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What Is Crowdestor?
Crowdestor is a crowdlending investment platform, providing a connection between businesses requiring financing and investors. Investors can be attracted to such loans as they provide a much higher than interest compared to a bank account. Crowdestor currently offers various investments with returns up to 21%.
Crowdestor (www.crowdestor.com) is an Estonian crowdlending platform created in 2017. The name Crowdestor is a combination of Crowd and Investor. The platform works in a similar way to Envestio (see my review here), connecting investors with businesses seeking project funding. Crowdestor offers up to 5 new projects each month, seeking funding between €12,000 and €750,000. Projects span many industries including real estate, hospitality, retail, concerts, renewable energy, and more recently, forestry. Most projects through Crowdestor are covered by a buyback guarantee fund, which is a separate provision type of fund. The buyback fund currently has a pool value of over €100,000. Other features of the platform include:
- No fees to the investor
- Minimum investment of €50 per project
- Minimum withdrawal is €10
- Early investment reward scheme
As with other P2P platforms, transfers will work through TransferWise or Revolut. However, Crowdestor will not return withdrawals into a TransferWise account.
- Crowdestor is a private limited company registered 12 December 2017
- Paid out interest: Unknown
- Average Interest rate: Projects range from 12.5% – 21%
- Registered Investors: Unknown
- Total funds invested: Unknown
Once you have loaded the Crowdestor page, there is a login/register page that allows new investors to sign up.
Investors can be from anywhere in the world, as long as they are over 18, and have a European IBAN. The sign-up process is simple with a form seeking name, email and password.
Once that form is complete, the investor will be asked some more questions about date of birth, nationality, and if they have registered as a company or not. The investor will also be asked about bank information and will be required to set up a pin code to be used when signing transactions.
Once your details have been reviewed and accepted, your account is activated and you can see the profile page.
From the dashboard, users can see an overview of their profile including current balance, money available, total invested, active investments, profits, number of investments and average interest rate. Below the statistics, there is also a list of most recent transactions. From the dashboard, investors can easily add or withdraw money.
What types of loans are available through Crowdestor?
The platform offers a wide variety of loans, in projects including:
- Real Estate (housing, apartments and retirement villages)
- Hotel or Apartment Renovations
- Businesses (Bars, Retail, Fashion, Health Care, Grocery Stores)
- Summer Concerts
- Renewable Energy
Buyback Guarantee Fund
Crowdestor offers a Buyback Guarantee Fund used to safeguard an investors return in case a borrower defaults on their loan.
How the fund works:
- Crowdestor will initially pledge €50,000 into the fund
- A commission of 1-2% of each project will enter the fund
- If a borrower defaults on their payment, the platform will proportionately compensate all investors
The fund was expected to reach €100,000 by the end of 2019, however, this goal was reached halfway through 2019.
Early Investment Reward Scheme
In addition to the already high-interest rates, Crowdestor runs an early investment reward scheme which provides additional interest to investors who commit to projects before funding deadlines. The additional interest is calculated according to the project interest rate, and the timeliness of your investment in relation to the funding deadline.
If the project is not successfully funded, the additional interest will still be paid into your investment account.
Additional interest is included in the first interest rate payment.
Detailed Project Information
Once a project has been released on the platform, prospective investors are able to see a lot of information that relates to the borrower. The information usually includes:
- a summary of the project
- the loan conditions (amount, interest rates, expected payment dates, and loan run time)
- security and/or collateral placed on the account
- information about the borrower (including financials and offered services)
- future plans of the company or industry
- what makes it a good investment
- the risks associated
- supporting documentation.
There are no fees for investors that register through the platform:
|Account Sign up||€0|
|Making an investment||€0|
However, if you are planning on borrowing money, then there are fees for structuring the loan, administration, establishing and releasing the mortgage by Crowdestor Security Agent, and Notary fees.
My Crowdestor Review
Crowdestor is one of my favourite platforms in my portfolio, which is why I have invested the most in them. There are so many great features:
Their buyback guarantee fund. This is a pool of money that is ready to be used in case an investment was to default. It’s the only platform in my European portfolio that shows how much they can actually pay back investors. Other platforms such as Envestio, Kuetzal etc, say that they can afford to pay out defaults, however they are not clear on how. Crowdestor makes it very clear. It is important for the investor to choose projects that utilise the buyback guarantee, as not all do. You can find this information under the “loan” section of each investment. This fund isn’t the only backstop for loans defaulting through the platform. There are usually securities placed on each loan, ranging from guarantees, land pledges or pledges of real estate. The value of the buyback fund is publicly listed on the website, and can be found here. There is also a 0% default rate.
Crowdestor will act as co-financiers or co/developers for each project on the platform. This means that there is more accountability from the development partners.
Crowdestor will provide advanced notice of projects to provide time for investors to (1) add funds to their account, or (2) find out more about a project. Even with the advanced notice, projects take a few days to get fully funded. This is a stark contrast to platforms such as Envestio, that may sell out of a project within an hour of it being notified and released.
There is an early investment reward scheme, which provides additional interest from investing in projects early. There is no reason not to utilise this if you’re investing through Crowdestor.
The platform provides very detailed information about projects, including backstories about projects, financials, company outlooks, and performance of investments.
From all of the above, you can see why I think Crowdestor is one of the best crowdlending platforms in Europe at the moment.