Fintech
Finbee Verslui raises EUR35 million in investment to focus on corporate financing in Lithuania – FF News
European investor Pollen Street Capital invests €35 million in alternative lender Finbee Verslui and this investment will make it possible to finance more than 1,500 companies more quickly and on more favorable terms than in the past.
Faster loans with better conditions
“Our mission is to empower the country’s small and medium-sized businesses to grow by providing them with the financing they need. We have already supported over 3,000 clients since inception, with 2,000 active, and have maintained an average annual growth of 60% in loan originations over the past 5 years. We are grateful for the continued support of our investor community to fund these loans, but growing customer demand has led to a funding gap. So far, we have increased liquidity with our own funds, but this partnership will allow us to grow at a much faster pace,” comments Tomas Mačiulaitis, CEO of Finbee Verslui.
He confirms that the company has financed more than EUR 27 million in loans last year. This year, the growth rate is expected to be maintained with more than EUR 40 million in new originations: “This additional financing will allow us to meet the market demand and grow together with the numerous businesses we will support,” says T. Mačiulaitis, adding that with the investor’s funds, Finbee Verslui will be able to offer financing to companies on more competitive terms.
“First of all, we will be able to repay corporate loans much faster. Until now, it took more than a week to crowdfund larger loans, while now it will take only a few hours from signing the contract to the moment the money is in the account. Also, regardless of the customer’s ability to borrow, we had to limit the maximum loan amount based on the liquidity on our platform. This means that if a relatively large company wants to borrow EUR 100,000 and we assessed that it could borrow that amount, we still had to reduce it to EUR 50,000. Now we will be able to lend as much as is actually needed,” says T. Mačiulaitis.
“As in much of Europe, there is growing entrepreneurship and demand for SME financing, as the availability of bank capital is not sufficient to meet demand. Finbee Verslui has developed an attractive product for Lithuanian SMEs looking to grow and we are excited to support them and their customers on this journey. We are impressed by the management team and their commitment to prudent lending practices and look forward to promoting financial inclusion within the country,” added Ethan Saggu, chief investment officer at Pollen Street Capital.
T. Mačiulaitis points out that small companies with up to 10 employees account for about 84% of all legal entities in Lithuania: they are the backbone of the economy, but access to financing remains difficult for this segment. “Thanks to this partnership, companies will get the financing they need, and we will help them increase their volumes, create jobs and pay more taxes. Among other things, this is a new investment attracted to Lithuania at a time when there is much talk about the withdrawal of foreign investors from the region,” notes T. Mačiulaitis.
Finbee Verslui was represented by the law firm Motieka & Audzevičius.
Among the first in Lithuania
T. Mačiulaitis says that Finbee Verslui is one of the first alternative financiers to attract an institutional investor in Lithuania, but this is a common practice around the world.
“In more developed markets, the opportunities for individuals to invest in peer-to-peer lending platforms have actually significantly decreased with the entry of institutional funds into the market. For example, the American LendingClub became one of the first P2P platforms in the world that continued to increase restrictions for private investors, before finally switching to funding loans with money from institutional investors. Another well-known British platform, ThinCats, has already switched to funding loans only from institutional investors as of December 2019. The British company Zopa also started as a P2P platform, but eventually became a bank not accessible to retail investors. A similar example is the case of Funding Circle. In Lithuania, we also talked about the scenario where private investors will eventually see a decline in business financing offers, so instead we will promote our alternative products: consumer loans and business loans secured by mortgaged real estate or other assets,” Mačiulaitis emphasizes.
According to him, the main reason for this trend is that rapid growth by retail investors alone is hardly possible: “The number of retail investors and their ability to fund loans is growing more slowly. Therefore, companies that want to exploit the market opportunity are forced to seek institutional money, which allows them to fund large amounts of loans much faster. Over time, working only with retail investors makes it more difficult to grow or at least maintain the same volume of loans. I think this is the natural evolution of the business.”