Team Lendermarket

Interview with Claus– Lendermarket Stars

We are glad to come back with another Lendermarket Stars interview, this time we talk with Claus from, a P2P lending expert, consultant, and publisher from Germany with more than 17 years of experience writing about investing topics.

Tell us a bit about yourself and how and why you started

I became interested in P2P Lending in the spring of 2006 when I saw the American p2p lending service Prosper, by chance. I found it interesting from a marketing perspective as it totally changed the way that loans were given out and thought it could potentially disrupt the online market for consumer loans that had been dominated by banks. I then tried to find out if it was economically viable, that is if default rates were low enough to make it a profitable investment considering the risk level. However, at that time the sector was nascent and there was nearly no public data available. So I started gathering data and began sharing that on (English language) and (German language). The blogs soon attracted a large readership among industry insiders and retail and institutional investors.

You have been in this industry for quite some time now, tell us how has the market changed since the beginning of your journey.

The market became a lot more mature and professional. In the beginning, there was a lot of experimentation with business models, UI and customer acquisition. Also in most markets regulators have reacted to the new offerings and have adapted or created a regulatory framework as guidance for the platform.

And what are the changes you expect to happen in the industry in the coming years?

The entry hurdles will keep rising due to increasing regulation (including AML and KYC requirements). As a result, fewer new services will launch on the market, while the existing services will have the chance to grow in a growing overall market. Becoming trusted brands will be even more crucial for p2p lending providers in order to succeed in winning and satisfying both borrowers and investors.
Looking at some players it appears that the product offers of p2p lending players might evolve to more and more resemble bank products.

What are the things that keep you motivated to keep your investment journey when you experience market fluctuations?

As with other asset classes, there are some ups and downs in the investment experience. One thing that might help in these volatile times is the comparison of p2p consumer loans to credit card debt. For credit cards, there are decades of available financial data, and the credit card companies made profits year after year giving out consumer loans, no matter if it was a boom or recession times in the economic cycle.

What would be your advice to someone who is about to start their investing journey?

Start slow with a small amount. P2P Lending has a bit of a learning curve. Diversify over platforms, loan types, loan durations and markets (countries). Check if there are statistics/data on how the platform performed so far. I have written more tips in the article 10 Tips for New P2P Lending Investors – How to Start.

When do you think the best time to invest is?

Is there ever a “best” time? If you find the asset class interesting, I suggest trying it out with a small amount and gaining first-hand experience to see if it matches your expectations.

How many P2P platforms are you currently investing in? And what is the P2P allocation from your total portfolio?

Due to my professional interest, I am invested in more than a dozen platforms. But only on 4 to 5 I have larger amounts invested. I aim to have around 10% of my total portfolio allocated to P2P. The bulk is in ETFs.

What are some non-negotiables when it comes to investing in a particular platform?

As much transparency as possible regarding data and statistics. I prefer platforms with a long track record and a secondary market.

Our last guest left a question for you: What was your worst investment so far and what did you learn from it?

Around 1993, while I was still studying at university, I put some money in an actively managed fund investing in South East Asian stocks (“Tiger States”). That did not perform well. I sold this at a loss. In hindsight, it was an impulse investment with too little information. Since then I try to read and research much more before making an investment decision.

And last but not least, in order to continue with this chain, leave a question for our next interviewee to answer!

Have you ever considered investing in farmland as an asset class?

Do you want to start investing in P2P by yourself? Check investing opportunities in Lendermarket.

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