Hive5 is a newly launched platform by Hive5 International Group that offers European retail investors investments in group-owned loan originators. The first loan originator on the platform is Ekspres Pozyczka which facilitates short-term payday loans in Poland and business loans directly to the loan originator itself. In this interview, you will learn from the CEO & Co-founder Ričardas Vandzinskas how Hive5 came about and what it means to invest with Hive5.
Ričardas Vandzinskas's Story
First, could you tell the readers a bit about your background? How did you become interested in peer-to-peer lending and working with finance?
I started my career at PriceWaterhouseCoopers – a leading global financial advisory firm. Over the past 15 years, I worked with medium to large multinational corporations to aim for aggressive geographic expansion and global growth. In parallel, I took part in the corporate governance of public and private corporations by holding my duties on supervisory boards and independent audit committees with a focus on corporate risk management.
My key role was a relentless search for new funding sources to constantly expand our M&A investments portfolio and bring solid ROIs to our investors upon the exit. While dealing with classic offline investment bankers, risk capital funds, mezzanines, and wealthy investors, in parallel I was observing a big bang in an online, fully digitalized lending society. In contrast to classical offline, digital online lending was about the speed, simplicity and great window opportunities for those individuals and businesses which would usually stay out of the scope of conservative banking. This was when I started planning hive finance.
My business partner Andrius Rupšys I met at Ruptela. His own ambitious and fast-growing global tech company with a presence on 5 continents and more than 250 employees worldwide. Our clients were complaining that getting a business loan from a bank is usually very complicated. Many projects never see their daylight. This is where our core expertise in finance and tech finally collided, bringing up to the world Hive5. A platform to service a growing need for alternative financing tools in the faster-than-ever evolving digital lending world.
The Story of Hive5
With the co-founder of Hive5, Andrius Rupšys, you have decided to explore new opportunities by founding a P2P lending platform that connects loan originators with investors. How did you decide to change direction from attracting investors to a successful GPS tracking company to starting an online lending platform? And how do you plan to differentiate Hive5 from the many competitors?
Firstly, we know how business is done. Together with Andrius Rupšys, we have been in global business management for over 15 years. With our own skin in the game, we went through quite a few macroeconomic cycles and turbulences and passed the exams in a real-time environment. We know how to manoeuvre large multinational organisations in their good and bad times, how and when to react and make urgent changes when necessary. At the same time, we realise the importance of a long-term vision, focus and business sustainability.
Secondly, by saying "we have a team of professionals", we mean it. Regarding the Hive finance holding entity, Hive5 P2P platform or our first geography-based microlending entity Ekspres Pozyczka in Poland – all our team members have ample expertise in top finance corporates. For instance, before joining Ekspres Pozyczka, our CEO Wojtek Homan was an executive in Provident; whereas the Head of Operations at Hive5, Inga Zubanovė, was building operations and support of the second largest P2P platform in the EU from scratch.
Risk mitigation and management are our top tasks at our daily operations' strategic and tactical levels. We shall shortly introduce the COSO methodology-based enterprise management process within our group entities. In addition, we are among the few in the market who have recently implemented a revolutionary AI-based, multisource Big Data scorecard decision engine into our first geography loan originator, Ekspres Pozyczka. It allows us not only to filter out fraud but also correctly manage and plan default levels while simultaneously ensuring a fast-forward scale of our quality loan portfolio in Poland. We will use this unique practice in all our next consumer lending geographies. Besides having our skin in the game, we are motivated to manage the investments with confidence.
Finally, as every educated investor knows, the necessity of diversification. We will relentlessly diversify within two mainstreams:
- Geographic: Hive5 will phase its expansion into three continents – Europe, Africa, and Asia.
- Products: We have launched Hive5, allowing investors to choose from consumer and business loans. Soon we will introduce other business lending products, such as Green (or sustainable) loans, Equipment leasing, Estate loans and BNPL.
