Illustration of Crowdestor's "Sweet dreams Samloem" project

Crowdestor review

Crowdestor’s overview

Crowdestor offers real-estate and business loans. Their interest rates are usually in the 14%-20% range, for durations varying from one to two years. A partial buyback guarantee A buyback guarantee is a guarantee provided by the platform or a loan originator.
If repayment of a loan is delayed by more than a given delay (usually 30 or 60 days),
the platform or loan originator will buy back the loan. The guarantee may cover only
part of the capital, or in a much more interesting case, both the capital and accrued
interests. As the conditions vary from one platform to another, it’s very important
to check this point.
is provided through a warranty fund.

My opinion on Crowdestor

In a rather short time, Crowdestor managed to become my favorite platform for speculative loans. Indeed, between the excellent performance, the large supply of loans and their diversity, it’s hard not to be impressed ! I only regret the lack of a secondary market The secondary market is a marketplace allowing investors to sell loans from their
portfolio to other investors. This is useful if they need to get their money back
before the loan’s maturity.
.

Detailed ratings

Actual performance

Thanks to the lack of default, current returns are very high. It’s however unlikely that they remain at this level, especially after many SMEs were hit by the Covid-19.

Loans liquidity

There are many new investment opportunities each month, which allows a large portfolio diversification.

Reporting

Reporting has improved with the most recent upgrade to the website.

Transparency & reliability

The platform has started to communicate more actively in Spring 2020, but transparency could be further improved.

Website ergonomics

Crowdestor‘s website is basic but works well.

Crowdestor’s pros & cons

Pros

  • Excellent performance
  • Financed businesses belong to diversified sectors
  • Partial buyback guarantee through a warranty fund
  • Projects are added very regularly

Cons

  • High-yield projects sell out quickly
  • No secondary market or early exit
  • Lack of details for several projects

Loans characteristics

Loans duration

Medium-term : one month to one year

Long-term : more than one year

Loans kinds

Business

Real-estate

Minimal investment

€ 50

Buyback guarantee

Buyback guarantee available

Currencies

EUR – Euro

Overview of Crowdestor’s loans

Crowdestor allows investors to lend money to SMEs. Interest rates usually range between 14% and 20%. The loans durations also vary greatly; they can be as short as 3 months and as long as 24 months.

The diversify of the financed businesses is one of Crowdestor’s great strengths. Here’s a sample of the borrowers :

  • A drum school
  • An hotel
  • Several forestry exploitation
  • A construction company
  • A mobile game development studio
  • A warehouse
  • Several hostels

Most borrower are located in Latvia; however, among recent projects, there were also :

  • a bar in Moscow
  • an indoor beach volleyball center in Estonia
  • two resorts in Cambodia
  • a transportation company in the UK
  • a kart track in Belgium
A subset of Crowdestor's active projects in late November 2019
A subset of Crowdestor's active projects in late November 2019

Most loans yield interests monthly, although there are some variations. Investors who want a regular cash-flow should check the projects descriptions carefully !

This loan only starts yielding interests after 6 months
This loan only starts yielding interests after 6 months

Minimal investment amount used to be € 100 per project, but has been lowered to € 50. However, unlike CrowdEstate, the invested amount doesn’t need to be a multiple of € 50. This allows you to reinvest interests faster !

Another interesting aspect is that interests are computed from the day you start investing, instead of the day when the project is completely funded. And even if the project doesn’t get successfully funded when the deadline comes, you still get interests for the period between your investment and the deadline !

Several projects were funded in several rounds, which is a common practice; for example, the “hostel renovation” project was first granted a € 200,000 loan, then a second loan for an amount of € 450,000 a few months later.

Loans volume

There are usually several new projects coming each week. It allows investors to build a diversified loans portfolio very easily.

The amount needed for each project is usually rather small (around € 100,000 – € 200,000), so they get funded rather quickly. However, there are also a few very large finance amounts; indeed, several loans reached € 950,000.

Mafia Stars
The financed amount for the "Mafia Stars" project was an impressive € 950,000

In Spring 2020, projects with very small amounts started to appear on the platform. One of them, granted to a temporary employment agency, was as small as € 1,391 ! They were initially issued by loan originator Monify, before being bought back by Crowdestor. As the platform has large plans for expansion and automation of loans requests, these smaller loans should be more common.

Buyback guarantee

In late February 2019, Crowdestor announced the creation of a buyback fund. It will be used to reimburse the investors in case the borrower defaults. The initial amount was € 50,000; it grows thanks to a commission on new projects. In early May 2020, it stands at € 360,000. The platform originally expected to reach € 100,000 at the end of 2019; thanks to the large volume of loans funded, this amount was reached much earlier !

