PeerBerry : crowdlending
challenger in Europe
PeerBerry has clearly been on a roll for a while now and is widening the gap with other crowdlending platforms. It is indeed a solid platform that makes profits and has a truly effective communication strategy.
In the crowdlending sector, PeerBerry is a rising star in which I strongly believe. But before you invest, I have prepared an in-depth analysis of this crowdlending platform. In this way, I invite you to form your own opinion about PeerBerry.
Table of content
What is PeerBerry ?
The company (SIA) AV Marketplace
PeerBerry is a Latvian-based FinTech company registered under the number 40203073653 with the official name ‘AV Marketplace’. Although its headquarters are based in Riga, their teams are physically located in Vilnius, Lithuania.
Launched in June 2017 by Aventus Group, PeerBerry is one of the fastest growing crowdlending platforms. After a timid start, the company has quickly positioned itself in the Top 5 crowdlending platforms in Europe. Its loan portfolio is regularly in the top 3 of the fastest growing.
The creator : Aventus Group
Aventus Group started its lending activity in 2009 in countries such as Lithuania, Latvia, Czech Republic and Georgia. It is a strong group with over 850 employees.
The group had already tested P2P platforms by joining the P2P platform Mintos in September 2016. Following this, Aventus Group left the platform to found PeerBerry where it was then the only one to offer loans.
Subsequently, the P2P PeerBerry platform joined forces with other loan originators to diversify its portfolio. In this way, it reduced the risk of a possible default by one of these companies.
And we can say that it has succeeded since the platform has generated profits since its launch in 2018 and still continues to confirm its successful results.
The current shareholders
Subsequently, Aventus Group sold PeerBerry to private shareholders. The platform is now owned by three shareholders: Andrejus Trofimovas (50%), Vytautas Olšauskas (25%) and Ivan Butov (25%).
Andrejus Trofimovas, majority shareholder, has spent his entire career in the real estate sector in management positions. He also obtained an MBA in economics from Vilnius University.
In 2017, Andrejus Trofimovas took over the management of the Aventus Group, which includes a number of PeerBerry lending companies located in just over ten countries, mainly in Europe.
Vytautas Olšauskas, successively founded the FinTech company Finhike in 2015, which he still manages, as well as the bank Mano Bankas, which he is Chairman of the Board of Directors. He is also a shareholder and CEO of the Crowdpear platform (real estate crowdfunding).
Ivan Butov is an expert in risk management and quality assurance. Previously, he managed various companies and was a member of the Loan Committee of the Credit Union. Currently, he works for TELEMED as a quality inspector.
The management team
Alongside him, Viktar Kamiahin is the Technical Director. Specialised in web development, he has worked in the tourism industry producing online booking systems and customer relationship tools. He joined the Aventus Group in 2017 and became the Technical Director before switching to PeerBerry.
PeerBerry has recently updated its About page showing a team of 10 employees.
Some statistics for 2023
Here are some statistics for the current year :
- Total amount of funds invested : €1.54 Billion
- Total amount paid to investors : €18.35M
- Average annual return : 11.11%
- Number of investors : 63, 000+
- Average portfolio per investor : €3,540
Despite a slowdown in mid-2020 due to the coronavirus crisis, the total amount of loans funded on the platform is growing as shown in the statistics below :
The funds invested by investors active on PeerBerry now exceed half a billion euros. This volume places PeerBerry comfortably in the top 3 of European platforms.
This figure is all the more impressive given the relative youth of PeerBerry compared to other platforms of the same size.
How does PeerBerry work ?
PeerBerry is a marketplace
PeerBerry is a crowdfunding platform, also known as a crowdlending platform (or P2P lending). It is an online marketplace that connects investors with loan originators.
The investors are individuals or companies looking for financial opportunities to grow their capital. They are remunerated through interest rates paid to them according to the capital invested.
The loan originators lend funds to borrowers, who are themselves individuals or companies. Thus, these borrowers have access to cash to finance their projects.
The PeerBerry platform acts as an aggregator of loans in which investors can choose to place their capital according to a number of criteria of their own.
PeerBerry is therefore only an intermediary between these loan originators and investors who wish to diversify their financial investments in different types of loans or in different countries.
The role of loan originators
The loan originators are responsible for assessing the creditworthiness of borrowers, granting them loans and then offering these loans as investments on the platform.
When one of these companies lists a loan on PeerBerry, it has already been granted to the borrower. The loan originator is only offering investors to finance the loan on their side.
Through the site’s interface, investors can browse the loans offered by these companies and then make their own investment decisions.