Hive5 Ownership & Management
What is the ownership structure of Hive5? Are you and Andrius Rupšys the only ultimate beneficial owners, or have you attracted outside capital?
Yes, two of us are the ultimate beneficiaries, 100% owning Hive finance mother company registered in Vilnius and its subsidiaries Ekspres Pozyczka in Warsaw and Hive5 in Zagreb.
Could you give our readers an introduction to the other members of your management team - who are they, and what makes them qualified to work at Hive5?
I am lucky to be surrounded by a team of professionals. I am very much proud of them.
Head of Operations, Inga Zubanovė.Her extensive experience includes customer care, daily operations, and process management within the financial and legal sectors. Before joining Hive5, she worked in a leading thriving investment marketplace for more than three years.
Head of Marketing and Communications, Karolina Staugaitė. She has more than eight years of experience developing successful marketing strategies for international companies. She is an expert in market analysis, strategy development, and marketing optimization. The most significant achievement in her career was scaling the tech startup that became the second largest P2P platform in the EU.
Chief Technology Officer, Aleksey Kalevich. He is a full-stack developer with more than 10 years of experience building scalable websites and web applications. He has repeatedly gone through web applications' "idea to product" cycle. His broad experience comes from smaller companies, as well as global corporations. Before joining Hive5, he worked at Aventus IT company, where he had a valuable opportunity to get to know the fully digitalized consumer finance field.
Customer Support Manager. Greta Možeikaitė. She is a customer care professional with additional exclusive experience in sales. She worked at one of the largest banks in the Nordic and Baltic countries, Swedbank as a KYC Analyst, one that brought her knowledge of accounting principles, taxation policies, government regulations, and income tax procedures.
How many employees do you currently have at Hive5?
At the Hive finance group level, we are a team of more than 25 professionals from 5 geographies. Hive5 consists of 5 crew members, a CEO, a Head of Operations, a Customer Support and Operations manager, a Head of Marketing and Communications and a CTO. Also, we have over 20 professionals working in Ekspres Pozyczka, our Warsaw office.
Hive5 Business Model
Hive5 offers investments through a loan originator that is Hive5 Group-owned. Did you acquire this Loan Originator, or do you establish them yourselves? And are you planning on offering investments from not Hive5 group-owned Loan Originators?
Ekspres Pozyczka is an acquired company by Hive finance. We bought a company that no longer had business prospects, rebuilt it and hired a professional team. Also set up a new crediting system with a fully automated AI-based, multisource Big Data scorecard decision engine.
To provide diversification, we might also offer to invest in loans issued by 3rd party loan originators. Before listing them on our platform, we will diligently evaluate the possible risks of every future project and partner.
In the market for offering investments by 3rd party loan originators, some malicious actors and other challenges might make the p2p lenders sceptical of a new resale marketplace. How do you make sure investors can trust Hive5?
My partner Andrius and I are Lithuanian citizens – publicly well-known business management profiles. We are both Baltic Institute of Corporate Governance graduates, with the regulator's verified stainless reputation, which allows us to serve our duties on supervisory boards, and audit committees of large public and private organisations.
Our own skin in the game. We invest our own funds into the businesses we run; also, we invest through Hive5, same as everybody else, for the very straight reason – we are committed to the success of what we are doing, and we are looking to be rewarded.
Investing at Hive5
You currently only have one loan originator on Hive5, Ekspres Pozyczka, that offers investments in consumer loans from Poland. Can you reveal any other countries and investment types retail investors will be able to participate in at Hive5?
That is only the very beginning of our expansion plan. Hive5 will phase its geographies into 3 continents: Europe, Africa and Asia.
Also, investors can diversify their portfolios between consumer, business, real estate, green and venture loans.
If I decide to place money at Hive5 and build a diversified portfolio, how much can I expect in net yearly return after losses and delayed payments?
Hive5 aims to implement different risk tolerance products, from Conservative to Aggressive Risk, with up to 19% return on investment. Currently, we offer to invest in Consumer and Business loans up to 15% NAR.
