A Monethera review after 6 months
Monethera is one of the newest players in the business crowdlending town. You can invest in real estate projects, business loans, green energy, logistics or technology companies and earn up to 22% per year in interest.
At the end of March 2020, it had almost 3000 investors that funded loans worth a bit over 5 million EUR.
At this point, the Covid-19 crisis hit them and they decided to take a break from p2p lending space.
Unfortunately, we are forced to inform you about the temporary complete cessation of the work of our platform until the end of the state of emergency all over the EU due to the pandemic of COVID-19.
Several factors prompted us to make this decision: pandemic and closed borders, reduced demand for goods and services of our borrower-companies, agreements cancelation. All this means that neither borrower-companies nor Monethera can fulfill our obligations to you.
The state of emergency is declared in almost all EU member countries. All debts are frozen to avoid a risk of general insolvency and widespread default. And there is a situation when it is impossible to file for bankruptcy against debtors.
We also had to reduce staff due to quarantine and the general economic situation. Our office in Riga is closed. That’s why we apologize for the delay with a response to your mails. From the next week, we will pause any social media activities and support.
We understand that now the most crucial question for every investor is, “What happens to my money, and how can I return it?”
At the moment, we can’t offer you any final solution. As we said before there is a state of emergency declared in almost all EU member countries. So it will be necessary to wait until the coronavirus crisis gets to an end. After this, borrower-companies could return to process all pending transactions.Monethera, March 27th
- Launched: June 2019
- Headquarters: Estonia
- Loan types: Business Loans, Real Estate, Green Energy, Logistics, Technology
- Loans from: Latvia, Estonia, Poland, Germany
- Loan terms: up to 2 years
- Interest rates: 18% – 22%
- Loans funded: 5.4 million EUR
- Investors: 2800
- Fees: no fees
- Minimum investment: 1 EUR
- Currency: EUR
- Secondary market: no (can sell loans back to Monethera with a 5% fee)
- Auto-invest: yes
- Buyback guarantee: yes, partial
- Accepted investor countries: all countries, except the USA, China and blacklisted or sanctioned for EU countries
How does Monethera work
Monethera only launched their peer to peer lending operations in June 2019, although they say they’ve been running a private investment fund since 2017.
They decided to open their gates to the public in order to attract more funds and grow faster.
Companies from various industries apply for financing online on the Monethera website. From what I’ve seen so far, most loans available are from Latvian companies or from nearby countries.
The Monethera team does its due diligence on the loan request. This includes checking their financial statements, analysing their business plan, look at the market conditions, check if the company has any legal problems.
After the loan request is approved, it is published on the website and investors start investing in it. Each loan has a deadline for funding, usually of 2 weeks. If the loan is not funded in the expected time, the funds are returned back to the investors, including the interest for the 2 weeks. If the loan is at least 80% funded, Monethera will invest the remaining amount so the project can start.
All the loans available are full-bullet loans. This means the interest payments are received only at the end of the loan term. This just changed on July 11th, 2019. All loans will pay interest on the first day of each month.
At any time during the loan term, investors can sell back their investment to Monethera. They will need to pay a ~5% penalty, and this means they’ll only receive back 95% of the invested amount. This option was frozen in January 2020, for an undetermined period, due to the mass panic caused by Envestio and Kuetzal’s wind-down.
In case of default, Monethera has a reserve fund from which it will pay immediately to its investors 35% of the invested sum. The rest of the invested sum (65%) will be returned to the investors after it is collected from the borrower. This greatly depends on the speed of the judicial process, and it may take up to 18 months.
A more in-depth look at Monethera
Monethera is located in Tallinn, Estonia, and it currently has 15 employees. In the 2 years functioning as a private investment fund, it held a portfolio of 36 projects worth a bit over 6 million EUR.
Due diligence on the loans offered is done with the help of SIA Doma Audits, a Latvian audit company with a track record of almost 20 years.
While Monethera is very new, and it doesn’t have yet an extensive track record, its management team has decades of experience in the financial sector. You can read more on the company and their team on their Linkedin profile:
- Andis Taubergs – CEO, with around 20 years of project management experience in various companies
- Kristine Romanova – Senior Investment Advisor, with more than 10 years of experience in finance
- Viktors Mirosnicenko – Senior Financial Analyst, with around 20 years of experience in financial analysis
Regulations and how safe are my investments
Monethera is registered in Estonia, which doesn’t have any specific crowdlending regulation.
Becoming a Monethera investor
You can register on the website and invest if you are not a resident of the US (of course), China, Lithuania, Latvia, Estonia, and some blacklisted or sanctioned for the EU countries (I assume countries like North Korea).
