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Solidate – Solutions to debt problems

Solidate helps over-indebted people get back on their feet. We desire to reform the credit market and do responsible and impressive business. Our owners include well-known players in the financial sector, such as ICECAPITAL, Taaleri and Thomasset.

Vår berättelse

Meaningful work to help people and families

Our mission is to help over-indebted people get back on their feet. We do it openly and responsibly through cooperation between the public, private, and non-governmental organizations. We are the first in Finland. At the same time, we want to create solutions that make lending and borrowing more responsible business.

In Finland alone, about 400 000 people have a registered payment default. Easily withdrawable unsecured debts, easy access to consumer credit, and gambling problems drive people into a debt trap. Help is needed to get out of this vicious cycle before social exclusion and despair. The cost to society of one single excluded family is estimated to be around 100 000 euros a year.

Solidate’s service allows everyone to analyze their accounts to get overall picture of their financial situation. This has been made possible by European Union’s PSD2 regulation. The analysis is a free of charge service. With the customer's consent it is also used by Solidate's partners in the third sector. Solidate performs an artificial intelligence-based analysis of the customer’s financial situation. Customer receives a detailed statement of his/her financial situation. The best solution for achieving financial balance is proposed to the customer based on the statement.

Solidate's role is to help people in debt problems provided that they commit to a new payment program according to their ability to pay. We also help people in very difficult situations with further individual assistance. Our goal is that we can offer help ourselves or through cooperating partners.

Solidate has created a market-based model for resolving debt problems. We offer our over-indebted customers a voluntary debt settlement. We redeem loans from creditors at the market price below face value. Then we grant customers a new loan with lower interest rate and payment plan adjusted to customers’ cash flow. We also share the negotiated below-market price benefit with the customer.

The corona pandemic has not alleviated the situation. Actually, on the contrary. The created economic crisis requires all possible solutions to secure Finland's future. We are expecting a growing number of over-indebted people to suffer the crisis in near future. We want to help people out of this desperate situation. We want to help people in this difficult situation.

Do you want to join us in helping families and society in this mission?

Vår affärs- och marknadssituation

Solidate offers its’ over-indebted customers a voluntary debt rearrangement. To finance the loans Solidate seeks capital from socially responsible investors. With the capital Solidate redeems loans from creditors at market value and below the face value and grants the customer a new, lower-interest and solvency-adjusted loan (Solidate Arrangement Loan). The resulting benefit is shared together with the customer creating an incentive to pay the loan.

Initially, the customer receives an analysis of his/her financial situation based on his/her bank account transactions and a recommendation for actions based on it. Based on the analysis, we provide the debtor a suitable payment to resolve the entire debt at a moderate interest and cost.

These new loans are financed by our responsible investors. The financing is in the form of a loan, hereinafter in the form of a bond. These loans are on the balance sheet of Solidate Uudelleenrahoitus Oy which is a wholly owned subsidiary of Solidate. It also grants the Arrangement Loans. Preparations are also under way for the introduction of a debt restructuring alternative investment fund.

Based on several thousand analyses performed using Solidate’s service about 30% of debt problems are also related to a gambling addiction. We do not offer debt settlement to its’ victims but direct them to get help for their addiction by Peluuri’s (www.peluuri.fi) services.

The heavily indebted people whose problem can only be solved with a radical debt cut we redirect to a legal debt settlement.

Market size

About 400.000 people in Finland have a registered payment default. In addition, the debt problem affects a large number of people who try to avoid a default until the very end at any cost. The debt is paid by debt.

Those in foreclosure are one of Solidate's key customer groups. At the end of 2019 507.000 people were seized and claims in private law totaled EUR 3.127 billion. 33% of the individuals in foreclosure had a debt of more than 10.000 euros.

At the same time unsecured consumer loans amounted to EUR 7,62 billion. Of these foreign banks and domestic minor credit companies have financed about 2,4 billion euros (2019).

 

Cross Border lenders

 

The total market available to Solidate for over-indebted individuals and households that can be helped by a private debt facility is estimated at € 3,0-3,5 billion euros:

Type of credit

 

Solidate's earnings model

We do not add to the distress of the debtor but offer a rather unique solution. We break the debt spiral by redeeming expensive loans from existing creditors below their face value. The resulting accord, i.e. the difference between the redemption price and the face value, 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. By following the payment plan the debtor receives part of the accord for his/her benefit. This further lowers the debtor's costs significantly. Compliance with the payment plan is also supported by the voluntary credit ban required to be taken by the debtor.

