If the first wave of crowdfunding is p2p lending, the second wave seems to be invoice crowdfunding. Invoice crowdfunding is safer than most forms of p2p lending and offers respectable returns, ranging from 8% to 20% on an annualized basis. This combination makes it an excellent choice when the economy is heading into a slump.
Let’s Crowd Smarter has created an Investor’s Guide to Invoice Crowdfunding. This Guide is for investors and based on our own investment experience and interviews with industry insiders. We hope you like it!
Invoice Crowdfunding – the next wave
Crowdfunding arrived in Singapore about two years ago with the emergence of p2p lending platforms. While the industry is still growing, investors are increasingly worried about problem loans as the economy heads into a cyclical downturn.
As we (the Let’s Crowd Smarter Team) have observed in our own p2p portfolio, late repayments and loan defaults are becoming more frequent. This prompted us to search for a safer alternative.
Enter invoice crowdfunding. Invoice crowdfunding basically refers to the financing of unpaid invoices through the use of online platforms, matching businesses to investors.
If managed properly, invoice crowdfunding is safer than most forms of p2p lending. The investments are backed by a real asset – the invoice. Also, the investment returns usually come from a large corporate (which is less likely to default), rather than an SME. Finally, the risk of loan stacking is quite low in invoice crowdfunding.
Yet, the returns are also quite respectable, ranging from 8% to 20% on an annualized basis. In our view, the combination of lower risk and respectable return makes invoice crowdfunding an excellent choice when the economy is slowing down.
Investor’s Guide to Invoice Crowdfunding
We (the Let’s Crowd Smarter Team) have invested in more than 50 invoice deals this year. We also did plenty of behind-the-scenes due diligence work to ensure prudence.
To share our knowledge, we have created an Investor’s Guide to Invoice Crowdfunding. This Guide is based on our own experience and interviews with invoice crowdfunding platforms – Capital Match, InvoiceInterchange and Funding Societies. It is written in an easy-to-read format for the complete beginner.
We hope you like it. As always, feedback and criticism are welcome.