Crowdestor Review: A New Online P2P Investment Crowdfunding Platform
Here’s everything you need to know about Crowdestor: one of the newest crowdfunding investment platform.
You’ve probably been thinking or perhaps even decided to become one of the modern-day investors. And whether you’ve been looking to diversify your portfolio or reduce the level of risks for your investments, peer-to-peer (P2P) lending is one of the best ways to invest. It not only entails lending money to individuals or companies via online platforms in exchange for payment of interest over time, but can also offer high yields if done right. One such platform is Crowdestor; a relatively new online peer-to-peer lending platform that has made it possible for retail investors to invest in alternative investments and funding campaigns.
Established in 2018, Crowdestor is a newly-established peer-to-peer (P2P) crowdfunding platform that offers investment opportunities in real estate, transport, startup projects, and other business projects. While Crowdestor doesn’t offer consumer borrowing and lending options, it seeks to reduce the level of risks and offers better returns to investors.
The recent emergence of P2P crowdfunding platforms has offered an avenue for retail investors to invest in opportunities that were previously only accessible to big investors and hedge fund managers. But it can be difficult to choose which platform to go with, especially now that several online crowdfunding platforms that offer these opportunities. Again, choosing the right online P2P crowdfunding investment platform can help in maximizing your returns and so it’s important to know a thing or two about these platforms.
For this reason, this article seeks to impartially and objectively review one of these platforms: Crowdestor. But before we begin, I must, however, admit that this review is based on following this platform closely, as well as thorough research about the platform.
So without further ado, let’s roll.
Registered in Tallinn, Estonia, but based in Riga, Latvia, Crowdestor is a relatively new online P2P crowdlending platform that offers investors the chance to invest in real estate and other business projects. Launched in February 2018 by Janis Timma and Gunars Udris, Crowdestor is essentially a platform that connects investors with businesses seeking project funding.
With projects ranging across several industries such as real estate, transport, retail, hospitality, renewable energy, cryptocurrency, grocery store, concerts, forestry and many more. Crowdestor also got involved in the first project that launched on their website as a co-financier. This guaranteed more accountability on behalf of the investors. For the time being, they do not do that anymore. The platform offers at least 5 new projects each month, looking for funding ranging between €12,000 and €1,000,000.
As an investor, you can begin investing in Crowdestor with as little as €50 with an annual interest starting from 12% and can go as high as 36%! Needless to say, Crowdestor offers higher rates than traditional banks and has some of the best rates in the business.
Despite its short history, Crowdestor is highly reputable within the European P2P lending community. That’s because its loans are some of the safest asset secured loans where borrowers are thoroughly vetted by Crowdestor. In some instances, the platform puts some of its members on the boards of the borrowing corporations to ensure that the corporations do not default on the loans.
In other words, investors do not have to worry about borrowing businesses failing to pay back the loans. So far, the platform has never experienced any default, which is an indication of how the platform’s loan recovery process is perfect.
Crowdestor’s Facts and Figures
Here are some key facts and figures about Crowdestor.
- Interest rates range from 12% to 36%;
- Offers both business and development loans;
- Investors are not charged any fees;
- The currency is Euros (€);
- Minimum investment amount is €50;
- There is no minimum withdrawal amount;
- Number of investor: 8,000+ (and it’s growing);
- The platform has funded nearly €934 million worth of business loans;
- It offers loan durations ranging between 3 to 24 months.
How Does Crowdestor Work?
Now that you’ve seen Crowdestor’s potential, you’re probably gaining more interest in using the platform as your investment vehicle, but perhaps wondering how it works. Well, the platform is simple and straightforward from the word go. Companies or businesses that are looking for funds to start, grow or operate their businesses can look to borrow finances on Crowdestor.
The platform carries out in-depth due diligence on the business and its capability to pay back the loan within the stipulated duration. If the business’ loan request is accepted, Crowdestor publishes the loan on the website so that interested and eligible investors can start investing in it.