We apply separately for financing for the redemption of the loans – and for the financing of the Arrangement Loans to be granted.* The return for investors and Solidate will only decrease if credit losses exceed the amount of the accord.

With regard to the Solidate’s earnings from the Arrangement Loans consist of an arrangement fee (EUR 150 per customer) and a maintenance fee corresponding to 2.2% annual interest for the term. In addition, the company receives a 20% stake from the debt accord. In loans financed by a planned bond arrangement Solidate's share of the accord will be 60%. In connection with the legal debt settlement Solidate receives a fixed fee from its partner for providing the necessary financial data and analysis.

Solidate is also negotiating to provide access to the Solidate service platform to its partners. The first pilot project is about to begin as soon as it is approved by the Financial Supervisory Authority (FIN-FSA).

* We are seeking funding for this primarily from institutional investors, as the need for funding is high.

The competitive situation

Several loan providers in the market offer new loans to combine several existing loans into one. The most significant marketing channel is the various comparison services. The market is mainly populated by lenders who have previously provided expensive payday loans. The number of market participants has fallen significantly as a result of the nominal interest rate cap that came into force at the beginning of September 2019. The financing and risk selection model of several players does not allow for new loans any more.

Lending companies registered by the Regional State Administrative Agency of Southern Finland (ESAVI), which have recently stopped granting new consumer loans:

Company &Product names

The players still active in the market are not competitors of Solidate because they do not offer their services to Solidate's target groups. Unfortunately, creditors offering additional debt may rather deepen the problems of their customers and thus increase Solidate's target group. On the other hand, the reduction in supply due to players leaving the market puts many debtors in a new situation - debt can no longer be repaid with new debt. This also increases the need for the arrangement offered by Solidate in the market.

Solidate never increases the amount of credit to the customer. Solidate only offers a solvency-adjusted arrangement for over-indebted people. Takuusäätiö (The Guarantee Foundation, https://www.takuusaatio.fi/) operates in the same market as Solidate. Solidate and Takuusäätiö share much of the same values. However, the volume of the Takuusäätiö's arrangement loans is limited, both in number and in euros, in relation to the size of the debt problem. It is exactly this customer need that Solidate strives to meet.

Why invest in Solidate?

  • Solidate has created a new and unique, market-based model for resolving the debt problem, with over-indebted people getting their debt problems under control.
  • The size of the market is large. In Finland alone, unsecured consumer loans of more than EUR 3 billion require a responsible debt settlement that considers the debtor's solvency.
  • Solidate's business model is highly scalable as each Arrangement Loan generates income throughout its term (approximately 5 years on average).
  • Solidate aims to arrange loans totaling EUR 60 – 70 million by the end of 2021. The result for 2021 for the Arrangement Loans is already estimated to be clearly positive and the cash flow positivity is expected to be achieved in Q1 / Q2 2021 based on current forecasts.
  • Licensing of Solidate's service platform for use by private and public sector partners will also increase net sales and earnings.
  • Solidate's unique, market-oriented model is exportable anywhere almost as is. The aim is to expand operations to the Nordic countries and the wider EU region once the Finnish market has achieved a stable position. This will increase cash flow and the value of the company.
  • The company's owners include well-known financial investors and companies such as ICECAPITAL Pankkiiriliike Oy, Taaleri Sijoitus Oy and Thomasset Oy, as well as a number of experienced angel investors.
  • The company believes that a possible exit will take place in connection with internationalization, within 3 to 5 years at the latest, either through an acquisition, a merger or an IPO.

Vårt team

Vårt team

Solidate has a strong team of nine employees and a strong Board. The company is moving from a development phase to a rapid growth phase and therefore management goals and competence profiles are changing. For this reason, the company's CEO will change during the summer 2020. The new CEO Repe Harmanen is already strongly involved in the development of the company and will start as the CEO on August 1, 2020.

Solidate's owners and investors, ICECAPITAL Pankkiiriliike Oy and its shareholders, Taaleri Sijoitus Oy, Thomasset Oy, Palmen & Charpentier and Tradeka, have been active in the advisory role and significantly strengthen the company's extensive expertise.

