We are back with another profile, this week we have Christian Faes from LendInvest.
LendInvest are the world’s leading online marketplace for property lending & investing.
Let’s find out more about Christian and LendInvest. Our questions are in bold.
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Who are you and what’s your background?
I grew up in Australia where I trained and qualified as a solicitor specialising in corporate finance and real estate. I first moved to London in 2000 and was a lawyer with Clifford Chance and then in-house with Deutsche Bank.
In 2008 my business partner and I spotted an opportunity to go into business together and we have never looked back!
Christian Faes of LendInvest
At first, we launched Montello Bridging Finance. As financial markets around the world fell apart and banks shut up shop, we saw an opportunity to set up a short-term mortgage lending business. At first, business was slow but that gave us time to get our credit underwriting processes right before the market began to recover and demand for loans grew.
Then, in 2012, we were watching with interest the emergence of Zopa, Funding Circle and other peer-to-peer lenders in the consumer and SME lending markets. No one had tried P2P in the property market and we spotted an opening to be the ones to do it first. LendInvest was spun out of Montello in May 2013 and the business has grown very quickly since. In a way, we fell into the P2P and FinTech worlds. We like to think of ourselves as lenders learning the tech, rather than a technology business learning how to lend. Lending well is difficult and takes time to learn. That’s where we have the edge.
What is your job title and what are your general responsibilities?
I am Chief Executive of LendInvest and one of the business’ two co-founders. I oversee all aspects of our company’s development – from bringing on board more institutional investors and opening up our business to the capital markets, to managing our regulatory and underwriting standards and helping our HR team attract the best people to the business.
Can you give us an overview of your business?
We were the world’s first online marketplace to focus on property and continue to be the largest lender in this space. We are also now the fourth largest P2P lender in the UK and recently announced our second set of profits after two years in business. In our first year of business we lent approximately £100m, and last year (our second year), that number rose to over £250m.
In short, we match people and institutions looking for attractive opportunities to invest in real estate, with property entrepreneurs looking for short-term finance to fund property purchases, renovations and developments.
Individuals can invest money in their choice of mortgage loans via our online marketplace in return for competitive interest rates. Additionally, we manage upwards of £150 million in funds and funding lines on behalf of institutions, wealth managers and family offices, all of which is invested through our online platform in the same investment opportunities as our peers.
Borrowers come to us for short-term finance because we can make mortgage application decisions quickly and move fast to complete on deals within days as opposed to the weeks or months that traditional lenders will typically take.
At LendInvest, we pride ourselves on being property lending specialists. We have many years’ experience in the property investment sector and we don’t allow ourselves to get distracted by diversifying what we do into any other industries. We don’t need to because the UK mortgage market is a big enough opportunity already. This £1.3 trillion sector is traditionally slow and offline making it ripe for transformation through tech-based businesses like ours that challenge the incumbents to automate their services for more fairness, speed and efficiency.
Currently we focus on lending in the £4 billion short-term market. Over time we will expand our mortgage product range to include more conventional buy-to-let mortgages.
Tell us how you are funded.
We were fully self-funded until June 2015 when we completed a £22 million equity investment in our business by a listed Chinese technology company. It was the largest ever Series A investment in a UK FinTech business and the capital allows us to continue our significant investment in technology and recruit heavily across all teams, to match the demand we’re seeing from both investors and borrowers for our services.
Why did you start the company? To solve what problems?
We are in a funny situation in that we launched a FinTech start-up to disrupt a sector that we have been operating in as a traditional business for the last seven years.
The idea of LendInvest was born out of our own frustration with how slow every moment of the mortgage application and approval process can be. We were confident that, by adopting the principles of peer-to-peer lending that were doing so well in consumer and SME lending sector, we had the opportunity to disrupt a sector that is traditionally offline, slow and almost completely dependent on human resources to get things done.
After only two years in business, we are already able to reduce the time that it takes to approve a mortgage application dramatically. The typical application with a high street lender takes three months from initial enquiry to completion. Using our proprietary technology, this can take as little as two weeks. The speed at which we are able to work makes us extremely popular with property entrepreneurs buying at auction who need to complete their purchases within a matter of weeks.
