Crowdestor is a small crowdfunding platform from Riga, that helps to fund business projects from different sectors. This peer-to-business (P2B) lending platform is gaining popularity, mainly due to high annual returns of up to 21%. Higher returns, however, always come with higher risks. Read our Crowdestor review to learn more about the website.
- 28/07/2020 - Crowdestor is facing a DDos attack which caused downtime of Crowdestor's website
- 10/07/2020 - Crowdestor launched its new provision fund
- 26/06/2020 - Crowdestor published several updates about their current loans in the Crowdestor Investor Group on Facebook
Crowdestor in Numbers
It’s always good practice to look at a platform's previous performance before signing up and investing money. If you can’t find a platform’s basic statistics, you should almost certainly treat this as a red flag.
When searching for initial information about Crowdestor, we found the following basic stats on the platform's homepage:
|Total loan value:||+ €32 M|
|Amount of investors:||+12,800|
|Loss of investor's money:||-|
|Average portfolio size:||-|
|Latest financial report:|
Unlike Mintos, a P2P platform that is happy to share advanced statistics, Crowdestor isn’t the best when it comes to providing investors with detailed information.
The number of investors using Crowdestor is growing, and that’s without the heavy advertisement competitor platforms like Bondora use. This is generally a good sign, as it means investors found Crowdestor through word of mouth rather than paid promotion.
Note, however, that eventhough we have reached out directly to Crowdestor and requested additional details, noone ever got back to us.
Crowdestor Promo Code
Some of the crowdfunding platforms, Crowdestor included, offer special promo codes that reward new investors with a cashback bonus.
New investors that register and invest through our link will receive a 1% Crowdestor bonus from their average portfolio size after using the platform for 90 days. This is of value, particularly for investors who plan to invest large sums of money.
Check out this example to give you a better idea of the Crowdestor bonus:
You invest €50,000 within the first three months and you will receive €500 bonus that will be added to your investor’s account.
In order to obtain the Crowdestor bonus, you don’t need a promo code per se. Just sign up with our link and the promo code will automatically be connected to your investor’s profile. The sign-up process is very simple and it only takes a few minutes.
Crowdestor’s New User Requirements
Much like most P2P lending platforms, Crowdestor requires its investors are over 18 years old and transfer funds from their European bank accounts. Note that you need to reside within Europe to be eligible to invest. This means that investors from the US and Canada are not eligible to invest on Crowdestor.
No EUR bank account? No problem
If you are looking into a digital bank account with fast and free SEPA transfers, the N26 account might be a good option for you. It takes a maximum of two days to deposit money on your investor’s account.
Risk and Returns Involved with Crowdestor
When reviewing the risk of an investment on a specific P2P lending platform, you first need to look at the securities that come with the investment.
You can find some information about the securities of a specific investment in the project description. From an investor’s perspective, the information Crowdestor provides regarding the security of your investment is less than sufficient.
Here’s a breakdown of the safety that comes with Crowdestor investments:
- Guarantee by borrower
- Intellectual property and copyrights of an online game developed by the borrower
- Commercial pledge on assets and agreements
- Buyback fund
In most cases, there isn’t much additional information about the security of your investments, which could easily lead to confusion regarding the actual securities that come with P2P lending on Crowdestor.
Crowdestor has recently upgraded its buyback fund. From now on, it’s called a “provision fund”.
Additionally to the collateral which is the real protection of your investments on Crowdestor, you can enjoy the protection of Crowdestor’s provision fund.
Crowdestor pays 0.5% commission of every project to this fund. The status of this fund is being updated on a monthly basis.
How does it work?
The provision fund “covers” the entire loan portfolio on Crowdestor. Meaning the size of the fund will be split according to the loan amount of the outstanding loans.
And here goes the calculation (example):
Total loan portfolio: €20,000,000
Average default rate: 10%
Individual project: €100,000
Provision fund size: €360,000
360,000 x (100,000 / (20,000,000 x 10%)) = € 18,800
In short, if you invest in a loan of €100,000 and it defaults, a total of €18,800 will be distributed across all investors.
This is in addition to the collateral which will be sold to cover the loss.
