Deals: Lendix grabs $13.5 million to become a leading European P2P lending platform

By Romain Dillet for TechCrunch

Shortly after acquiring its competitor Finsquare, Lendix is back with more news. The French startup has just raised $13.5 million (€12 million) and now wants to become one of the leading European peer-to-peer lending platforms.

Lendix launched just like year. But the startup has taken over the French market by storm. During its first year, the platform has managed $22.5 million (€20 million) in medium-term business loans. Typically, Lendix manages loans for small and medium companies for 3 to 6 years with annual returns between 4 and 9 percent for the lenders.

But now that Lendix has acquired its smaller competitor, the company will be able to manage short term loans as well as this is where Finsquare shined before the acquisition.

So let’s come back to today’s news. Lendix raised $13.5 million from CNP Assurances, Matmut, Zencap AM and existing investors, such as Partech Ventures, Decaux Frères Investissements, Sycomore Factory and Weber Investissement. But this is just one part of the equation as some of these investors have also committed to investing $22.5 (€20 million) on the platform. It’s a good vote of confidence and lets Lendix finance more deals.

Having CNP Assurances as a backer is also interesting as CNP Assurances is just starting investing into fintech startups — Lendix is the major French insurance company’s first investment.

Next, Lendix is going to expand to other European countries, starting with Spain and Italy in the coming months. For each geographical expansion, Lendix has to work on getting a license to operate on these new markets. Rules can be slightly different as well. It’s a long process, but also a good barrier to entry for foreign competitors.

As you can see, Lendix is avoiding the U.K. for now as Funding Circle and other platforms are already pretty big there. But what if Lendix could become the dominant peer-to-peer lending platform for the rest of Europe? It looks like that’s exactly what the company plans to do.

I’ve tried opening an account on the platform, and I’ve been impressed with the process so far in France. Opening an account is seamless. You can then lend a bit of money in a company in just a few clicks — on average, people lend €220 per loan. When you lend, the platform automatically generates a contract you can keep in your records. And, of course, you’ll get money back every month.

But Lendix doesn’t want to stop there as the current marketplace could be much simpler. As a small company, it’s already much faster to talk to Lendix than a traditional bank to see if you could get a loan.

As a lender, I wonder whether lenders could get tired of having to manually reinvest their loans. And in its current form, there’s one thing that is probably stopping many people from investing on the platform. If you want to allocate a significant portion of your savings to a platform like Lendix, chances are you’re slowly going to get back your money over multiple years.

In the future, you can imagine a hands-off option that will turn Lendix into a fully automated savings product with no strings attached. Lendix could repackage loans into a three-tier system with three different loan portfolios for instance. You’d choose the riskiness and average interest rate of the portfolio and automatically invest in all the loans in one tier for instance.

And if you want to get your money back, Lendix could match people willing to sell their positions with people willing to invest. If the market is liquid enough, you could sell your position without having to wait for the end of the loans as somebody else would take over your loans.

There will be some legal and trust issues as you don’t want Lendix to invest in failing companies without your knowledge. So this is a long and windy road, but also the most interesting one.

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