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Solidate – Solutions to debt problems

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Henrik78 15 days ago

What steps if any are you planning to avoid falling into other similar(albei tnot same) loan re-arrangers like Lendo etc Who made massive losses last/this year? Are there expansion business model in consideration? And as a last question, what if any SoMe strategy/campaigns are/will be in place to get your needed aggressive user base given that many of your users spent assumingly a lot of time online.

anonymous
Solidate Oy
13 days ago

Thank you for your interesting questions. First of all, we are in a completely different business than e.g. Lendo. Lendo is a loan comparison service that forwards offers from several lenders to applicants and does not handle the loans itself. Comparison services receive their income as fees from loan providers, we are the loan provider. Alongside the interest component, our earnings are based in part on our success in redeeming the customer’s old loans on good terms. Second, we always make the loan decision ourselves based on a very careful analysis of the client’s finances and the interaction with the client. The loan is adjusted to the customer's solvency, which supports not only the customer getting back on their own feet but also our earnings.

Solidate also plans to start operations outside Finland, as over-indebtedness is not an exclusively Finnish problem but a global one. Solidate's unique operating model can be transferred outside Finland almost as such - we will focus on it when operations in Finland are sufficiently established.

Your last question is somewhat ambiguous, but social media really is an important channel for us to find our potential clients. So far, we have succeeded well in this. Note that the good result is partly due to the activity of our partners, which we are very grateful for.

anonymous 20 days ago

Very interesting business idea to solve one of the most pressing issues we have in Finland (and many more countries).

Based on my experience in helping one of my friend recently with debt restructuring, I find the difference between Solidate interest offer of 8,9% (checked from Solidate website) and many offers from regular loan companies (range from 9,5-15%) quite small. How can you 1) make a difference to your potential customers that you can resolve their situations and 2) attract significant customer base to grow fast, if your offering is near to the existing market?

anonymous
Solidate Oy
20 days ago

Thank you for your precise question. Over-indebtedness really is a vicious problem and there are not many who are actually helping those in trouble and trying to a) break the debt spiral and b) help people get back on their feet.

How do we make a difference? First of all, we serve those people others don’t. People with registered payment default (around 400 000 in Finland) and/or in foreclosure (around 500 000) do not get financing from regular loan companies. We help them. Second, regular loan companies do not figure out the entire loan and financial situation of the customer and try to solve the whole problem. We do. Third, we also make sure that it is possible for the customer to repay our Arrangement Loan with his/her real cash flow. Fourth, unlike others we redeem the existing loans from lenders on market price, below the face value and will return part of the benefit (accord) to the customer when he/she follows the agreed payment plan. Finally, we try to help everyone coming to us – if our solution is not suitable for the person we guide him/her forward to other partners who might be able to help.

It’s important to perceive that we need financing from socially responsible investors to refinance the customers’ loans. In order to succeed with that the risk level must be acceptable for the investors. In practice our interest level depends on the investors’ decisions. We strive to keep interest rates as low as possible by limiting investor risk with e.g. the accord, that provides a buffer against credit losses, reduces risk, and enables the economic viability of the model for both the debtor and the investors financing the debt arrangement. Another thing that limits the risk is the voluntary credit ban required to be taken by the debtor.

anonymous 22 days ago

Hi, Two questions 1) Your revenue target for 2021 is 3,2 M €. What kind of customer base is required to reach that target and how that compares to the current customer base? 2) Any guidance on how that 3,2 M € would break down between your different earnings models? (Arrangement fee, Maintenance fee, stake from the debt accord). Thanks in advance!

anonymous
Solidate Oy
20 days ago

Hi and thank you for your questions.

1) This revenue target is based on our plan to arrange somewhat over 2 000 loans by the end of year 2021. Around 900 clients have now given us the power of attorney, but we have so far completed around 20 rearrangement processes. We provide new rearranged loans for people with sufficient payment capabilities and therefore not all customers will get a loan from us to keep our risk levels at acceptable level.

2) The vast majority of the revenue comes from the Maintenance fee (interest), around 80%, Both accord and Arrangement fee bring around 10% of total revenue.

Note that the revenue and financial expenses structure may vary depending on the instruments used to finance the Arrangement loans. These numbers are based on our plan to primarily use bonds at this point.

anonymous 23 days ago

Hello and congrats on your business idea! There's a lot to like from an ethics point of view, and it seems like an innovative and exportable concept because, unfortunately, the problem of people in debt who finance a loan with a further loan is common in many countries.