It took me 5 minutes to register on the website, upload a copy of my ID and a utility bill. Then I had to wait until the afternoon for my profile to be verified. (Their number of investors on the website is still in the hundreds, so I’m sure my profile wasn’t in a very long waiting queue).
You can fund your account by bank transfer. I’ve funded my account through Revolut, and the funds appeared in my wallet a few hours later.
If you want to withdraw money from your account, the minimum amount is 10 EUR.
Select one of the projects, read about it and invest. The minimum investment is 1 EUR. You can later track your investments on your dashboard page.
To protect your funds and investments, Monethera added a 2-factor authentication option (use your password and also a code that regenerates every 30 seconds). So, don’t just use your password to connect to your account. Add this additional step to your account setup process.
Monethera taxes and fees
The only fee investors pay on Monethera is the 5% fee (up to 10%, depending on the project) if they wish to sell back their investment to Monethera before the loan term.
Monethera doesn’t automatically retain taxes from the interest payments, so you’ll need to do it by yourself in your home country.
Monethera is a relatively new platform, although the current progress looks promising. There’s a constant stream of projects available, they get funded relatively fast and some of the projects have started to mature and were paid in time. We don’t have access to its financials, but the risk of platform default at this point is low.
Crowdfunding is a fairly unregulated domain in most of Europe. Any changes could affect existing platforms. This means Monethera might find it hard to comply with the regulation changes and at the worst, they’ll have to suspend their activity.
The small and medium enterprises are the first to fall during economic downturns. If the economy hits a rough patch, your p2p lending portfolio will suffer on any platform you’ve invested in.
During their experience as a private investment fund, Monethera says it had a default rate of around 4%. You’ll need to take this into account if you plan to invest in Monethera projects and make sure you diversify your portfolio as much as possible.
There’s a constant supply of projects published on the platform. Most of the time there are at least 2 projects available for funding.
The loan terms range from 3 to 12 months and the minimum investment on each of them is 1 EUR.
All projects available come with an early buyback guarantee (at a ~5% fee) if you want to exit earlier from the investment. (frozen functionality at the moment).
They don’t have a secondary market where you could sell your investment before term, so the buyback guarantee is your only early exit.
There’s also an auto-invest option available on the platform, so investments can be automated.
Once you invest in a project, you can see the details of your investment on the dashboard.
Monethera improved a lot the details available on the projects since June. Each project presents details on the company, their business model, the market they activate in, how are the funds going to be used and where are they going to generate enough revenue to pay their loan back. They also added a risk level indicator (low, medium or high), and a few details about collateral and guarantees.
I like that Monethera listens to investors suggestions and updates their platform accordingly.
If you decide you want to free up your funds early, you can sell your loans back to Monethera for a 5% – 6% fee.
I’m new to Monethera and I’ve done my first investment at the end of June. Since then, I’ve slowly increased my portfolio to around 1300 EUR in November.
All payments came on time (1st day of each month), and I’ve earned so far 41 EUR in interest payments. This amounts to an annual return of 20.59%.
I like how my list of transactions is displayed,
although I’d prefer more a CSV or Excel export so I could aggregate the data by myself. (they’ve added a CSV export button on the transactions page).
Conclusions on Monethera
I was a bit sceptical 6 months ago when Monethera projects had few details and you couldn’t see almost anything about the loans you were supposed to invest in. Since then, Monethera evolved a lot and my trust in them increased as well.
Too bad they chose the worst timing to start offering high-risk business loans.
- The projects advertise good returns
- The minimum investment in a project is 1 EUR, so I don’t need a big commitment to try it out
All projects come with a buyback guarantee. It has a 5% fee, and it doesn’t include any interest for now, but I’m willing to cut some of my profits if I need my funds now
- lots of details on the available projects
- I like the website design. It’s fast, modern and visually appealing. While this is not important from an investment point of view, it does make my experience on the website more pleasant
- experienced team
Aspects to improve
- No secondary market (you can exit early from your investment but with a 5% fee)
- New platform. And hence higher risk. They still have to build trust by finishing projects on time and treating their investors well. While every p2p lending platform on the market goes through this stage, it doesn’t lower the risk taken by new investors
- no possibility to exit early from your investment, so you’re stuck until the loan matures
Risk and returns summary
- Transparency: 3/5
- Loan security: 3/5
- Liquidity: 2/5
- Account security: 5/5
- Track record: 2/5
- Returns: 5/5
Final score: 3.3