Visiting Peerberry in Vilnius. Interview with CEO Arunas Lekavicius and CMO Gerda Striskaite-Greice

Visiting Peerberry in Vilnius. Interview with CEO Arunas Lekavicius and CMO Gerda Striskaite-Greice

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Visiting the Peerberry office in Lithuania

I have been investing with Peerberry for more than a year and they remain a good slice of my crowdlending portfolio and will continue to do so. Therefore, I was excited to get a tour of the office and meet the employees. Peerberry is located in a business center in Vilnius, Lithuania. As you probably know, I recently spent 3 weeks there, interviewing and getting to know the companies, platforms and the people behind. 

As you may know, Peerberry was born from Aventus Group and I was pleased to see that they are still working closely together. They are actually located in the same office. I actually think it is really good that Peerberry is working so close, physically, to one of their big partners. There are some pictures of the office further down, so you can get a feel for the Peerberry office. The interview was held in a conference room in the business center and we had a coffee first together to get a bit more acquainted.  

The interview with Peerberry

Georg: 
When investors look into new P2P platforms to either start investing with their first platform, or want to expand their portfolio to the next platform to diversify, it is always important to know something about the people behind the platform and their experience in finance and business. Arunas, you are a fairly new CEO here at Peerberry. You have been here for about 6 months but you actually have a lot of experience in finance. Can you tell me a little bit about your experience, the companies you have worked for and what roles you had in the different companies? 

Arunas: 
Actually, my career started in 2007, så I have almost 12 years in the finance sector. All my life I worked in banking and financial institutions. My first job was in SEB Bank, it is a well known Scandinavian bank. I started my career at the lowest step as a Private Customer Representative. After that, I changed to several positions. I worked as a Private Customer Manager, and my last job title in SEB was a Business Customer Project Manager. So I worked with SME companies, I analyzed data, financial statements, prepared projects, etc. After almost 4 years, I joined Luminor bank and I became Project Manager of Leasing. It was a new sales support unit and this unit was handled directly by members of the board. It was a great experience. Later I became head of leasing for Lithuania. I also worked in a project group of the Baltic countries. After 5 years I joined another financial group 4finance. It is a huge group operating in 20 different countries and here I was responsible for a new project called auto lending, and in general, I was responsible for all countries where we started this auto leasing project. After that, about 6 months ago, I became the CEO of Peerberry

Georg: 
So if we talk about Peerberry, it was actually one of my first platforms and also among my favorite platforms. So Peerberry, I understand, was born out of Aventus Group that was founded in 2009 and actually was a loan provider at Mintos for a short time. Can you tell me a little bit about the development of Peerberry from just having loans from Aventus Group until today where you have a lot more loan providers? 

Arunas: 
Yes, today we have 21 loan providers. So we are growing. During two years in operation, Peerberry has a portfolio of more than 8000 investors. When I joined Peerberry my main task was to expand the number of loan originators, and enable investors to invest in more different types of loans. Like leasing, real estate projects, long term loans, and short term loans. Another task was a stable growth of the platform and risk management. The main reason that Peerberry is growing, is that we want to give investors the possibility to diversify their investments. So currently 21 loan providers in 8 different countries. 

Georg: 
So, in the beginning, Peerberry had only short term loans. Or payday loans which usually have a term of about 30 days. What are the terms of the loans on Peerberry today? 

Arunas: 
It, of course, depends on the loan originator. Peerberry still has short term payday loans. But for leasing for example Peerberry has until 60 months. But we only have one or two loans with this long term at the moment. The average is around 12 to 24 months. All Peerberrys real estate development projects is for a one year period. Peerberrys long term installment loans are 3 months. The most popular loan for investors in of course payday loans because you can invest and get the money back fast. The way I invest, is 60 or 70 percent of my portfolio in payday loans and the rest is diversified into long term loans. In leasing for around 12 months. 

Georg: 
Yeah, so you can set up several auto invest strategies. One for short term loans and put a max amount in that strategy and then do another for the long term loans. 

Georg: 
In just one year Peerberry managed to onboard 15 new loan providers. That is a lot. A lot of work must have gone into that process.  

Arunas: 
One of the reasons was that I already knew some of these loan providers from my leasing background. Another important reason is that Peerberry is working with Aventus Group and our relationship with them is really good. Peerberry also works with another large group Gofingo and they are also expanding their activities in different countries and launching new products. Peerberry knows these groups really well so we are collaborating together and launching their products on our platform as well. 

Georg: 
So those groups have several loan originators within the group. 

Gerda: 
When Peerberry launched the loan term loans it was much easier IT wise. I think in one month Peerberry launched 3 to 4 new loan originators. When Peerberry first prepared the system for long term loans we could easily add those existing products. 

Georg: 
When you onboard a new loan originator, what kind of things does Peerberry look into? What would, for example, disqualify a loan originator from being introduced on Peerberry

Arunas: 
We are carefully connecting to loan originators, we are checking their financial statements and of course, we have a due diligence process. We are checking portfolios and default rates. Peerberry does not want loan originators who have bad portfolios, loan originators with too many late payments. 

Georg: 
When you have already introduced a loan originator on Peerberry, do you then keep a close eye on them and their performance on a regular basis to see if they continuously perform the way Peerberry wants? 