Crowdestor’s website doesn’t provide much information regarding how the buyback fund will work. However, in a communication with Investing Small, they indicated that :

Funds from Buyback Guarantee Fund are distributed as follows – in case there is a default project, the current project receives share from the Buyback Fund which is proportional to the outstanding amount of loans in Crowdestor.

If there is 2m EUR in outstanding loans, project is 200k EUR and Buyback Fund is 100k, it means that max cap distributed to the Project is 10% from Buyback Fund.

In a nutshell, the buyback fund will only cover a small fraction of the capital. The total recovered amount will depend much more on the efficiency of the recovery process, which remains to be seen.

Due diligence on one of Crowdestor’s recent projects

After Kuetzal and Envestio proved to be scams, investors – including me – started to be much more cautious about the platforms. I thus contacted Realto, the parent company of the borrower for one of the large recent projects (“E. Fon Trompowsky Quarter”). They confirmed that they actually received the funds for the first tier – funding for a second tier is currently taking place -.

Loan confirmation for "E. Fon Trompowsky Quarter" project
Loan confirmation for "E. Fon Trompowsky Quarter" project

Platform’s transparency and reliability

If Crowdestor is a great platforms for borrowers, the platform’s track record is still unclear. Indeed, many loans were supposed to be repaid in Spring 2020, but the coronavirus crisis has delayed most loans reimbursements.

In terms of transparency, things have obviously improved. Crowdestor’s CEO Janis Timma now communicates a lot, either on Crowdestor’s unofficial Telegram channel, or on the platform’s official Facebook page for investors. Unfortunately, having several communication channels means that news are spread between several communications means – not to mention the noise inherent to Telegram or Facebook groups -. I wish the platform used their blog to communicate instead of these channels; it would probably be more efficient.

The composition of the whole team is now disclosed on the platform’s website.

What I still don’t like is the inability to check projects before they open. Several of them lack also concrete details about the borrower, making it hard to evaluate the risks. Another negative aspect regarding projects descriptions is that once a project is totally funded, it’s impossible to look at the details unless you invested in it.

Impact of Covid-19 outbreak on Crowdestor

The Covid-19 outbreak had many impacts on Crowdestor. Although several of them will have a negative financial impact on investors, this crisis also lead to positive consequences in term of communication.

First, the platform announced the introduction of a three-months leniency period in March 2020. As a consequence, all loans repayments are deferred until the end of June 2020. A poll was conducted among investors in order to decide how to handle the delayed interests. Unfortunately, the votes cast by investors didn’t lead to a very definite outcome. As a result, different decisions were taken depending on the borrowers.

Here’s a sample of the decisions taken by the platform for sectors which were heavily impacted by the crisis :

  • The projects in tourism industry were hurt very badly by the crisis. As a result, the recovery period was extended for 3 more months. Interest rates for the recovery period will be paid in September, when repayments resume. Borrowers will be able to request an additional fundraising campaign. Loans repayments from borrowers in the luxury goods sector will follow the same rules.
  • In the exhibitions and entertainment sector, the loan itself will be extended for 9 month. Interests for this extra period for will half the initial interest rate, and will be paid at the end of the loan period.

In other sectors, consequences are less dramatic and don’t require an extra recovery period :

  • Companies in the energy the energy sector will repay interests for the recovery period along with the next scheduled repayment.
  • Borrowers in the transport industry will pay back the interests for the recovery period at the end of loan period. The same applies to consumer and leasing loan projects, or food and beverage industry as well as advertising.

Of course, this is just a theoretical schedule. It remains to be seen whether borrowers will be able to actually make repayments.

The second consequence was a large decrease of the loans volume. The number of available loans and their amount have both decreased.

The third consequence of this decreased activity was that the communication from Crowdestor has improved a lot. With less requests from borrowers, the platform’s management finally has some free time to deal with investors’ questions – a welcome change -. The platform set up a dedicated Facebook page for investors, and the management is now active in Telegram channels. The result is a much better communication on projects statuses.

Crowdestor’s expansion plans

In Spring 2019, Crowdestor announced an equity campaign. Although the details are confidential, what can be revealed is that the platform plans to expand and automate their processes.

Indeed, while Crowdestor‘s management was praised for being hard workers, the manual processing of loans requests didn’t leave them a lot of time for the much needed communication towards borrowers. Moreover, it made it very hard for the platform to scale up and increase the loans volume.

In late April 2020, Artur Geisari (the CEO and co-founder of loan originator Monify) joined Crowdestor as Head of SME. In a letter to Crowdestor investors, he cites “automated, and standardized SME lending” as a new direction for Crowdestor.

I’m at the same time thrilled by the new opportunities offered by this upcoming expansion, but also quite wary about the automation aspect. Until now, Crowdestor’s methods seemed to work rather well. Whether it’s actually possible to automate them remains to be seen.

