Crowdestor investors have funded almost 300 projects with total amount of 40 million EUR. The average interest rate is 18.5%, most projects are extremely risky and many have no collateral. So how is the overall portfolio doing?

No stats, no problem?

If you want to find this info on Crowdestor’s website, good luck. To be honest, I find it a bit ridiculous - Crowdestor has raised € 1 million for their own platform, hired lot of people and developed an SME automation product, but providing stats to investors? That can wait.

Obviously this is not good enough. So Basti, one of Crowdestor investors, created a crowdsourced Google Sheet document, where anyone can add info about Crowdestor projects and their updates:

docs.google.com/spreadsheets/d/1B3ytgmTC2xNJhTaQl_A3Klz-9T77rvBiQNv2E4h8ggk/edit?usp=sharing

His comment about how the project started:

I’m Part of a bigger Crowdestor Telegram Group. After the first wave of Covid 19, more and more people asked about missed payments and delayed projects. It was hard to follow all comments, updates and extensions. So the idea of one place with all info was born.
The sheet started small with only delayed projects, but soon I liked to see the whole picture and put all my projects on it. Many other investors helped to improve and filled their data. Special thanks to Tomas.

It must have been a lot of work, but the result is great - now anyone can check, which projects are paid, which are delayed and which might get in trouble soon. As I understand, colors mean following:

Green = paid, all fine
Red = big problem
Yellow = partly paid

First impression

I have not spent much time analysing this data, but I tried to understand, what is the proportion between projects that are payed back and those that have run into issues.

So at first I summed up all the “green“ stuff - 43 projects, total amount: € 3.7 million:

Then I summed up all the “red“ and “yellow“ rows - 58 projects, total amount: € 11.5 million:

Does not look good to me - late/problematic projects are responsible for 3x larger amount than those that have been paid back.

Expected return?

If we ignore all the rest of Crowdestor portfolio, and assume that the quality of it is similar, then let’s check, what are the final returns that Crowdestor investors can expect:

If less than 80% is recovered from problematic projects, then the average investor can expect a negative return. And if anyone expects to get around 10% return in the end, he should pray that at least 90% is recovered from problematic projects.

Is that likely? I don’t think so. Just one Fertilizer project can cause a € 1.5 million or 13% loss of the 58 projects with issues. But there are restaurant and bar projects, yacht rental, concerts, exotic resorts - businesses strongly affected by Covid. And some of the projects might be positively impacted by Covid, but still are extremely risky and with no collateral - movies, game, software - stuff that can go to 0 as well.

Maybe someone plans to do more serious research - let me know, will be happy to share it, but right now - after spending couple of hours and looking at this data I have big doubts if the average return in the end will be positive.

What about Crowdestor investors?

I find these stats troubling, but I am not an investor in Crowdestor and it does not really affect me. So I asked for feedback to couple of Crowdestor investors, who have invested in these projects at least € 10k. Are they worried? Not really.

After seeing the stats, has your attitude changed? Are you more optimistic or more cautious?

Investor 1: When I look at the stats, my attitude didn‘t change. Crowdestor now needs to prove their debt collection ability and improve the website.
Investor 2: Didn't take a look at the stats. I know that delays happen but can't do much about it right now except complain or take action. Neither I am up for right now. If misconduct becomes apparent in borrowers, I expect Crowdestor to take appropriate action; if Crowdestor misconducts, I am willing to take legal action myself (or in a group) against Crowdestor.
Investor 3: I am more cautious.
Investor 4: More cautious. I will check more carefully all projects before eventually investing and I will invest smaller amounts as before.
Investor 5: I am a bit disappointed to be honest, but I only invested betting money, so what I get back I reinvest. I will be more diligent about the borrowers. I think they are working on providing more information, the projects are risky per se, but with 20%+ interest anyone would understand that.

When you first started to invest in Crowdestor, what were your expectations of final average return? Have they changed?

Investor 1: My expectation was 15 % average return, with some high yield projects, it could be a bit more at the end.
Investor 2: I chose Crowdestor as a high-risk, above P2P-average return investment opportunity, thus >15% with still upside. Expectations haven't changed given that collateral and securities offered are rather weak.
Investor 3: I started last summer. I expected 16% p.a. Now interest rates have risen, but defaults are increasing. Or the delays, so I think that the 16% will remain.
Investor 4: I expected about 15% return. Yes, the delays and eventual defaults can bring the final average return much lower or negative. On the other hand I still think it could be possible to have a long term return of 10-15% with P2B.
Investor 5: I had 10% return expectation, now I expect way more, and to be fair the interests are raising.

Which Crowdestor projects are you most worried about? Do you see any of the projects where you invested, potentially going to 0?

Investor 1: Limp Bizkit Tour and Resort Projects are heavily affected by the pandemic. Hard to predict the outcome, at the point I invested these seemed less risky. Premium Foods Confectionary Investors memo did not show a clear plan of recovery.
Investor 2: There may be some, just hope won’t be too many. Most worried: all non-collateral ones in tougher industries like retail, convenience, restaurants, entertainment, travel, forestry ... you name it.
Investor 3: Bounty Resort is very risky.
Investor 4: In general all delayed projects are very worrying if no update is given to the investors about the reason of the delay and the collection process. I really hope that the long time awaited "cabinet" with updates on loans will be soon implemented. Talking about single projects, Fertilizer is maybe the most worrying. Other projects in far away countries like Cambodia or Georgia look also extremely risky. And of course projects related to concerts and other events that are not possible to realize before of Covid restrictions. For sure there are problematic projects that might go potentially to 0.
Investor 5: Projects related to marketing activitis are at great risk unfortunately.

What about other P2B platforms?

If anyone is up for it, would be interesting to understand what is going on in other P2B platforms like Crowdestate or TFG Crowd. Not sure, if situation there is any better…

Key takeaways

I don’t think that the average Crowdestor investor will get a positive return
Crowdestor investors are optimists, still expect a 10-15% return
If a P2P platform won’t provide stats, investors will do it instead

P.S. Join “High-risk investments“ Telegram group for an informal discussion.

Kristaps Mors

Crowdestor portfolio statistics