An initial review on Kuetzal

Kuetzal is a new crowdlending platform from Estonia offering the possibility to invest in business loans with good interest rates. The interest rates range from 10% to 21% and the loan terms range from 1 to 4 years. What makes Kuetzal appealing is the fact that it offers these business loans under a buyback guarantee, which means in case of default the projects will be bought back by Kuetzal from investors.

Kuetzal is a new crowdlending platform from Estonia offering the possibility to invest in business loans with good interest rates.

The interest rates range from 10% to 21% and the loan terms range from 1 to 4 years. What makes Kuetzal appealing is the fact that it offers these business loans under a buyback guarantee, which means in case of default the projects will be bought back by Kuetzal from investors.

A sad end for Kuetzal

Kuetzal needed 1 year until it ran into problems. It’s bank accounts got locked in the second half of December due to money laundering concerns. Almost a month later, Kuetzal team finally managed to issue a statement.

Dear Kuetzal investor,

Our team wants to apologize for delays in payments and replies to e-mails received.

Unfortunately we have to inform that Kuetzal is announcing wind-down, furthermore the company will only process withdrawals of the funds, the company is no longer accepting new project applications, investors registrations and deposits. Company’s reputation was harmed sufficiently for the past weeks, and Kuetzal management does not see a way to recover investor’s activity, therefore we may not return to usual working process. The mission of the company may not be reached anymore.

Due to high number of reports, claims and negative messages SEB Bank and PAPAYA (the only two banks that Kuetzal used) initiated the AML check and has temporarily blocked Kuetzal’s bank accounts. Kuetzal is currently unable to perform any operations for undefined period. Kuetzal management is aiming to reestablish the activity of both operational bank accounts and perform buy-backs and withdrawals in shortest terms respectively.

Kuetzal will keep the investors informed.

We have not been able to make Kuetzal a successful player on crowdfunding market. We will however aim to exit the market quietly with minimum repercussion to our customers and the whole crowdfunding market. The website functions furthermore will be limited, only the user area will be kept. All the user area functions will continue working as before.

In case of technical issues with withdrawals or other question we kindly ask to use our contact mail instead of social networks or cellphone to receive the fastest service.

Kuetzal’s e-mail:

[email protected]

January 12th, 2020

December and January have been the worst months for Kuetzal, to say the least. Right after a new management team took over Kuetzal, problems started to appear. Investors were worried about the change. Then a series of concerns appeared about some of Kuetzal’s projects, and the fact that the team didn’t do proper due diligence. Then an interview backdated June 2019 was published showing that Kuetzal team wasn’t very professional (personally I think it’s a bit fishy to publish this half a year later just when problems start to show up). Investors panicked and started mass-withdrawing their funds. Concerns and complaints were raised with the Estonian authorities. Kuetzal’s bank accounts were locked until further notice.

Without bank accounts, Kuetzal cannot receive new investments and can’t finance new projects, so the sensible thing to do was to pause its operations. Although their message feels more like giving up the fight and maybe start new with another platform since this one is to damaged to recover.

I’ll keep below my initial review, for historical purposes.

Platform highlights

  • Launched: November 2018
  • Headquarters: Estonia
  •  Loan types: Business loans
  • Loan terms: up to 4 years
  • Interest rates: up to 21%
  • Fees: no fees
  • Minimum investment: 100 EUR
  • Currency: EUR
  • Secondary market: no
  • Auto-invest: no
  • Buyback guarantee: yes, on most projects
  • Accepts investors from: any country excepting USA and blacklisted countries

Kuetzal started its operations only in November 2018. I lurked for a while in the background and waited for them to pull their site together. Back in November, it had shoddy English translations for most of the site, their FAQ section was missing important information, and it didn’t give me too much confidence to invest in their platform.

Competitors

The business crowdfunding landscape in Europe gets more and more crowded. Other platforms I’m using and offer similar projects to invest in are TFG Crowd, Flender, Crowdestor, Grupeer.