On the way, the loan originator is remunerating itself as a financial intermediary since the return offered to the investor will not be as high as the interest rate of the loan granted to the borrower.
In addition, the loan originator will be able to reallocate its capital to other borrowers, and start the operation again with its own funds.
Chronology of a P2P investment
On PeerBerry, the minimum amount that can be invested in a loan is €10. The annual interest rates are between 9% and 13%, a narrower range than on Mintos, which is justified by the fact that the level of risk is fairly similar between the different loans listed.
Indeed, as the loans are offered mainly by two financial groups, which are also closely linked, there is a certain cohesion in the interest rate policy applied on PeerBerry.
It is possible to improve these rates thanks to the platform’s loyalty programme. Indeed, investors who place capital of €10K benefit from +0.5% on all their investments.
And this rate bonus can go up to +0.75% for those who invest €25K, or even +1% above €40K as shown below.
I, for one, am very happy with the returns I get from PeerBerry every month. After a smooth start, I gradually increased the funds allocated to this platform.
The more positive signs I saw, the more I invested, until Peerberry became one of my main investment platforms.
In the following graph you can see how much passive income I generate each month on this platform :
Thanks to a judicious choice of investments, it is possible to obtain interesting, secure and liquid returns (up to 12% per year).
The loans I select are usually for a term of about one month. This is a perfect term for investors who don’t want to tie up their money for too long.
So, if you lend 100 on a 28-day term, then four weeks later the borrower will pay (for example) 102 to the loan originator, which will take its commission.
Then, this loan originator will pay the balance to PeerBerry, which in turn can take its commission before paying you the principal and interest due.
This is how PeerBerry makes its money, as the platform does not charge any fees on investments made, on the management of loans, on the resale of investments or on withdrawals made by investors.
Investing on PeerBerry
Who can invest on PeerBerry ?
Individuals of legal age and companies are eligible to invest on PeerBerry as long as they have a bank account located in a country of the European Economic Area (EU member states plus Switzerland, Norway, Iceland and Liechtenstein).
In this, the platform complies with Anti Money Laundering (AML) requirements. And PeerBerry will also verify your identity.
Therefore, you can register on PeerBerry without living in Europe and without being a European citizen. You just need to have a bank account there (as I do, living in Asia).
Even if you are a Thai citizen, it is possible to get started on PeerBerry by simply opening a Transferwise account in euros. PeerBerry will simply ensure that you are over 18 and have a valid ID card.
To date, investors registered on PeerBerry have invested from over 80 countries around the world.
To go a little further in the analysis, the main countries for investing in PeerBerry are (in order) :
- 🇩🇪 Germany
- 🇪🇸 Spain
- 🇵🇹 Portugal
- 🇦🇷 Argentina
- 🇬🇧 United Kingdom
- 🇳🇱 Netherlands
- 🇱🇹 Lithuania
The platform is available in English, German and Spanish.
What can you invest in on PeerBerry ?
On PeerBerry, investors have a relatively wide choice of investment types. They can invest their funds in different types of loan :
- Short-term loans
- Long-term loans
- Real estate loans
- Leasing loans
- Business loans
For short-term loans, borrowers pay back the principal and interest at the same time when the loan matures (after a few days for payday loans).
For long-term and leasing loans, the PeerBerry P2P platform pays back a portion of the principal with interest each month. Repayment of the principal starts at a low level and then increases with each maturity, while the interest follows the opposite path.
Real estate and business loans work differently. Each month only the interest is paid, while the principal is paid at the final maturity.
I have never yet seen car loans or business loans on PeerBerry.
PeerBerry offers relatively little information about the end-borrowers whose financing it facilitates. The vast majority of these borrowers have opted for short-term consumer loans. The duration of these loans is generally between 6 and 60 days.
Where can you invest with PeerBerry ?
It is important to know the countries in which we invest as the macroeconomic situation of a country can be decisive. In terms of diversification, it is also interesting to reduce our dependence on the economic performance of particular countries.
The borrowers that can be found on the platform are based in the following countries : Czech Republic, Kazakhstan, Lithuania, Moldova, Poland, Russian Federation, Sri Lanka, Ukraine and Vietnam.
Investors can thus diversify their portfolio geographically in 9 regions of the world. We are still far from what Mintos offers but it is a good start to diversifying its assets in crowdlending.
In practice, however, there is a large majority of loans from Kazakhstan, Vietnam and Romania.
In any case, PeerBerry only accepts SEPA bank transfers in euros.
PeerBerry offers a simple and efficient registration process. A few minutes are enough to register during which PeerBerry goes straight to the point without superfluous questions.