LendInvest Homepage
Who are your target customers? What’s your revenue model?
Investors fall into three main categories: individual investors; family offices and other wealth managers; and several banks and institutions that provide dedicated credit lines. All investors’ funds will be matched against one or several mortgage loans that have been preselected, vetted and approved for finance by us.
In fact, we will provide the mortgage finance to the borrower in advance of making the deal available to our investors. This way, we demonstrate our confidence in the ability of the borrower to repay their debt.
Investors like to invest with us because we offer fantastic interest rates. The average interest rate is currently over 7%. We have had no capital losses to date, meaning that in over two and a half years, no investors have lost money investing with us.
People who borrow from us will be seasoned and experienced landlords or property developers looking for a short-term mortgage deal, often to enable them to upgrade or rebuild a property before selling it on or refinancing with a mainstream buy-to-let lender.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
The buzzwords! Words like ‘FinTech’ and ‘P2P’ have been fantastic for fledgling, new companies to gain traction and attention in the financial system. But, as our business grows, I find that they can be as much a deterrent or distraction as an attraction. For investors or consumers who don’t yet understand how online lending works, the buzzwords can be shorthand for untested, unproven or risky.
When the top peer-to-peer lenders have lent almost £4 billion to UK borrowers, how can we still be called ‘alternative’? We need to start levelling the playing field and remove the stigma attached to being different.
What is your message for the larger players in the Finance industry?
Something along the lines of the above: being different, new or alternative has its benefits and isn’t something to run from. Also, come and talk to us. FinTech isn’t out to remove or replace the ‘traditional’ players in the financial services sector completely. We are out to improve the customer experience and that’s only going to happen with collaboration and partnerships between the new and the old.
What phone are you carrying and why?
iPhone 6. Everything around me at work and at home has somehow ended up being Apple, so it just makes sense.
Where do you get your industry news from?
Financial Times – essential viewing every morning to know what our customers, investors, partners and advisers are doing, reading or thinking.
City AM (London’s free daily financial newspaper) – with nearly 400,000 readers, it’s earned a reputation for good reporting and great features.
Business Insider UK – I like how it’s written and how it’s shaking up how business news gets reported.
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
There are so many. I am addicted to Twitter, and it really is how I keep up with everything that’s going on.
Peter Renton – @LendAcademy – who really is one of the grandfathers of the P2P/marketplace lending world. He started the LendIt conference which is a global gathering of the online lending world.
Cormac Leech – @cormacleech – FinTech analyst at Liberum, the investment bank. Has had finger on pulse of FinTech developments in the City for several years
… um, yes, then you should also be following me! @ChristianFaes
What’s the best FinTech product or service you’ve seen recently?
There are all sorts of developments happening in the world of property technology (or PropTech) right now that are not getting the airtime they deserve.
It’s not just the consumer-facing companies like Emoov, but many tech-driven businesses that work behind the scenes to improve processes that are traditionally offline, time-intensive and laborious, such as conveyancing and searches. We have a good relationship with www.plentific.com, a young London company that is developing a comprehensive information portal that homebuyers, investors and landlords can rely on to find valuable data in one place about the properties they intend to buy.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
I’ll make three:
The winners in each sub-sector of the FinTech world will be the ones that specialise and focus on doing what they do best.
We will start to see a lot more collaboration between the individual sub-sectors; for instance, peer-to-peer lenders using specialist payment services. An integrated network of closely aligned, niche and separate companies will eventually take the place of the monolithic, multi-service financial institutions.
As FinTech takes hold of the financial system even more significantly, City audiences will become more savvy and more demanding as a result about how FinTech companies talk about themselves and account for their performance, growth and future plans.
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Thanks to Christian for his answers today. You can find out more about LendInvest on their website, facebook, twitter, google+ and linkedin.
If you’ve any suggestions for other hot FinTech companies (startup, or established ventures) that we should be profiling, I’m all ears. Don’t hesitate to drop me a note at ewan@fintechprofile.com. There’s more information on this page.
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