European peer-to-peer lending platform Income has attracted €738,927 (£630,841.1) in investments since launching in January, as it eyes a UK expansion.
Estonia-based Income was founded in response to the Coronavirus crisis, with a view to creating a transparent and lower-risk platform that would provide a better experience for investors.
Chief executive and co-founder Kimmo Rytkönen is a P2P investor himself, with what he calls a “significant” portfolio.
Rytkönen, whose background is in consumer finance, feared he would lose a lot of money during the crisis and saw an opportunity to launch a P2P platform with an “institutional type of security” to mitigate risk.
“Speaking broadly, we noticed the protections in P2P were quite weak and you would think investor interest would be aligned with the marketplace but that seemed not to be the case with the platforms I was operating in,” said Rytkönen.
“So then came the idea of, how do we build something in the P2P space where investors can be more secure, to make a better investment experience and to bring a sort of institutional type of security? There’s a certain way that institutions secure the debt and analyse it.”
Read more: Robo.cash passes €15m investment milestone
Income connects both retail and institutional investors with unsecured consumer and business loans from third-party loan originators. The platform has a buyback guarantee to mitigate against late payments with borrowers, as well as skin in the game and a cashflow buffer.
If a loan originator cannot meet its payments, Income seizes the loanbook if the default is not fixed and creates a waterfall structure whereby borrower payments go to the platform through special purpose vehicles or a collection company. It distributes payments to investors first. After investors’ payments are satisfied, the loan originator receives its money.
Income also aims to be transparent by fully disclosing how the security and legal structure of the investments work. The platform is currently only open to investors in the European Economic Area (EEA) but it is considering expanding.
“We aren’t open to UK investors at the moment, but the UK market is huge for P2P and it’s very interesting,” Rytkönen said.
“We will take a look later this year and have plans on opening for global investors.”