Zagga P2P [formerly LendMe P2P]

[Knot]

Hi Marcus,

So LendMe (like squirrel) is aimed more at the professional investor than your average Mum and Dad investor who has a few hundred a month to invest?

I don't know many people who just have thousand (or $500) dollar chunks of cash lying around they could invest at will, whereas with the likes of Harmoney people can throw in excess cash and get a good return on it.

For me that is attractive, it means I can start to build a P2P portfolio on excess cash each month.

I guess what I am getting at is LendMe is not really suited to the average small investor, and in my mind that is going to be a very limiting factor for LendMe (and squirrel). I would love to hear your (and others) thoughts on this.

[Marcus@LendMe]

Hi Marcus,

So LendMe (like squirrel) is aimed more at the professional investor than your average Mum and Dad investor who has a few hundred a month to invest?

I don't know many people who just have thousand (or $500) dollar chunks of cash lying around they could invest at will, whereas with the likes of Harmoney people can throw in excess cash and get a good return on it.

For me that is attractive, it means I can start to build a P2P portfolio on excess cash each month.

I guess what I am getting at is LendMe is not really suited to the average small investor, and in my mind that is going to be a very limiting factor for LendMe (and squirrel). I would love to hear your (and others) thoughts on this.

Hi Knot,

Cheers for the question, it’s a good one and really speaks to our chore philosophy as a peer to peer lender, and the reason we are specialising in genuine secured lending.

Before the FMA opened the market up to peer to peer lending, there were very few options for investors (particularly Mum’s and Dad’s) to confidently manage their own investments and get a fair, safe, return.

There was a lack of information to help new investors get into the market and most investments by their nature are highly risky. Clearly very daunting for most, so as a result a large number of kiwis have had their savings (if they have been able to save any) parked on deposit with the banks earning lower rates. Those who had a higher risk tolerance/appetite may have had a mix of deposits and shares, but often invested in those companies they knew something about or had been recommended to invest into.

Peer to peer lending in NZ is obviously still in its infancy, but people are learning quickly that the money they’ve kept in the bank can be lent securely and receive much better returns by using LendMe. Investing $1,000 dollars at a time may appear daunting to a Mum and Dad investor right now, but we think the more they learn about how we operate the more confident they will become. The types of loans they can invest in through us (usually secured by 1st mortgage), and the rigour we put into assessing borrowers’ willingness and ability to repay their debt, enable even Mum’s and Dad’s to invest larger sums (in multiples of at least $1,000) in single loans rather than fractionalising below that to spread their risk.

To date, we have had each of our loans (totalling almost $1.5m) funded by single investors. They have been so confident in the nature of the security for these loans that they have chosen not to fractionalise their lending at all. These have all been Mum and Dad investors. While this has meant that some potential investors willing to lend $1,000 have missed out on these deals, we are still in our soft launch phase and as the number of loans coming through the site increases over the coming months, I expect that more investors will have a chance to co-fund a greater range of loans.

I hope this has answered your question. Over the coming months, continue to look at the types of loans we have listed and particularly the nature of the security behind each of these opportunities. I believe you will see that you can gain great returns from your LendMe investment without having to fractionalise to the same extent as elsewhere.