Generally, approved and upcoming loans are displayed on the platform a few days (and with a countdown) so that investors have sufficient time to fund their accounts or decide whether or not to invest in the project. If the loan is not funded to the required threshold, the investors’ funds are returned to their accounts within 48 hours. If the loan is successfully funded, the borrower is happy to receive the required funds and the investors begin to collect monthly interest payments.
In the unfortunate event that the borrower defaults, a portion of the loan is covered through the buyback guarantee fund (more on this later). The remaining percentage will be recovered after the debt is collected.
Who can Invest through Crowdestor?
To become an investor on Crowdestor, you must be at least 18 years old and have a bank account in one of the European Union (EU) member states or a European IBAN (International Bank Account Number). In other words, it’s not possible to invest via Crowdestor if you do not have a bank account in one of the EU member countries.
You can, nonetheless, look for the possibilities of opening a European IBAN (it’s possible in many countries). Keep in mind that you can be an investor on Crowdestor as long as you’re over 18 and have a bank account in any of the EU member states.
Crowdestor Sign up Process
Once you are on the Crowdestor page, click the login/register tab to sign up as a new investor. As shown below, the signup process is simple and straightforward as you only have to fill in your name, email, and password.
Once you’ve completed the above-shown form, you’ll answer some additional questions about your nationality, date of birth, if you have a registered company, and your bank information. You’ll, of course, be required to create a secret pin code that you’ll use when signing transactions from and to your bank account.
Once you’ve completed the registration process, you’ll have to wait for your registration to be verified. This can take a couple of hours. If your account is verified, you can fund your account and start investing. To make the funding process easier, Crowdestor provides you with an IBAN. You can as well use TransferWise to transfer money to your Crowdestor account.
Your Account Dashboard
From your account dashboard, you can see an overview of your profile including money available, current balance, the total amount invested, active investments, and the number of investments, profits, average interest rates, and recent transactions. You can also add or withdraw money from your account dashboard.
Detailed Project Information
When a project has been approved and published on Crowdestor, investors will be able to see lots of information relating to the project. Some of the information includes:
- A summary of the project;
- Information about the borrower or project;
- Loan conditions including amount, interest rates, loan duration, and expected payment dates;
- Security and/or collateral offered by the borrower;
- Supporting documentation;
- The borrower’s or project’s plans;
- The risks associated with investing in the project;
- What makes the project a good or viable investment.
What Types of Rates are Offered on Crowdestor?
At Crowdestor, you can invest in single projects. Each project has its rate of return and these returns vary depending on each project. However, the rates range from 12% to 36% and will depend on the project that you choose to invest in.
Keep in mind that it’s not easy to diversify into a lot of different investments on the platform. It’s, therefore, important to perform due diligence on each investment you target and ensure that you’re comfortable with the asset value or rates offered and the available loan terms.
Crowdestor Loan Types
All loans on Crowdestor are business loans and can range from real estate, startup projects, development projects, restaurants to cryptocurrency mining and forestry. Given the business nature of these projects, the shortest loan duration on Crowdestor is typically 3 months while the longest ones can go for 24 months.
Crowdestor also offers two types of crowdfunding model:
- Equity crowdfunding – This is a model of raising capital for a business from investors by selling off part of the equity to the investors.
- Classic crowdfunding – This is a model of raising capital for a business by providing pledges or collaterals.
The platform ensures that investors are given a fair warning before a project becomes active for investors to invest. Generally, some projects are funded faster so it’s important to make sure that you make your transfers in time that’s if you’re interested. To make sure that you’re well-informed, Crowdestor provides a comprehensive project description and documentation to help you make the right decision on the loan that interests you.
Again, Crowdestor puts a lot of emphasis on the financial security of the projects that they offer. That’s essentially why several projects offer various assets such as mortgages, pledge on shares or money from borrowers as security.
Crowdestor Loan Volumes
Typically, the amounts needed for each project on Crowdestor range from €100,000 to €200,000. In most cases, these projects can be funded pretty quickly. There are also a few large projects that can command figures close to €950,000.
