We recently started investing with Crowdo. Crowdo is a regional crowdfunding platform that offers crowdfunding opportunities across several Asean countries. After doing our due diligence, we’ve decided to invest with its p2p loans from Indonesia.
Overall, Crowdo’s website is well-designed and the user interface is intuitive. It provides different types of lending opportunities. For conservative investors, Crowdo offers secured lending with gold or jewellery as collaterals. This helps reduce the risk of loan loss. For investors with higher risk appetite, invoice financing / discounting opportunities provide potentially higher returns.
Who is Crowdo?
What caught our attention is how forward-thinking Crowdo’s management is. As reported earlier, they are the first platform in Singapore to secure the Capital Market Services (CMS) licenses for both debt and equity crowdfunding.
Today, Crowdo is a regional crowdfunding platform that has offices in Malaysia, Indonesia and Singapore. In Malaysia, its equity crowdfunding platform is already fully licensed and operational. In March 2016, it helped its first issuer, The Parenthood, raise close to RM2.6m (US$650,000)
In April 2016, it launched its Indonesian p2p lending platform to the public after running a private version of the platform with a closed group of participants. The p2p lending platform is also open to international investors.
Crowdo is led by co-founders Leo Shimada and Nicola Castelnuovo.
Registration and Cash Transfer
The registration process is quite straightforward. It requires some personal information (e.g. name, address, bank account number) and a scanned copy of passport for verification. Cash transfer requires a few more steps but it is not difficult. For us, both registration and cash transfer took about 1-2 days each.
P2P Lending with Crowdo
Crowdo offers several types of short-term lending (usually 3 to 9 months) to Indonesia SMEs.
For conservative investors who are concerned about pursuing bad debts in Indonesia, secured lending makes plenty of sense. This is because the loans are backed by gold or jewellery collaterals. In the event of two consecutive late payments, the collateral will be sold for repayment to investors.
For investors with higher risk appetite, invoice financing / discounting offers opportunities with higher returns. This form of lending is backed by future or issued but unpaid invoices.
The loans are graded from ‘A+’ (safest) to ‘E’ (riskiest). For investors, an ‘A+ grade’ loan earns about 10-14% effective interest rate p.a., while an ‘E grade’ loan earns above 40% effective interest rate p.a.
|Loan Grade||Effective Annualised Interest Rate|
Loan selection and bidding
Crowdo’s website is well-designed. Investors can easily view loan details such as borrower information, repayment schedule and collateral details. The information is also available on a downloadable factsheet (in PDF). We find the disclosure satisfactory.
When a new loan is put up onto the platform, investors will have several days to bid. Minimum bid is IDR 1m (USD 75) per loan. Once bidding reaches 100%, Crowdo will process all the necessary documentation and disburse the funds. If the bidding fails to reach 100% within the allocated bidding period, the bid will be cancelled and the bid amount will be credited back to the investors’ accounts.
We like the low minimum bid amount because it allows investors to diversify their money into different loans. There is also a Bidding Engine for investors to deploy their funds into multiple loans quickly.
In July, we participated in 60 secured loans. To diversify, we put in about IDR 1.5m (USD 113) into each secured loan across all loan grades and tenors. 93% of the loans made prompt repayment in August. Only 4 loans missed their repayments.
Nonetheless, Crowdo assured us that the loan collaterals are safe and will be liquidated to repay investors in the event of two consecutive delayed repayments.
Portfolio and Statements
Keeping track of 60 loans is not easy. Fortunately, Crowdo provides a number of tools to help investors navigate their way around. For a high level overview, Crowdo provides the latest repayment statistics as well as interest rate and loan grade distributions. For investors who want to delve into a specific loan or repayment record, such information is also available.
We are impressed with Crowdo’s portfolio tools. The only feature that we find lacking would be a monthly portfolio statement showing us our P&L and cash position.
What are the key risks involved? Although Crowdo offers secured lending, there is still a possibility of loan loss. This happens when the liquidated collateral fetches a lower-than-expected price due to a wrong valuation or a fall in prevailing gold prices. There could be execution or platform risk at Crowdo. International investors also face currency risk. In addition, fraud risk cannot be completely ruled out. Finally, there could be regulatory risk. Indonesia does not yet have regulations that govern p2p lending, but it could introduce them in the near future.
In our view, Crowdo is one of the best platforms in the region.
The website is well-designed and the user interface is intuitive. We like the fact that it offers different lending opportunities, including secured lending (which means better protection against loan loss). The low minimum for each loan (IDR 1m or USD75) enables investors to diversify their money into different loans. There are also automated tools such as Bidding Engine and Repayment Rollover for advanced users.
Indonesia does not yet have regulations that govern p2p lending but the fact that Crowdo is fully licensed in Malaysia (for equity crowdfunding) and Singapore (for debt and equity crowdfunding) gives us confidence that the platform is credible and committed to long-term sustainable business growth.
How to sign-up?
Crowdo’s p2p lending platform is open to public, including international investors. To sign up, please click here.