I'd like to ask you two questions:

1)Do you have any proof that the business is working? I ask because revenues at this point are really small, almost non-existent.

2) Do your investors and partners ICECAPITAL, Taaleri and Thomasset have bad loans they would like to restructure via Solidate?

Thanks in advance for your time and answers!

Massimo

anonymous
Solidate Oy
20 days ago

Hi Massimo, thank you for your great feedback and good questions. We share the same view; our concept is unique and useful almost anywhere. Over-indebtedness is a common problem in many countries. 1) Our current revenue numbers reflect the fact that we still are in an early phase in our business. Last year was used to develop the financial analysis for our clients’ use, further develop the semi-automated processes and what’s probably most important, build contacts and find reasonable ways to work with existing debtors. We are new, we still are small, it has taken some time to convince them that they should take us seriously, we are not going away. Now we are ready to capitalize on the results of that work. The first loan arrangements have been made but the total volume still is some hundreds of thousands of euros. The business model is strongly cumulative, though, and the revenue numbers will grow rapidly with the growing Arrangement Loan portfolio. 2) ICECAPITAL, Taaleri and Thomasset are investing in equity and in refinancing of the loans. They are not using Solidate to restructure their own loans. All good for you, Massimo, and thank you for your support.

anonymous 24 days ago

Would you be able to provide more details about the current revenues, cashflow and customer base?

anonymous
Solidate Oy
20 days ago

Sorry it took a while to answer your questions due to our short Midsummer break. Our customer flow has been as follows. Since starting the beta service in Q4/2019 (Q2/2020 in parentheses), we have got 5.300 (2.540) unique customers, performed 3.700 (1.700) analyses, got 921 (625) powers of attorney and have sent out debt status queries about 586 (340) customers. The Net Promoter Score (NPS) for our analysis and service is constantly around +40, which is a good to excellent score and consistent with the increasing flow of customers. Currently, we have 20 loans out, amounting to 420K€ and are working on the 187 applications in the backlog. Most of the loans were funded in Q2/2020. The current loan portfolio is estimated to generate an annual initial turnover of 9K€. Estimated deferred revenue from the debt accords is 13K€. Our business model is highly scalable, so these numbers will rapidly increase as the number of funded loans increases.

anonymous 24 days ago

What is your plan to keep investors up to date on what happens in Solidate? I.e. are you going to give progress reports or some sort of income/cash flow statements/balance sheets quarterly/yearly? If yes, on how deep level are you planning to report? Or what kind of other plans you have for investor relations? Just to be clear I'm not expecting a publicly traded company level reporting, though it would be nice!

anonymous
Solidate Oy
24 days ago

Thank you for your good question! We see that communication, not only on the financial progress but also how we manage to fulfil our mission within the society is very important part of our work. Our core values transparency and humanity are integral part of this viewpoint.

We are going to inform all our investors at least semi-annually on our activities taken and progress made, including financials. In addition, we will inform of any significant changes as soon as possible. Detailed information on the finances and progress made will be provided in connection with the Annual General Meeting.

Our communication plan naturally evolves as the number of owners increases. Our goal is to get more institutional investors involved and that is why our reporting naturally develops towards your wishes.

anonymous 26 days ago

Good evening. I would like to know what the participation of the current institutional investors in this round will be and at what terms. I would like to know in particular whether at the end of this round they will have maintained or increased their current share. In addition, I would like to know whether new institutional investors are involved and what their investment in total funding will be. I would like then to know if institutional investors are on the corporate board. Finally, I would like to know if some form of liquidation preference is envisaged for some kind of shares

anonymous
Solidate Oy
25 days ago

Thank you for the great question. We currently have multiple equity investors who can be considered as institutional investors. These include ICECAPITAL, Taaleri Invest, Thomasset and M4E fund. All of them are highly qualified financial sector players who also advise Solidate in its operations, which helps the future development of the company. All of them participate in this round on the same terms as other investors.

We are seeking investments from major institutions primarily for loan refinancing, where the need is much higher. Thomasset is currently one of the financiers, as is Tradeka. Taaleri has a new impact fund, which will start operations on July 1st and plans to invest in both equity and loan refinancing.

One of ICECAPITAL’s founding partners is a member of the Solidate Board.

There are no liquidation preferences. All shares are subject to equal terms.