After verifying your phone number (which Mintos does not do, for example), Peerberry verifies your identity to comply with European anti-money laundering laws.
To create an account on PeerBerry, the criteria are :
- Be over 18 years old
- Have a bank account in the European Economic Area
It doesn’t matter where you live or what nationality you are. And if you find it difficult to open a bank account (if you are not an EU citizen) then you can simply open an account in euros on (Transfer)Wise.
How to invest on PeerBerry ?
It is possible to invest manually or to set up automated investment strategies. In both cases, it is nice to see that it is the investors who are in control of their choices, which is not the case on all platforms (e.g. Robocash and Swaper).
Manual investment strategy
Like many other P2P platforms, PeerBerry offers manual investment. In this case, the investor selects the loans they want to invest in according to their own criteria : amount lent, expected interest rate, loan duration, type of loan, geographical location of the borrower, etc.
To facilitate this identification work, the investor can also set up (and save) different criteria filters in order to semi-automate their search for loans when they want to invest or reinvest.
Once the investor has confirmed the investments they wish to make, they can view the filters on their dashboard.
It will show information such as the country of the borrower, the purchase date, the type of loan, the interest rate, the amount invested, the expected payment date, etc.
Automated investment strategy
It should also be noted that apart from geographical location, loans on the P2P PeerBerry platform are very similar. Therefore, it is interesting to set up an automated investment.
You will need to specify the amount you wish to invest per loan, the desired duration of the loans, the amounts to be invested, and the targeted loan originators. The platform will then make the investments for you without any action on your part.
The PeerBerry strategies
PeerBerry now offers its own investment strategies for those who wish to fully delegate the management of their crowdlending assets.
The 3 strategies are as follows :
- Short-term : loans of less than 31 days with interest rates between 9% and 12% per year.
- Long-term : loans of less than 5 years with interest rates ranging from 10% to 11.5% per year.
- Real estate : mortgage loans of less than 1 year with interest rates ranging from 9% to 11.5% per year.
These 3 strategies will be sourced from all loan originators, which I personally do not do. Furthermore, all your capital and interest earned will be reinvested automatically as long as you do not stop the selected strategy.
No secondary market
Finally, unlike many of its peers in the sector (see Swaper : Opinion and Analysis), the platform does not offer a secondary market. This means that you have to hold your investments until maturity.
Thus, to withdraw your invested funds, you will have to terminate your automated investment strategy and then wait for the loans in which you have invested to end.
After that, the capital invested and the interest earned will be credited to your account. All you have to do is make withdrawals to your bank account.
But very good liquidity
In any case, as the vast majority of loans only last about 30 days, a secondary market would not necessarily make sense.
Even assuming that you have a 15% delay rate (I am at 17%), this means that 85% of your funds are available within a maximum of one month after the automatic investment has stopped.
Then it will take a maximum of 60 additional days for the buyback guarantee to take effect and for you to receive the remaining 15%. This means that 100% of your investment and the interest earned can be available within three months.
In this case, in the light of what has just been explained, it can be seen that PeerBerry nevertheless offers a more than acceptable level of liquidity.
Is it safe to invest on PeerBerry ?
Experienced investors are fully aware of the ‘risk versus return’ trade-off. This means that the higher the yields offered, the greater the risk that the borrower will default.
Knowing that PeerBerry offers attractive interest (as my rate of return below indicates), let’s take a closer look at the risk faced by the investor.
First of all, it is important to know that PeerBerry offers mainly payday loans. Borrowers usually need a helping hand and do not contact their bank because of the paperwork or their financial history.
The majority of these loans come from companies in the Aventus Group (around 80%), while the remaining 20% are offered by the Gofingo group, LitHome, SIB Immobilier and Litelektra.
For now, I will not mention the ongoing developments regarding PeerBerry’s licence in Latvia. This is the subject of recent developments which you can read about in this dedicated article.
Debt limit and cash reserve
Firstly, it is important to understand that these partner companies have a legal agreement with PeerBerry to only fund a maximum of 45% of their total loan portfolio via crowdlending. The rest of the loans are issued from their own funds.
Thus, PeerBerry monitors the level of indebtedness of its partners to ensure that they never exceed the contractually agreed limit. If the level of borrowing of these loan originators were to reach the set limit, their loans would no longer be listed on the platform until the situation improves.
In addition, PeerBerry’s partner companies continuously keep a cash reserve of 10% (or more) of the loan portfolio. PeerBerry can then contractually use this reserve at any time to repay loans to investors.