Opening an account on Kuetzal

There are no specific country restrictions for users that wish to join the platform. The process is smooth, and in a few hours, you can fund your account.

Sending funds from my Revolut account took only a few hours before they were available on Kuetzal for investing.

Withdrawing funds

There’s a minimum limit of 15 EUR if you wish to withdraw funds from Kuetzal. There are no fees associated with it.

They don’t ask you for any documents when you sign up and deposit funds. But they do ask you for a passport copy and a proof of address when you want to withdraw them.

Investing in the platform

kuetzal projects

The projects page looks relatively similar to how TFG Crowd projects are displayed. The projects available are from different European countries (mostly Eastern Europe) and the minimum investment is 100 EUR. The industry sectors are varied, including real estate, transport, medical care, fintech, food industry.

Each project has a funding goal (meaning the least amount of funds received in order to consider the crowdfunding campaign a success), and a maximum goal (the maximum amount of funds above which they wouldn’t know what to do with the extra money).

The projects funded have fixed interest, meaning the interest the project has to pay to investors, and also an expected interest, a larger amount to be paid depending on the project’s success. For example, for a retirement house project in the Baltics, the lenders offer a 6% fixed interest rate, and up to 15% interest rate if the project is successful (profitable).

Unfortunately, there are no clear rules stating under what circumstances a company would be willing to part with their profit and give more to their lenders. Specific criteria are vital for these types of projects.

An interesting thing Kuetzal does with projects that don’t reach the funding goal is that they use their own funds, or 3rd party investors funds to make sure the campaign is successful. If the goal for a project was 100.000 EUR, and investors only invested 50.000 EUR, Kuetzal will provide the remaining 50.000 EUR funds for the project to be funded. They call this Kuetzal Care.

Most of the loans come with a buyback guarantee. This means if the project defaults (is late with their payments for 2 months) Kuetzal will buy the loan back from the investors and later deal with recovery.

It also means that you can sell back your investment to Kuetzal at any time you want, although this comes with a 10% penalty. And the selling back process can’t be done through the platform, you’ll need to send an email to Kuetzal in order to initiate it.

What’s missing from Kuetzal

Kuetzal doesn’t have a secondary market, although this missing feature is endemic to most of the business crowdlending platforms from Europe. It compensates for this though with the buyback guarantee. You can sell back your investment to Kuetzal before the loan matures, but this comes with a 10% fee.

There is no auto-invest tool, although for a minimum investment of 100 EUR you would need to spend a bit of time reading about the project before investing in it.

The thing that bothers me most is that it doesn’t have 2-factor authentication, with either SMS or Google Authenticator. Your account is protected only by your password, so you need to be careful how you handle that. This is a feature that should be present on all platforms that handle money.

Another thing that bothers me is that Kuetzal doesn’t do any KYC (know your customer) procedure. It doesn’t ask for any ID or proof of address. All crowdlending platforms need to ask for these at some point, in order to follow the European anti-money laundering policy.

My portfolio

I haven’t invested much on Kuetzal since I’m not really sure what to expect from it yet. In May, I’ve invested 400 EUR in 4 different loans, with an average interest rate of 19.12%. Up until now, I’ve received all payments in time, and my annual return is 18.31%.

3 of the projects should mature in May 2020, while the 4th one matures in May 2021. I hope until May next year I have enough info on Kuetzal to decide if I want to reinvest in the platform or just leave it.

Conclusions on Kuetzal

I’m not yet fully convinced yet Kuetzal is a good platform to invest in.

On one hand, they have projects with good returns and buyback guarantee. All loans are secured with collateral.

On the other hand, Kuetzal is new in the crowdfunding space, and they don’t have yet any track record. They do promise to be transparent and publish yearly their financial statements, and this will provide an insight into how healthy the platform is, but this will only happen next year.

I’ve invested so far in 3 projects on the platform. I should receive next month my first interest payments. I’m interested in how fast the projects are funded, or after how much time Kuetzal care kicks in if there are not enough funds from investors and how regularly the interest payments are done. If all goes well, I’ll increase my position here and invest more funds.