As of July 2019, Crowdestor had 37 funded projects on the platform. Four of these projects were repaid in time while one project was repaid before the deadline. The platform takes pride in the fact that there has never been any default on the platform. This is a good sign that the platform is doing everything right and this should be the catch if you’re looking to invest on the platform.
Crowdestor is not regulated by a world-recognized financial agency such as the FCA in the UK. It’s, however, regulated by the Estonian financial laws, which is friendly to P2P platforms like Crowdestor.
Crowdestor Loan Liquidity
Crowdestor typically offers a limited selection of loans at any given time. Despite being a few, these loan sizes are decent and offer high rates. The platform generally publishes the loan on its webpage days before actual investments begin. This is to give investors ample time to perform due diligence, decide whether or not to invest, and transfer funds into their accounts.
Auto-Invest and Manual Investment
Unfortunately, Crowdestor doesn’t offer auto-invest options for investors. This is means that you’ll have to invest manually on the projects. This, however, shouldn’t be a problem in the sense that the projects on Crowdestor are limited and large so you can easily go through them. Additionally, the platform will send you an email notification when the projects are about to go live.
On the auto-invest feature, Crowdestor should work on this to catch up with similar platforms that offer the same feature.
Skin in the Game
To ensure accountability and transparency in projects Crowdestor got involved in the first project that launched on the website as a co-financiers and/or as co-developers. In some instances, Crowdestor places some of its members as board members in the business.
Crowdestor does not currently offer a secondary market, but it’s working on it. In other words, the platform doesn’t currently offer an early exit mechanism once you’ve invested in a project. For this reason, you’ll have to wait until the loan matures to recover your investment.
Crowdestor Design/Ease of Use/Languages
There’s no doubt that the platform’s interface is pretty clean and simple to use, which is great for the user’s experience and for finding your way around the platform. In addition to a list of the available projects, the platform has a separate page for each project. Everything from loan rates, loan duration, as well as all other details is available for users.
Currently, the platform is available in four languages: English, Spanish, German, and Portuguese.
Generally speaking, customer support always plays a huge role in such platforms, especially in enhancing investors’ confidence. Unfortunately, Crowdestor doesn’t offer live customer support or chat, which is one of the easiest ways to connect with the support team. Lack of a live chat can be frustrating if you need instant help from customer support.
Nevertheless, investors can contact the support team through email, which can be replied within three business days. The best part is that the support team is polite and very straightforward when answering your queries.
In terms of fees, Crowdestor doesn’t charge fees for investing on the platform.
To make it quite easy for you, Crowdestor offers a straightforward deposit and withdrawal process.
To deposit funds, you can follow these three simple steps:
- You need to transfer money from your bank account to your Crowdestor account via a traditional bank transfer, TransferWise, Currency Fair or Revolut.
- The funds will be available in your account within the day of confirmed arrival, typically 1 to 3 banking days.
- You’ll receive an email notification once the funds are available on your Crowdestor account.
To withdraw funds:
Click “withdraw funds,” enter the desired amount and wait for 1 to 3 business days for the amount to be available in your bank account. Keep in mind that there is no minimum withdrawal limit and there are no withdrawal fees. But depending on your bank fee structure, your bank may charge fees for handling the transactions.
Crowdestor only accept deposits from TransferWise and not withdrawals for investors knowledge.
What are the Risks of Investing in Crowdestor?
Like with all P2P lending or crowdfunding platforms or any form of investment opportunities, some risks come with investing in Crowdestor. The obvious risk is, of course, loan default from the project or business that you’ve invested in. This can result in a significant loss of your capital and it’s something that Crowdestor is looking to avoid by reducing the risk.
As an investor, the first step towards reducing this risk is to diversify. You should spread your investment on as many projects as possible so that you do not lose much if one project defaults.
Crowdestor takes several measures to ensure that the risks you take as an investor are reduced. Among other things, the platform extensively reviews the borrowers before they are accepted on the platform. From the borrower’s reputation, the financial background to current commitments, Crowdestor reviews things such as their business plans, loan security, and financial reporting to ensure that your investment is in safe hands.
