Welcome to Lendermarket stars! Here we talk with experienced investors, industry experts, and known people about the P2P lending industry and investing. In this interview we talk with Emils from Sneakypeer. Sneakypeer goal is to talk about a fundamental change within the peer-to-peer market and provide all the facts and figures investors need to know when investing safely in P2P platforms.
- Hello Emils, it’s a pleasure to have you join our Lendermarket Stars blog series, to start with, tell us a bit about your background and what is that you do for Sneakypeer.
Hello, I’m also happy to join. My passion has always been mathematics and everything related to numbers. This was the area of expertise I brought to the table when my partners and I came up with the concept for Sneakypeer. The majority of the market participant research was carried out by me, and I also developed the Sneakypeer scoring model and other website procedures’ logic.
I graduated from the University of Latvia, earning a Bachelor’s Degree in Economics and writing my thesis on the topic “Creditor-related risks in P2P Lending loans’. I realised that the industry lacks a systematic methodology, and I wanted to alter that. Now I have taken over the CEO position at Sneakypeer while continuing to research and study mathematics in order to fulfill one of my life goals: to master the science I’m most interested in.
- Are you a P2P investor yourself? If so, what is your allocation to P2P and what other assets are present in your portfolio?
I am managing a small portfolio of tens of thousands of euros owned by Sneakypeer solely for analytical purposes. If we haven’t made any investments ourselves, how can we assess the market and claim to be experts? Therefore, we made the decision to invest, test the market, and, most importantly, learn about the issues that investors deal with on a daily basis. I won’t mention them all here because the portfolio was well-diversified across a number of different platforms.
- What was the idea behind building a platform like Sneakypeer? What are the concept and the team’s mission behind the platform?
Shortly after the unfortunate events involving the platforms Envestio and Kuetzal, the concept for Sneakypeer was created. Making the industry safer, separating out scam platforms and preventing similar frauds is our aim. The regulator at the time was unable to accomplish it.
Nevertheless, our mission is to assess each market participant as objectively as we can and to offer our honest judgement of each platform while also giving potential investor information and different insights.
Sneakypeer already provides detailed analyses and descriptions of each platform, including financial figures, summaries, interviews, and other information. We created three ratings for each platform: the Sneakypeer rating, which acts as a risk indicator; the transparency score, which shows how much data the platform provides for us and investors; and the user rating, which functions similarly to Trustpilot. Sneakypeer is your one-stop shop for peer-to-peer lending.
- What challenges did you encounter during the creation of this project?
The COVID-19 pandemic definitely made its entry into the market which is a relatively small industry where everyone knows everyone. Face-to-face communication with P2P publishers, P2P platforms are the biggest investors and are the key to integrating into the industry. Due to the COVID pandemic, this opportunity was not available to us. We made some small business-related mistakes on the way, but we did learn a lot and it allowed us to be right where we are now.
- Let’s say there is a new platform on the market, what are the main characteristics you look into first? What does the due-diligence process look like?
Usually, we just sign up for the platform and research practically everything on their website before proceeding. Our scoring model evaluates every platform equally. We simply conduct the research and supply the model with the necessary data. We perform background checks on platform founders, extract financial information from company registries located around Europe, look into any conflicts of interest between platform owners and projects/originators, and much more. To see how responsive a platform is, we even send test emails asking a few straightforward questions. Sneakypeer can indeed get sneaky.
I won’t go into detail about how we conduct our due diligence, but the concept is obvious. While this procedure takes some time, we want to rate each platform as fairly as we can.
- Do you believe your tools will help investors and partners detect fraud rapidly and support their investment decisions?
I’m more than certain. The model has demonstrated time and time again that it is effective. More than a year ago, despite the fact that the majority of P2P publishers were promoting ViVentor, our assessment indicated that investors should be cautious when making an investment. We raised a red flag as soon as we realised the company had been operating without an active board member for some time. We are all aware of what happened to this platform. This scenario was predicted by our model. This is only one example. Investors can find information on the Sneakypeer website, and information is necessary in order to make decisions. We think that the information available on Sneakypeer is sufficient to make a choice.
- As a topic that is widely discussed recently, what would you say are the current biggest challenges in P2P lending?
The ability to be adaptable for all market participants is, in my perspective, the biggest issue. There are numerous problems constantly, starting with loan performances, the stability of loan originator partners, etc.
The COVID-19 problem, the recent unfortunate geopolitical developments, and the economic decline have all occurred in recent years. Regulators have also advanced in the past several years and presented difficulties for the majority of platforms. Everyone needs to be adaptable in those times if they want to survive and succeed.
- And how are P2P platforms reacting and progressing to these trends?
We’ve noticed that most platforms’ strategies and interactions with investors have changed. Planning does not work in times of uncertainty, and everyone must adapt rapidly. Despite obstacles, a large number of platforms have survived and grown. Economic and geopolitical developments are receiving a lot more attention.
- Our last interviewee left a question for you: have you ever considered investing in farmland as an asset class?
I don’t see why not. This sort of investment makes sense and offers a number of advantages. When we look at farming on a worldwide scale, the land is getting smaller while the population is growing. In any case, there would be more factors to consider in addition to the asset class type. However, in general, I don’t see any justification for not diversifying portfolios with assets like farmland.
- And last but not least, in order to continue with this chain, leave a question for our next interviewee to answer!
What, in your opinion, defines a transparent P2P lending platform?
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