Solidate's office is located in Helsinki at Pohjoinen Rautatiekatu 15 B 12.

Repe Harmanen

CEO from August 1, 2020

Has served as Chief Development Officer and CEO of multiple technology companies, both SMEs and publicly listed companies. Repe serves on the Boards of several growth and family companies. In addition to company development and growth, his expertise includes finance, M&A and a strong technology vision. He has more than 20 years of experience in international business at various stages. Repe holds a Master’s degree in Economics.

“Solidate’s mission is significant – to help families and individuals out of the debt trap, prevent exclusion and thus help the whole society with its business. Openness, transparency and accountability are important core values for me. ”

https://www.linkedin.com/in/repeharmanen/

Jarno Piironen

CEO until July 31st, 2020

Prior to Solidate, Jarno has been Nokia's business area manager responsible for product development, sales and marketing and manufacturing, as well as a business developer and a lawyer negotiating financing and sales agreements. Jarno holds a Master’s degree both in Laws and in Economics.

https://www.linkedin.com/in/jarnopiironen/

Anu Honkalinna

Partnerships

Anu has worked in the insurance industry for a long time and is an active startup mentor and connection maker, as well as a Kasvu Open miller. Anu holds a Master’s degree in Laws.

https://www.linkedin.com/in/anu-honkalinna-3725543/

Annika Karppinen

Stakeholders

Annika is responsible for contacts and the development of cooperation with consumer lenders and collection companies. Annika has previously worked in the insurance industry for a long time with partnerships and external sales channels. Annika has a Vocational Qualification in Business and Administration.

https://fi.linkedin.com/in/annika-karppinen

Mikaela Urpalainen

Product management and customer service

Mikaela is responsible for product management and ensures that the platform is serving customers all the time better. She is also responsible for customer service. Mikaela holds a BBA degree in International Business.

https://www.linkedin.com/in/mikaela-urpalainen-540b6212a/

Inka Uusijärvi

Customer service

Inka is responsible for customer service and its development. Inka holds a B.Sc. degree in Psychology from the University of Maastricht.

 

https://www.linkedin.com/in/inka-uusijärvi-7b7054157/

Gabriela Åkers

Customer service and communication

Gabi handles customer service and communications. Gabriela holds a BBA degree in Marketing from Arcada University of Applied Sciences.

https://www.linkedin.com/in/gabriela-%C3%A5kers-500421140/

Juhani Paukkunen

Technology

Jussi is responsible for the development of the platform and has about 30 years of experience in developing financial, insurance, and collection software. Jussi holds a Master’s degree in Technology.

https://www.linkedin.com/in/juhani-paukkunen-021b3532/

Ramita Biswas

Projects and platform development

Ramita is responsible for developing the platform and keeping projects on schedule. Prior to Solidate, Ramita worked for Tata Consultancy Services and holds a B.Sc. degree in Technology from the University of West Bengal.

https://www.linkedin.com/in/ramita-biswas/

Harry Nyroos

Chairman of the Board and founder of the company

Harry is a serial entrepreneur in the technology, insurance and finance industries. Harry served for a long time as the CEO of Profit Software, a company he founded. Harry works as an angel investor and advisor, particularly in the financial and technology industries. 

“For me, the purpose of business has always been to benefit the company's all stakeholders and the society, to improve people's lives. Solidate is built on the same ideas. A single actor can initiate a major change.”

https://www.linkedin.com/in/harry-nyroos-03392b31/

Jari Hänninen

Board Member

Jari is a former Director, Trade and Customer Finance, Nokia Corporation. He has extensive experience in various positions in the financial sector as well as in positions of trust related to the sector.

“Solidate’s work combines many things that I feel are close to myself. I followed the financial difficulties of entrepreneurs quite closely already in the 1990s. The recent indebtedness of individuals is a serious challenge that I want to be tackling. I will continue to work on the development of new financial solutions.”

https://www.linkedin.com/in/jari-hänninen-a8b51418/

Marko Luoma

Board Member

Marko is a founding partner in ICECAPITAL and a private investor and has more than 20 years of experience in the financial sector and M&A.