As we noted earlier, Crowdestor also got involved in a project as co-financier and/or co-developers. The platform can even appoint members to the board of these projects to ensure accountability, safety, and security of your investment. This is an indication that the platform’s interests are aligned with the interest of the investors.
This is another way of reducing the risk of losing your investment as a result of a default. Introduced in March 2019, the buyback guarantee fund is used to safeguard investors’ capital and returns if a borrower defaults on their loan.
Here’s how Crowdestor will deal with a defaulted project:
- If project defaults, first Crowdestor will use all of their legal instruments to collect the debt – realisation of the collateral, debt collection claim against guarantor etc;
- If this does not cover the loan fully and accrued interests, Crowdestate compensate the shortage from Buyback Guarantee Fund Funds;
- Buyback Guarantee Fund are distributed as follows – in case there is a default project, the current project receives share from the Buyback Fund which is proportional to the outstanding amount of loans in Crowdestor. If there is 2m EUR in outstanding loans, project is 200k EUR and Buyback Fund is 100k, it means that max cap distributed to the Project is 10% from Buyback Fund. Of course today this is insignificant amount to be covered from Buyback if such project would default;
- In Crowdestor opinion, most important is the aspect that there is a clear mechanism how Buyback fund grows and that there is a real funding in place meant to cover potential loses, not just a combination of words “buyback guarantee” with out explaining what are the financial capabilities to execute such guarantees.
Althought, we are yet to see how Crowdestor will actually deal with such a scenario given that the platform has never experienced any default so far.
Buyback fund status at the time of publishing this review has reached over €143,000.
Early Investment Reward Scheme
In addition to the high-interest rates offered by Crowdestor, the platform offers an early investment reward scheme. This is to offer additional interest to investors who choose to fund the projects before the set deadline. This interest is calculated based on the interest rates of the projects and the timeliness of your investment per the funding deadline.
And even if the business is not successfully funded, the additional interest will still be paid.
What Can Happen if Crowdestor Goes Out of Business?
As an investor, one of the most important parts of assessing a P2P platform like Crowdestor is looking at what can happen in the worst-case scenario. In this case, Crowdestor goes out of business and seizes to exist.
One of the most crucial steps that Crowdestor has taken to protect investors is by keeping the platform’s assets separate from investors’ assets. Through Crowdestor Security Agent OÜ, the platform ensures that your investment is separate from the company. This is to ensure that your investment remains intact even if Crowdestor goes out of business.
Crowdestor Main Competitors
- Offers very high-interest rates;
- The projects are selected by a competent, skilled, and experienced management team;
- The platform offers early investment rewards;
- The platform offers detailed information about the projects;
- The buyback fund helps in partially protecting investors’ capital;
- Investment starts from as low as €50;
- The platform offers interesting projects every month.
- There’s no secondary market and you can only recover your investment at the maturity date;
- It’s a high risk;
- It’s a relatively new platform;
- No auto-invest and you have to invest manually;
- The platform doesn’t offer live chat customer support.
Conclusion – Crowdestor Review
Despite being a relatively new platform in the P2P lending and crowdfunding industry, I must impartially admit that I have a really good feeling about Crowdestor and I hope it doesn’t disappoint. Well, its lack of auto-invest and the partial buyback guarantee may be minuses, but there’s no doubt that Crowdestor is a really pleasant platform that offers high-quality deals and excellent returns on your investments.
That being said, it is a great platform to try out if you’re looking out for a portfolio in the crowdfunding business. Navigating your way around the platform is as easy as A, B, C, and the platform’s high rates are certainly worth trying.
But before investing your money in any of the projects, just take your time and do your research and only invest in projects that you’re comfortable with. Hopefully, this should be a turning point towards your financial freedom and independence.
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If you have any questions about Crowdestor or business crowdfunding in general don’t hesitate to leave them in the comments below!