{"id":7962,"date":"2020-07-10T12:36:41","date_gmt":"2020-07-10T12:36:41","guid":{"rendered":"https:\/\/savingsforfreedom.com\/?p=7962"},"modified":"2020-10-10T15:10:29","modified_gmt":"2020-10-10T15:10:29","slug":"crowdestor-words-matter-towards-transparency","status":"publish","type":"post","link":"https:\/\/savingsforfreedom.com\/blog\/2020\/07\/10\/crowdestor-words-matter-towards-transparency\/","title":{"rendered":"Crowdestor: Words Matter… Towards Transparency"},"content":{"rendered":"\n

Among the biggest criticism P2P companies receive is consistent aggressive marketing. It takes full advantage of the low financial literacy from the majority of P2P investors to present significant risks in a mitigated manner. Crowdestor followed such path. Not anymore. They are moving in the right direction.<\/em><\/p>\n\n\n\n<\/a>\n\n\n\n

Crowdestor: Platform Status Update<\/h2>\n\n\n\n

Janis Timma<\/a><\/strong> is among the most engaged and ambitious P2P platform CEOs in the industry and he’s aiming to building the leading business crowdfunding platform in Europe. To achieve that, the Crowdestor team is making major changes with significant impact on the way investors evaluate risk. Crowdestor is among the P2P platforms capable of building a strong community of investors that allowed them to overcome the COVID-19 period and remain strong. In fact, they actually promoted fundraising directly from investors to fund their growth. Like PeerBerry<\/a><\/strong>, or Robo.cash<\/a><\/strong> was able to combine financial transparency, a stable presence of the CEO in direct communication with investors, and operational capacity to deliver value to its ecosystem.<\/p>\n\n\n\n

Provision Funds and Buyback Guarantee: Simple Marketing?<\/h2>\n\n\n\n

The lack of regulations in the European P2P industry allow less transparent marketing strategies from platforms that want to offer investors “safety options<\/em>“. This results in hard to justify or verify provision funds or buyback guarantees to “safeguard<\/em>” investor\u2019s money in the case of defaulted projects.<\/p>\n\n\n\n

The reality is that most of the so called provision funds and buyback guarantees are just marketing, supported by empty words. Offering a buyback guarantee is among the top features that investors demand from a platform. Without regulatory oversight, it is easy for P2P platforms to present such feature without real capacity to cover such guarantees.<\/p>\n\n\n\n

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Crowdestor: From Marketing towards Reality<\/h2>\n\n\n\n

The Crowdestor approach was to offer what was called Buyback Fund. And words matter… By providing a buyback fund the majority of investors believed that their investments would be covered in case of default, even if Crowdestor was very clear, since the very beginning, that was not the case.<\/p>\n\n\n\n

The Buyback Fund Method:<\/strong><\/p>\n\n\n\n

In case of a default, the total amount of the funded loan for this defaulted project would be converted to a percentage of the total amount of all the outstanding loans. The amount of funds was split between the investors of this project accordingly. See the example below:<\/p>\n\n\n\n