100% guaranteed loans
In addition, these loan originators automatically accompany investment projects with a buyback guarantee. Thus, in the event of a borrower’s default, the loan originator buys back the defaulted loan from the investor and also pays the interest that should have been received.
Offered on all loans, this repurchase guarantee provides investors real protection for their investment.
If the borrower defaults on a loan for more than 60 days, the loan originator is legally obliged to buy back the investor’s shares in the loan in question (outstanding capital plus accrued interest for the loan period).
Example of a buyback guarantee
To fully understand the buyback guarantee mechanism, here is a concrete example :
You lend €100 to a borrower in Lithuania at 15% who is expected to repay these funds 30 days later.
One month later, you find that no payment has been received on your account.
It is the loan originator that will then follow up with the borrower to try to obtain payment.
If 60 days after the original due date, the borrower has still not repaid the loan, the buyback guarantee comes into effect.
Thus, the loan originator transfers the €100 plus the interest to PeerBerry in accordance with the buyback guarantee.
Your PeerBerry account is then credited with the principal plus the agreed 15% interest.
In the end, we can even see that there is no loss (opportunity cost) since the investor will receive interest during the loan extension period (between 1 and 60 days).
Finally, it should be noted that the buyback guarantee is only mobilised for 1.5 to 2% of all the loans listed on the platform. And to date, no loan has defaulted since PeerBerry started its activities in 2017.
If, despite everything, an insolvency problem should arise at the level of the loan originator itself, PeerBerry offers an additional guarantee called the group guarantee.
This group guarantee comes into play in the event that the loan originator is unable to cover the buyback guarantee.
In this case, all the other loan originators in the group to which it belongs are jointly and severally liable to repay what is owed by their ‘sister’ company. The conditions under which such a repayment would be organised are known only to the companies. No public document detailing such repayment conditions has been published to date.
In P2P investing, as in any other asset class, it is good to be able to diversify your holdings. This allows you to mitigate your exposure, thereby reducing your risk level.
This can be done easily on PeerBerry since the minimum investment amount is just €10. So you can invest in 100 loans with an initial stake of €1,000.
But since there is a buyback guarantee, it is not as important to diversify your loans as to diversify the loan originators you work with. If a company defaults, you automatically limit the possible loss.
My opinion on PeerBerry
It has to be said that PeerBerry, although a young platform that appeared in 2017, is becoming one of the leaders in the P2P lending sector.
This company has been able to bring together a large number of players, since it now has 31 loan originators and several tens of thousands of investors who already trust it.
It is also worth noting that the volume of loans to date is in the upper middle range of P2P players, as PeerBerry is ranked in the top 3. . It must be said that the platform has been well helped by Aventus Group, which started its lending activity more than 10 years ago.
Finally, PeerBerry offers real geographical diversification with no less than 14 countries represented.
Nevertheless, the platform still has some room for improvement.
Neither secondary market nor reserve fund
Most of the serious competitors in the P2P market offer a secondary market (though sometimes with a commission to pay).
This type of market improves the liquidity of the platform by allowing investors to exit earlier than expected. As a corollary, a secondary market increases the number of loans available on the platform to those who wish to invest.
PeerBerry argues that they do not need a secondary market because the vast majority of their loans are very short term (about one month).
They are not wrong in this respect, as this characteristic ensures good liquidity for the investors who wish to buy or sell.
Regarding the lack of a reserve fund, PeerBerry is in line with a large proportion of platforms that do not generally use one. PeerBerry gives a good excuse, which is the group guarantee by the parent group (Aventus or Gofingo) in case of default.
Financial information about loan originators
As mentioned above, PeerBerry collaborates with two large financial groups, Gofingo and Aventus Group, as well as with three smaller lenders, Lithome, SIBgroup and Litelektra. In total, investors can put their funds into loans from 27 loan originators.
Until recently, there was very little information about these loan originators. But the crisis of 2020 has brought more transparency.
Investors now have access to the size of their loan portfolio, the total amount of loans financed, their geographical location, their date of creation and their size in number of employees, as well as information on the buyback guarantee and interest rates.
This new information has increased investor confidence in the platform.
Furthermore, I think it would be interesting for PeerBerry to develop its own rating system one day, as others have done (See Mintos : Review and Analysis).
I understand that platforms working only with one loan originator do not do this (See my review on Lendermarket). But with 27 loan originators, I think it’s important that PeerBerry get on board.
PeerBerry has some interesting reasons for not doing this. Indeed, their team points out that despite good ratings on other P2P platforms, some loan originators did not fare well in the Covid19 crisis.