Late loans generate the same interest as current ones, which means investors will receive the principal amount + earned interest for the complete period of the initial term and overdue. Our invested loans are secured with a buyback, thus defaulted loans will not affect the investment portfolio.
How do you calculate your returns? What method do you use to decide when a loan must be written off and accounted as lost or with minimal chance of recovery?
We calculate NAR daily by using the loan's interest rate and considering that year has 365 days. On our platform, all loans have a buyback obligation; therefore, loan write-offs do not affect investors’ NAR.
Ekspres Pozyczka’s debt recovery management is defined by Hive finance group standards and Polish legal requirements. Our Loan originator starts the debt recovery process 10 days before the loan's due date. First, the borrower is offered to refinance for the current loan with a payment of interest and commissions accrued over the period of use. Next comes the soft-collection stage. On the 30th day past due, the loan agreement is transferred to the professional debt recovery agencies. Then the debts remaining 60th days past due are sold and written off from the Loan originators’ balance. As a result, our Loan originator collects 75% of the overdue amount during 5-60 days past due.
Do you personally invest in the loans listed on the Hive5 platform?
It is essential to experience the whole investment process as other investors do and to earn an attractive return on investment. Therefore, of course! Andrius and I, as well as our team, invest at Hive5. So do our relatives, close friends, business partners and wealthy investors.
Since August inception we have already funded over EUR 100 thousand of loans on Hive5, and we will continue with growth.
Risks at Hive5
How do you ensure that the loans listed on Hive5 are safe for investors to put money into? Do you offer any sort of Buyback Guarantee, Provision Fund, or similar protection mechanisms?
It is always worth reminding that every investment is associated with a certain level of risk. To minimise it, we offer a combination of all instruments that you have mentioned above.
Firstly, our Loan originator is obliged to BuyBack the loan no later than 60 days after the loan payment due date, even if the loan is late or even if the end-borrower did not repay the loan to the lender. Both loan principal and accrued interest shall be repaid in full.
Secondly, all our Hive finance group entities have a corporate policy to allocate at least 10% of equity into the provision funds, which shall be used as a buffer to secure our investors’ funds in case our Loan originator faces some financial difficulties.
On top of that, our Loan originator will shortly introduce consumer credit insurance products, adding extra security to their obligations in front of the investors.
Our own skin in the game is what makes us solid and different from the other p2p companies.
If Hive5, for some reason, should go out of business, what will happen to the investors’ money?
Hypothetically, should hive5 face some liquidity issues, then first of all parent company Hive finance would step in with the equity infusion. Even if the parent company would face going concern issues, then the shareholders would contribute with their own funds or attract extra equity capital from third-party sources, if necessary.
Needless to remind that our Loan originator Ekspres Pozyczka has a contractual obligation to settle the payments to the investors directly.
Hive5 License and Regulation
Hive5 is launched as an unregulated platform. Do you plan to become regulated in the future? Are you applying for the EU Crowdfunding license right now?
The next step in our licensing roadmap is to receive updated and clearly defined ECSP regulatory framework guidelines, which shall be announced by the European Commission in November of this year. Based on those guidelines, we will start application preparation for the single licence “passporting” procedure allowing the provision of crowdfunding services in the European Union and European Economic Area (EU/EAA). We will keep you and all our investors constantly updated on this matter, as we consider it a solid extra mile of trust in front of our investors.
Hive5 in the Future
You have just started the journey with Hive5, but you seem to have an ambitious and clear plan for the future. Could you tell us a little about the platform's next steps?
Main KPI of Hive5 - at least 6000 active investors and 10 million EUR of the total loan portfolio by the end of this year.
Also, we will keep the promise to offer diversification on our platform. By now, investors can invest in consumer and business loans from Poland. Soon there will be more opportunities on the way: consumer loans from other European geographies, also different types of business loans – green loans, estate loans, BNPL and venture loans.
To make our platform stand out from a UX/UI perspective, we plan to implement more advanced and user-friendly features in the marketplace.