Blockchain based Peer-to-Peer Lending with focus on Microfinance where all parties reap the benefits. A continuing low-interest environment, searching for yield and an ever increasing higher prioritization of social objectives makes this market, however, also very attractive for foreign investors who are willing to lend at significantly lower rates.
Local Communities Africa
LendSV addresses the Sustainable Development Goal (SDG) #1 as defined by the UN: 'End poverty in all forms'. Our solution is a two-sided web platform for microcredits powered by an electronic payment system based on cryptographic proof, allowing any two willing parties to transact directly with each other without the need for a trusted third party.
According to the World Poverty Clock roughly 600mn people live in extreme poverty. These people are typically excluded from the financial system as they lack identfication documents and have no credit history. As a result local loan sharks charging up to several hundred percent of interest are often the only option. If people have access to Microfinancing, it is primarily done domestically, whereby banks as well as NBFCs typically act as lenders. A continuing low-interest environment, the search for yield and an ever increasing higher prioritization of social objectives makes this market, however, also very attractive for foreign investors who are willing to lend at significantly lower rates. As a first target market we selected South Africa (we will be happy to explain the DD which led to this conclusion) where Microfinancing recorded a volume of USD 2bn in 2018, smartphone penetration is high, and c. 13.3mn people live in extreme poverty. Due to abuse by existing microlenders of the financial hardship of the poor, the regulator introduced an interest rate ceiling of 60% p.a. for Microfinancing. LendSV believes that the interest rate can be cut by at least 50% due to lower interest rate expectations by foreign investors, higher automation and a leaner operational setup. Direct and fast access to financing for the poorest 1 billion people. Depending on the market, up to 50% lower interest rates expected. Global microfinance credit portfolio is USD 114bn with a CAGR of 9%. 600 million people living in extreme poverty until today mostly excluded from the system. LendSV will open up a completely untapped market.
Our technology drastically improves the efficiency of cross-border transactions. Instant settlement, enhanced transparency and transaction costs at a fraction of a US dollar cent will open up an untapped market where micro payments are economical. A blockchain powered digital identity system allows the unbanked to get access to funding. All it takes is a web-enabled mobile device.
Bitcoin is a great medium of exchange, a purely peer-to-peer version of electronic cash which allows payments to be sent directly from one party to another without going through a financial institution. The strongest use case we see is for those who are unbanked, the use of small payments (even under a USD), and for one-off private payments. Bitcoin is better than any other system for the latter specifically. Automated governance of contractual loan obligations, enabling full accountability through the lending process ensured by blockchain based smart contracts. The current financial system, with trusted third parties acting as intermediaries, comes at a cost and hence makes small payments not worthwhile as transaction costs eat up a signficant part of the amount transferred.
Samuel Hieber (Heads Strategy and Technology, Background in Corporate Finance, M&A and Auditing, CFA charter holder, Swiss CPA, fluent in Chinese - ex Lehman Brothers, ex PwC, currently Monterosa Group - Patrick Prinz (Heads Business Development and Finance, Background in Investment Banking and Strategy Consulting, Lending and Structuring, CFA charter holder) - ex Citigroup, ex Strategy& (former Booz & Co), currently Monterosa Group -
Blockchain based Peer-to-Peer Lending with focus on Microfinance
At LendSV we are convinced that for social objectives to be sustainable, they have to make economic sense. With the help of innovative technology LendSV is confident that financial inclusion can be propelled while allowing investors to achieve both financial and social objectives. LendSV allows investors globally to help empower the poorest 1 billion people while sharing in their rise from poverty.
We have our MVP ready and are actively reaching out to local partners (borrower selection and KYC partners such as NGOs onshore, service providers for credit scoring) as well as are in talks with multiple investors (with focus on social impact). In parallel we are finalizing the incorporation of our company in Switzerland (all docs are ready). To date we have not received any funding but are targeting a Seed round in 4Q19.
We have the MVP ready and currently start testing. The MVP is an app solution which allows lenders to flip through multiple loan requests. Once selected it only requires a swipe to the right and the loan is funded from the lenders in-app wallet and goes directly to the borrower. The payment channel is working, transactions are instant, transactions costs are close to zero and the transaction can be looked up on the public leder to verify that indeed 100% of the loan amount went directly to the target borrower.