I visited Moneyzen‘s office back in August before I started investing with them to see what their strategy was. About a week ago, I visited again to see how they were doing, and to get some comments about how things are going for them.
Overview of last year
Moneyzen finished last year with a bit more than 400 000€ given out in loans. Overall, that was obviously less than they had hoped for, but for a strategy that’s supposed to be conservative in terms of picking high quality clients, that was maybe expected.
Another aspect that was different from what was expected was the way the loan portfolio turned out – the loans have a longer duration and a bigger sum than they had originally predicted. I can see that from my own portfolio as well, the average loan length is 40 months, making it a pretty non-liquid investment, especially since there is no secondary market yet.
In terms of investors, they are still financing quite a lot of the loans themselves, which shows that they believe in the model. The number of investors is growing, but slowly – that’s to be expected since the portal is still quite new and people are always somewhat conservative when it comes to investing their money.
There are several core ideas about Moneyzen that I still like:
1. Owners participate heavily in loans, which means they have a vested interest in things working well.
2. Recovery is done in-house, both cutting costs and allowing for more flexibility.
3. They have not lowered their standards for loan clients, even though there is enough investor money available.
4. They invest a lot of time into communication with investors, (which is something other sites might want to learn from.)
What the future may bring
It’s difficult to predict what might happen to a social lending company since the market can be quite volatile. The CEO himself stated that at minimum they want to build up their portfolio to 1M€, which would mean (almost) hitting profitability, which isn’t bad for being around for only 2 years by that point.
It’s also obvious that Estonia as a market is somewhat over saturated and the new regulations that are coming live may impact the market in different ways. Whichever way they want to play it, expanding into another country is necessary and apparently planned as well (and hopefully they’ve learned from all the mistakes that Bondora made!).
Hopefully the developments of the site will pick up as well, since they’ve been currently not happening due to needing a developer. So, if you know Ruby on Rails and have a passion for social lending, there’s a position available for you!
Overall, I’ll continue my strategy of 50€/month and keep reporting the results!