Is Crowdestor Safe?
Crowdestor offers high yielding investments in business projects. In short, Crowdestor connects business owners with the crowd that helps fund their business ideas. In theory, this is a great initiative to support small and medium businesses in Europe, as you can invest from only €50.
Past experiences with similar business models show that investing in business loans is extremely risky. Retail investors have already lost millions by investing in seemingly similar platforms such as Monethera, Grupeer, Envestio, and Kuetzal.
Let’s have a look at the team behind Crowdestor, their terms and conditions, and whether we can spot any red flags.
Who Runs the Company?
Janis runs at least two more companies Eco Energy Riga and the Heat and Power Plant Association of Latvia . Janis owns a power plant by himself, which helps fund the expenses of the crowdfunding platform.
Gunars was previously the managing director at FUNDEA before he joined Crowdestor as the COO. Our quick research showed that FUNDEA is a microfinance company from Guatemala. We aren’t, however, sure whether this is the company Gunars previously worked for.
On Crowdestor’s team page, you will learn that the team runs with only 9 people. Recently Artur Geisari joined Crowdestor as the new head of SME. Artur is simultaneously the CEO and Co-founder of Monify, a fintech start-up that provides funding to SME in the Baltics and Poland. This new recruit should help Crowdestor to become the top funding sources for SME in Europe. Only time will tell whether Artur can reach Crowdestor’s high ambitions.
Who is the Legal Owner of the Company?
Crowdestor OÜ is registered in Estonia; however, their HQ is based in Riga, Latvia. In the Estonian business registry, we found that Janis Timma is the only registered management board member.
Are There Any Suspicious Terms and Conditions?
Crowdestor is funding a broad spectrum of projects from all around the world. It’s important to be aware of the terms and conditions and know your legal rights in case something goes sideways.
First and foremost, Crowdestor is only a service provider that connects borrowers (businesses) with investors. The company itself does not provide any legal or investment advice. You, as an investor, lend money to the business, which is also your contractual partner.
Crowdestor isn’t liable for any losses that might occur from any of your investment activities on the platform.
This is a standard clause used by all P2P platforms. As an investor, you should do your own due diligence about every single project and evaluate whether you are willing to take the risk and invest.
In Crowdestor’s terms and conditions, you learn that your uninvested funds are excluded from Crowdestor’s assets, which means they belong to you. Crowdestor can only use them in line with the terms and conditions - to invest in projects of your choice.
This gives you good legal ground. We have tested the withdrawal function of our available funds on 7/04/2020, and we received them on 8/04/2020 to our bank account. Great to see that the platform’s withdrawals work like a charm.
Amendments to the terms and conditions
Crowdestor can amend the terms and conditions at any time without prior notice.
If you disagree with the changes, you won’t be able to continue using the platform. The positive balance will be paid out to your bank account within 10 working days.
In case you have ongoing investments, you will need to wait until the borrowers repay their loans in order to exit Crowdestor completely as there is no early exit option currently available.
Do Investors have Access to Individual Loan Agreements?
Investors have access to all loan agreements. Just click on the left menu on My Investments and choose the individual agreements.
Crowdestor’s loan agreement isn’t publicly available. You can either view it before you decide to invest in individual projects or afterward in your investor’s dashboard. Compared to many other assignments and loan agreements, Crowdestor’s contract seems much better structured.
Potential Red Flags
- Crowdestor isn't answering any of our questions regarding the statistics of the platform
- Crowdestor can amend the terms and conditions without prior notice
What’s our opinion about Crowdestor?
We have had an active portfolio on Crowdestor since 2018. Our average interest rate is at 16.65%.
The P2B platform lures investors with high interest. You should know that high returns come at a higher risk.
While Crowdestor was founded by seasoned entrepreneurs, there’s a lack of transparency which we don’t appreciate. The descriptions of individual loans aren’t sufficient and neither backed by additional financial reports.
This can be an issue if you plan to invest several thousand Euros in a single project.
Personally, we prefer to know exactly where we put our money into. In the case of Crowdestor, you have to hope that everything goes according to the plan.
Basing your investments on hopes isn't good practice though.
