[Germany] Every financial crisis has its losers, but it also has its winners. In Germany, one of these winners is the social lending online platform Smava. The ‘peer-to-peer credit marketplace’ is backed by VC financing from Earlybird and Hamburg-based Neuhaus Partners and has seen impressive growth. Smava doubled its loan volume from €2.5m in the second quarter of 2009 to €5m in the third, according to co-founder and CEO Alexander Artopé.
The startup has originated over €10m in loans this year alone, and over €16m since its inception in 2006. The company makes more monthly business than its US competitor Prosper, Artopé calculates. Although the US market is bigger and Prosper got five times more VC funding than Smava (a whopping $40m), in September 2009 Prosper originated $1.22m in loans (€818K) while Smava made nearly twice that amount: €1.5m.
One obvious growth driver is the current credit crunch. Banks in Germany hesitate to lend money, leading to a tight credit situation, especially for small and medium sized companies and the self-employed. Smava lets its users conduct their money business directly with each other — no bank involved. This leads to lower costs, more transparency and more self-determination for all participants.
Berlin-based Smava generates revenue by collecting a one-time fee of 2.0 or 2.5 per cent on funded loans from borrowers. Lenders can use the service for just €4. Over 2,500 borrowers have already taken a loan. Also, over 10,000 lenders show that a good return can go along with a meaningful investment. Lenders can read in each loan listing what happens with their money, providing a ‘feel-good’ sense of supporting people in projects they otherwise couldn’t afford. This so called “social return” is increasingly appealing for lenders in times of the financial crisis and complex financial products.