"Over-indebtedness causes huge problems at the individual level and societal costs. Solidate’s innovative model for helping people heavily in debt is inspiring for me and I am happy to contribute to bring a better future."

https://www.linkedin.com/in/marko-luoma-5a3126/

Tom Miller

Board Member

Tom is the Development Director of Suomen Hypoteekkiyhdistys (Finnish Mortgage Association). Previously, he was the President and CEO of Nordea Mortgage Bank Plc. and was in charge of Nordea's mortgage products, their customer experience and financing. Tom also serves as a board professional and advocate for responsible business on social media.

”Understanding household indebtedness has been part of my job and even a matter of personal interest for years. Of particular concern is the development that has come with the so-called quick loans – there are quite ordinary households in Finland struggling with a genuinely significant debt problem – and the problem is not a mortgage. Unfortunately, regulation looks at the issue from afar and from above - the wondering of macro-stability does not solve family debt problems.”

https://www.linkedin.com/in/tom-miller-23325/

Torsti Tenhunen

Board Member

Torsti is a board professional, management coach, angel investor and FiBAN influencer. Torsti has founded and funded several innovative startups and serves on the boards of several companies and as a growth accelerator, including with a few large companies.  “I also want to be involved in solving even bigger, socially significant challenges. Slowing down or even preventing over-indebtedness and offering new options to those in difficulty is such a challenge. Solidate's solution to it is very innovative, socially helpful and soon also exportable.”

https://www.linkedin.com/in/ttenhunen/
Risker

Onoterade tillväxtföretag är investeringar med hög risk. Risker som finns i onoterade företag är t.ex. risken att förlora hela din investering, brist på likviditet på aktien, oregelbudna eller sällsynta utdelningar (vinstutdelning) och utspädning av din insats. Läs denna denna riskvarning noggrant innan du gör en investering.

Vi rekommenderar att du tar reda på investeringsmålet som du är intresserad i, diversifierar genom att investera i flera investeringsmål, och balanserar din portfölj genom att likvida investeringar. Vi rekommenderar även att du studerar noggrant riskbeskrivningarna som finns i målföretagens riskavdelningar, som du hittar i investeringsmaterialet.

Bifogat till investeringsmaterialet hittar du en kreditupplysning som kan vara relevant för att göra ett investeringsbeslut.

Financial risks 

  • Financial forecasts – The company serves as a platform bringing together indebted individuals, responsible investors, the public and third sectors, private lenders and the debt collection industry. The company's operations are affected by, among other things, the general financial situation, interest rates, credit sector regulation, ability to utilize technology to enhance the operations and the development of cooperation with all the above-mentioned players. Building a network is demanding, but if successful, it will give the company a competitive edge.
  • Financial risk – The company is not yet profitable and requires financing for its operations in order to continuously grow its business. In order to grow the company also needs financing to refinance the Arrangement Loans.
  • Credit risk – Refinanced customers are in difficulty, which is why the credit risk of the company's loans is high. The company manages credit risk by comprehensively clarifying the customer's debt situation and payment assets, the accord obtained from creditors and the customer's voluntary credit ban. Excessive credit loss reduces the company's ability to obtain financing to lend to customers, which limits the company's operations.

Operational risks

  • Technical risk – The company's customer service process depends on the functionality of its technical platform and that of its integrated partner companies. 
  • Security risk – The Company handles confidential information of individuals, and leakage of information may compromise the Company’s reputation and operations. The company minimizes information security risk through personnel training, platform development guidelines and regular information security tests and audits, the latest of which was conducted in January 2020. The company is not aware of any information security-related events.

Non-financial risks 

  • Regulatory risks – The company's operations are governed by several pieces of legislation, including the Consumer Protection Act, Act on Preventing and Clearing Money Laundering, the Payment Services Directive 2 and its Finnish implementation, the Act on the Registration of Certain Lenders and Peer Brokers, the Credit Information Act and the EU Data Protection Directive and Data Protection Act. The company works with major financial groups, with which co-operation requires compliance with the relevant regulations and the requirements of the Financial Supervisory Authority. An interpretation by an authority that differs from the company's interpretation or the company's error may, at worst, halt the company's operations. The company has no pending regulatory processes.
  • Legal risks – The normal course of business of the company includes being a party to legal proceedings relating to debts. In principle, the risk of being involved in another procedure for a non-business reason always exists, in which case the risk may be, for example, incurring additional costs in the form of legal costs.
  • Risk of losing key personnel – The company is small, and the loss of key personnel could lead to a slowdown in the company’s operations. The company's key personnel have been committed through ownership and option arrangements.