While Crowdestor has exciting goals in terms of business expansion, it is hard for us to understand how they are able to evaluate the risk factors of a real estate loan on an island in Cambodia.
We have a small stake at Crowdestor but due to the above-mentioned concerns, we won’t increase our investment at this point.
Crowdestor is very user-friendly. Regardless if you’re a beginner or advanced P2P investor, the platform is very intuitive and easy to use. What we also like is the dashboard overview, where you can track your portfolio performance. Crowdestor manages to show you all the information you need.
Currently, Crowdestor investors still need to invest manually when diversifying their portfolio as the Auto Invest feature is still in development. This is something that should be changed soon, and when it is, we’ll be sure to update this Crowdestor review.
We’ve had no issues when it comes to adding and withdrawing funds, with the deposit of funds taking no longer than two days.
Although there is certainly room for improvement, for most investors the current features will suffice.
Liquidity is becoming an important factor for P2P investors, particularly when there is uncertainty in the financial markets.
Due to the fraudulent behavior of P2P lending sites such as Envestio and Kuetzal, the P2P lending market experienced reputational damage.
Many investors requested to add an early exit option on Crowdestor. From now on, investors will be able to exit their investments on individual projects before the end term.
Note that this feature isn’t a secondary market, which is still in development. With the early exit option, the borrower will repay a certain amount of the loan in advance.
To find out which projects offer the early exit option, navigate to your investments within the user dashboard.
Certain projects allow you to send an application for an early exit. Note, that the early exit option comes with a fee - also called “early exit discount rate”. This rate is determined by the borrower.
When you scroll down the page, Crowdestor explains the exact process of how this early exit option works. Note, that there is only a 30-day window where you can submit your request for an early exit. Afterward, it can take up to 20 days to receive a part of your initial investment back to your investor account.
We appreciate the efforts to allow investors to withdraw their investments in case they absolutely need the money. We encourage our readers, however, to think this through as it comes with certain losses in the form of the early exit discount rate.
Crowdestor’s Customer Support
We have reached out to Crowdestor several times, requesting more statistical data as well as their financial reports. To date, we haven’t heard back from anyone. We addressed our questions to various emails we could find on Crowdestor’s website without any reply.
If it is hard for us to get a response, it might be troublesome for new investors to get any additional information as well.
There is one way to get in touch with Crowdestor, and that’s via a private Facebook group. In order to join this group, you have to be a registered member of Crowdestor. If you are a new user who would like to get some information before signing up, you might not be able to get it anywhere.
Crowdestor Review Summary
Crowdestor is aimed at investors who seek higher returns. The risk of investing on Crowdestor is higher as you cannot easily evaluate the risk and returns since Crowdestor is listing loans from a variety of industries and countries. You should do your own due-diligence before investing on Crowdestor.
Main takeaways from our Crowdestor review:
- Invest in high-yielding business loans
- Invest across various industries
- Backed by collateral and provision fund
- Lack of transparency and poor communication
If you are keen to take the risk and invest on Crowdestor, sign up with our exclusive link and get a 1% bonus on your investments within the first 90 days.
Ready to lend with Crowdestor?
How is my investment secured on Crowdestor?
Each of your investments on Crowdestor offer different protection. Most of the projects are partially covered by the provision fund, while other securities might be borrower’s guarantees or business collateral. We recommend investors become familiar with the securities before investing on Crowdestor.
Is Crowdestor good for diversification?
Crowdestor is good if you’re looking for a secondary platform on which you want to lower the platform risk. The platform is not, however, the best when it comes to diversification as there aren’t as many investment opportunities and investors can often experience cash drag.
What’s the minimum investment amount on Crowdestor?
The minimum investment on Crowdestor is €50 per project. You need to invest much more money than on other P2P lending platforms to achieve a good diversification rate.
Is there a buyback guarantee on Crowdestor?
Unlike Mintos or PeerBerry, Crowdestor does not offer a no buyback guarantee .There is, however, a provision fund, which helps to cover potential losses.
|Address:||Roosikrantsi 2, Tallinn, Estonia|
|Phone:||+371 2733 3274|
|Opening Hours:||Weekdays from 9AM to 7PM|