European peer-to-peer lender EstateGuru has secured entry to the German lending market through a partnership with Varengold Bank.
Under German regulations, alternative lenders can only operate if they have a service agreement with a local bank.
Varengold Bank will now provide EstateGuru’s regulatory umbrella so it can launch in Germany.
EstateGuru already has 19,000 investors from Germany – its largest cohort – and the service co-operation means it will be able to lend to borrowers in the country.
“Geographic expansion is one of the three key development areas that will empower us to deliver on our long-term strategy to finance €5bn (£4.47bn) annually by 2025,” Marek Pärtel, co-founder of EstateGuru, said.
“The other two being technology and institutional investors. Germany has been on our radar for quite some time.
“So, it is a logical step to become a proper member of the alternative finance industry in Germany.”
Lukas Diehl, executive vice president and head of marketplace banking for Varengold Bank, described EstateGuru as an “Estonian fintech powerhouse.”
“Foreign fintechs tend to underestimate the bureaucratic hurdles until they experience them firsthand,” Diehl said.
“EstateGuru has decided to address this challenge by making use of the regulatory umbrella we can provide thanks to our full banking license.
“It is a perfect example of how fronting services enable the entry of companies with business models that bring innovation, new technology and agility to the German market – to the ultimate benefit of all market participants.”
Varengold has previously provided funding lines to Assetz Capital, MarketFinance and LendInvest.