PeerBerry argues that their concept is different as their management prefers to ‘keep control’ on the performance of each loan originator based on their financial reports.
On the other hand, PeerBerry sends this work to the Latvian regulator, which applies a rating model including 23 criteria to the loan originators listed on their platform. The result of this rating shows that these companies present a low or moderate risk.
No Skin in the game”
Arunas Lekavicius, the CEO, mentions the fact that the group guarantee exists, that the financial statements of the loan originators are verified every 6 months and that his team also carries out internal processes to review their portfolio every month.
Reservations about the group guarantee
Although the group guarantee is a last resort and has never been used so far, it is possible to express some reservations.
First of all, it should be noted that ‘Aventus Group’ is in fact simply a trade mark. The company behind the group is ‘Aventus Capital’.
Secondly, a central point needs to be explained : ‘Aventus Capital’ is not a holding company for the various loan originators listed on PeerBerry. Consequently, these companies are not subsidiaries of the Aventus Group, nor is it their parent company.
As a result, a number of investors have expressed reservations about the validity of the group guarantee and about the entity that ultimately guarantees the loans on behalf of this group guarantee.
In fact, the loan originators operating under the brands ‘Aventus Group’ and ‘Gofingo Group’ have signed cross-guarantee agreements with each other. With these agreements, all companies act as guarantors for each other.
If one of the companies encounters sufficiently serious financial difficulties to request the mobilisation of the group guarantee, then it is up to the ‘management’, consisting of the shareholders and directors of the companies, to determine to what extent each will contribute to the debt.
This is what PeerBerry has explained on its website : What does the additional group guarantee mean and how does it work ?
So, it is true that this group guarantee is a plus in risk management. But now that it has been put forward by PeerBerry, some questions arise as to its practical implementation :
- Is the involvement of shareholders in management legally valid ?
- How will this management determine in practice the contribution of each company ?
- In the event of a default by one of the companies, who should investors turn to ?
Finally, it should be noted that these agreements are not public, but their existence is simply attested by a memorandum.
For my part, I don’t find this legal arrangement established by lawyers to be a real problem. It is a plus to have this guarantee compared to other platforms that do not offer it.
Moreover, the regulator is not at all interested in the group guarantee. It is more focused on the financial performance of the loan originators and on the fight against money laundering.
The fight against money laundering is one of the most important steps in the whole regulatory process, as it involves borrowers, PeerBerry’s business partners and investors.
To conclude, let’s say that it is better to see this group guarantee as a public commitment of these different companies to help each other in case of a hard blow by using all available resources. But let’s keep in mind that this is indeed not a legal obligation.
Alternatives to PeerBerry ?
It is not easy to find an alternative to PeerBerry. Even if they are both leaders in this sector, in my opinion Mintos is not the answer.
You should turn to Swaper, or Lendermarket, which are just as liquid but with even better rates. And of course Robocash, which offers slightly lower rates in the short term but with the support of a large international group.
For those who wish to invest in ‘exotic’ markets in foreign currencies, there is the Iuvo platform.
Despite the investment risks inherent in any P2P platform, there is no doubt that PeerBerry is one of the best P2P platforms on the market. This was demonstrated during the Covid19 crisis in 2020.
Furthermore, on this platform, there has never been a default by a loan originator to date. It is therefore ideal for those looking for alternative investment options to more traditional investments.
One point I really like is the very short duration of the loans (this is the aspect that made me invest in Swaper as well) which ensures good liquidity. In this respect, it is easy to understand why the absence of a secondary market is not a problem.
In addition, PeerBerry has a clear advantage in terms of diversification, with 27 loan companies that can invest in 9 different countries. This high number allows PeerBerry to offer a steady stream of loans. This avoids any cash-drag that would penalise our returns.
As far as risk is concerned, it is really well controlled thanks to the double guarantee (buyback guarantee + group guarantee). Even if it is true that introducing of a rating system would help guide less experienced investors.
Another point : PeerBerry has made a profit every year since its creation, which is not the case for all crowdlending platforms, including the largest ones.
Finally, as far as human resources are concerned, I find their policy cautious because they hire at a normal rate, i.e. a few recruitments per year. On this subject, I wrote in my last version of this analysis that it would be a good idea to plan recruitment for their support team, which is too slow in my opinion.
This has been achieved with the recruitment of the charming Kotryna as Customer Care and Operations Manager.
In your opinion, is Peerberry a platform that can be considered reliable ?
Have you already started investing ?
I would be happy to hear your feelings on this platform which has been so successful since its creation.
Please leave your questions below and I will be happy to answer them.
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