Fund and ASN-Novib Microcredit Fund) and investors cannot choose in which countries they want to invest in SMEs.


For a complete competitive overview see our competitive landscape infographic.

Customer feedback

We have around 850 loyal crowdfunders who have invested an average of EUR 3,500. The number of clients is increasing rapidly as is the average amount they invest.


Customer feedback

We always ask new crowdfunders why they choose for Lendahand. These are the responses:

  • The interest rate is attractive given the risks
  • I’m creating jobs on the other side of the world and ‘do good’ with my money
  • I’m more in control of my money than if I put my money in the bank or in a fund


New customers

We estimate to have welcomed 700 new users by the end of this year. Next year that will be 3,000. We also expect to have 2 institutional clients on board next year.


Sales pitch

In high-income countries small and medium enterprises (SMEs) provide 60% of the jobs. In emerging countries they only account for 30% of the jobs.


The best reinforcement for any economy is a strong middle class. If employment grows, poverty reduces. Eventually health care and education, amongst others, will improve as well. The problem lies in the fact that SMEs in emerging countries often do not have access to (affordable) financing.


Via Lendahand crowdfunders provide meso-credit to give these companies a push in the right direction. As this leads to the addition of jobs and income, the poor will profit from this. The crowdfunder can expect a financial return of 3-4% per year while benefitting from the expertise and creditworthiness of a network of local partners. Social impact and financial return truly coexist.


What has been done before

PR & blogging, search (SEO/SEA), social media, display, banners/advertising, word-to-mouth, member-get-member.


Partnerships

We are in talks with several potential strategic partners.


Turnover so far

EUR 60,000 in accrued revenues since inception.


Projected turnover

2015: EUR 65,000

2016: EUR 220,000

2017: EUR 730,000

2018: EUR 2,200,000


Assumptions

In 2018 we facilitate EUR 150,000,000 in loans. 65% of this will come from outside the Netherlands while 25% comes from (small) institutional investors and corporate clients.


Gross margin on crowdfunding will converge to 2.75% p.a. (currently 3.9%).


Note that the pre-money valuation is set to EUR 4,000,000 but the final post-money valuation and allocation is yet to be determined. Some investors may invest alongside the Symbid cooperation. Although 7.6% post-money allocation is our conservative estimate, in reality it may be lower.


Invested so far

  • Subsidy (Dutch Ministry of Foreign Affairs): EUR 150,000
  • Equity (clients, crowdfunders, angel investors): EUR 290,000
  • Convertible debt (clients, crowdfunders): EUR 150,000
  • Debt (Impulsis, client): EUR 85,000


Risks

  • Not able to obtain an AFM license
  • International roll-out fails
  • Not able to attract additional funding
  • Downward pressure on margins
  • No significant expansion of the lenders base
  • Not able to onboard local partners with the right scale
  • Default of a local partner