Platform’s features

Early exit

Early exit NOT AVAILABLE

Investing methods

Manual investing

Secondary market

Unlike CrowdEstate, Crowdestor doesn’t provide a secondary market. There’s no early exit mechanism either; as a result, you won’t be able to sell your investment early.

One exception was the ability provided in Spring 2020 by a few borrowers to buyout part of their outstanding loan from investors. However, very few projects actually allowed this option, and it was usually at a very high discount.

Manual investing at Crowdestor

One recent improvement is the ability to view only the active projects; previously, both active and totally funded were displayed together, requiring to scroll through many of them to see the currently available opportunities.

The amount of detail provided varies from one project to another. I overall find the descriptions less complete than those at CrowdEstate. I also regret the lack of a risk assessment.

However, in all fairness, descriptions have improved a lot for most recent projects – especially loans which previously belonged to Monify portfolio -. They are now more factual and follow a standard outline.

Excerpt of a project's description at Crowdestor
Excerpt of a project's description at Crowdestor

Auto-invest

it’s currently not possible to invest automatically; however, with the recent website upgrade, a section named “Auto-invest” has appeared and is supposed to be live soon. I’ll of course update this review as soon as it is available.

Until then, I would recommend you to connect to Crowdestor‘s website as soon as new projects open in order to be able to invest in them. Indeed, the recent high-yield projects were very popular among investors and sold out quickly.

Website’s ease of use

Languages

English, German, Spanish

Funding methods

Crowdestor’s registration process

Signing up at Crowdestor is straightforward, as is often the case for crowdlending platforms.

During the registration process, investors have to define a PIN code in addition to the password; it will be required when investing. Another safety measure is the optional use of Google Authenticator.

Account funding and funds withdrawal

Website’s design and ergonomics

Crowdestor‘s website is simple but well designed and properly translated. The advantage of business and real-estate crowdfunding platforms is that the number of projects is rather low and there are not many options available.

As a result, these websites are usually very easy to use. Administrative operations such as creating your account, funding it and investing in projects are easy to carry.

Available languages & translations quality

Crowdestor‘s website is available in English as well as in German and Spanish. The English translation is great.

(I previously wrote that there was a Portuguese translation, but either I was wrong or this featured was removed.)

Reporting

I initially found Crowdestor’s dashboard too crude to be useful, as it lacked many useful features. Fortunately, with the website’s redesign in November 2019 came a new and improved dashboard. It’s now easy to evaluate the diversification of your portfolio, see the incoming payments for next month, or marvel at the growing profits chart – which actually became a flat line for 3 long months in Spring 2020 because of the coronavirus -.

Unfortunately, crucial data such as delayed loans currently aren’t visible in the dashboard. This lack of reporting should be addressed by the platform during the summer; indeed, as part of their expansion plans, they hired several IT developers.

Documentation

Crowdestor‘s documentation could be improved. Indeed, while the FAQ A FAQ is simply a compilation of Frequently Asked Questions is rather complete, breaking it down into sections would make it much more readable. Moreover, apart from the FAQ, there’s very little documentation available.

Support

It’s possible to get in touch with Crowdestor by phone or e-mail.

At some point, I sent an e-mail to the support as my account’s balance was incorrect. They quickly replied that this incident was being investigated; when I logged in the following day, my balance was back to normal. However, I regret that they didn’t get in touch to notify me that the problem got fixed.

Communication from the platform​

Most e-mails from Crowdestor will be announcements of new projects. Investors will also be notified of repayments, as well as when transferred fund reach their Crowdestor account.

It’s now possible to opt-out of these notifications from the Profile screen.

Actual performance of my Crowdestor portfolio

12,88%

At the end of July 2020, the XIRR for my Crowdestor portfolio was 12,88%.

With zero interest received for three months in Spring 2020, the performance of my Crowdestor portfolio will be hurt. However, it's more important to see in late June whether all borrowers can repay. Needless to say that I'm far from being 100% confident, so the returns may decrease a bit more.

Don't hesitate to read my most recent crowdlending portfolio review for detailed platforms performance comparison as well as historical performance.

Portfolio creation date

I created my Crowdestor portfolio in February 2018.

Crowdestor's main competitors

For a detailed comparison of the different real-estate and business crowdlending platforms, check out this article.

Crowdestor's facts & figures

Location

Tallinn, Estonia

Founded in

2017

Number of investors

13,501

Loans amount financed

€ 33,407,834

As of May 2020

Who can invest at Crowdestor

  • You must be at least 18 years old.
  • You must have an active bank account in one of the European Union or EEA banks.
Crowdestor FAQ

Disclosure

Please note that this review may contain affiliate links. It means that I will earn a commission if you decide to invest after clicking through the link – at no additional cost to you, of course -. Please understand that I have experienced all of these companies, and I recommend them because they are helpful and useful, not because of the commissions I make if you decide to invest through my links.