Arunas: 
Yes. We check the financial statements every 6 months of all the loan originators. We also have internal processes to check the portfolios every month. Trust is really important. We, of course, want that every investor gets their money back. There is also buyback on all Peerberrys loans and even if a loan is not current, we still pay interest on the loan. 

Georg: 
So what happens if you look at a loan providers financial statement after 6 months and you can see that they are starting to perform not as well as before? What will your procedure then be? 

Arunas: 
Peerberry is glad to say that this has not happened until now. But if it happens will terminate the agreement with the loan originator is they start to perform badly. If a loan originator is performing badly and we see potential risk, Peerberry can terminate them on the platform from one day to the other. 

Georg: 
What if they just start to underperform a little? 

Arunas: 
We will then scale the loans from that originator down. If we see that a portfolio is going a bit down, we stop listing loans from that loan originator. Then Peerberry look at how they perform the next month and the month after that. Then we slowly introduce the loans again on the Peerberry platform. 

Georg: 
About future loan originators is Peerberry planning to go into the Southeast Asian markets as many other platforms? 

Arunas: 
We already have loan originators outside of Europe. About the Southeast Asian markets, we are looking into it, but it also depends on our partners. One of our biggest partners, as you know, is Aventus Group and they are planning to open some companies in those markets. Of course, we need to wait and see how these companies perform before we introduce them on the platform. But if everything turns out ok, then we plan to introduce them on Peerberry as well. But this will be in the future. For sure not during this year. In case of young or new loan originators we take additional guarantees. 

Georg: 
Do you have a rule about new loan originators that they have to be in business for a specific number of months or years before you introduce them on the Peerberry platform? 

Arunas: 
No. It depends on the financial statements, on sales and the quality of their portfolio. 

Georg: 
What are the expansion plans for Peerberry during the next year? Does Peerberry plan to introduce new loan originators? Will we see any new functionality on the website? 

Arunas: 
Peerberry has only been in operations for two years. So it is a really new company in this market. For this year we plan to introduce a few new loan originators. For next year we have plans, but they are not clear until in about 3 months. Right now we are focused on our internal processes and IT development. The reason is that just this year we connected 11 new loan originators. So currently our platform is working slower than usual. So our focus right now is to focus on solving the issues surrounding that. Now we focus on making that platform up to date and deliver new functionality for 2020. 

Georg: 
Peerberry has developed a lot in terms of loan originators. The platform is very simple to use and has limited functionality. Was this a deliberate choice from Peerberrys side to make it as simple as possible? 

Arunas: 
In the beginning, it was one of the main priorities that investors could get started investing simple. A few clicks and your funds would be invested and earn interest. But now we are growing and Peerberry plan to add some extra functionality. 

Georg: 
A lot of investors are concerned about what will happen when we will have a new financial crisis. What will happen to the P2P industry? You have been in the finance sector in the last financial crises, so what are your thoughts about that? 

Arunas: 
It is really difficult to answer. Now the market is growing really fast. Every month the companies in the industry are performing better and better. They get more and more funds from investors. But it all depends on risk management by every platform. So we will see. This sector has never gone through a crisis. There will probably be some platforms who go out of business, but overall I think it will be ok. 

Georg: 
How does Peerberry prepare for the worst-case scenario? 

Arunas: 
We work with a very strong group that has more than 10 years of experience in the lending business. We are growing every year. If we look at the profit of Aventus group and compare 2017 and 2018, then 2018 more than doubled. We evaluate every loan originator and I think we will be ready. But risk management is the most important thing for Peerberry

Georg: 
You said earlier that you have real estate loans. Can you tell me a little bit more about that? 

Arunas: 
Yes. We have a big partner, LitHome, who is really well known in Lithuania. They have a lot of experience in building houses, flats, business centers, etc. We have four projects at the moment and we provide the possibility for investors to invest in these projects. They all have good LTVs and good interest rates. 

Georg: 
So LitHome has all the knowledge and experts for this area of your business? How long have they been working in the real estate sector? 

Arunas: 
They have worked for about 15 years in the real estate sector so LitHome is a really strong company. Peerberry works with them in just a few projects right now. They have a lot of projects in Vilnius and other cities in Lithuania. But maybe we will expand the number of projects in the future. The projects we have with LitHome is just new developments. There are no renovation projects. 

Georg: 
Is Peerberry planning to add functionality to the platform in terms of statistics? It would be nice for an investor to see how well diversified he is over loan originators. 

Arunas: 
Peerberry is working on it at the moment because a lot of investors have been asking for this functionality. So this is one of our projects at the moment. 

Georg: 
How many people are employed with Peerberry right now? 

Arunas: 
Right now we have 8 employees in Lithuania. We also have an accountant in Latvia. We are now planning to expand our team. At least two new employees will be joining this month. They are split up on different functions. We have 3 full time IT guys who are working on our platform. We have our CMO and we are employing an additional employee in marketing. We are also planning to have a telemarketing department. We have a customer care employee, we have two operations specialists, we have an analyst, and risk management is handled by me. 

Georg: 
There is a buyback guarantee on all loans on the Peerberry platform. Does Peerberry demand any skin in the game from your loan originators or partners? 

Arunas: 
No. Not at the moment. but if we will continue to grow like we are doing now, that may change. But for new companies in the Aventus Group and Gofingo that joins our platform and have been operating just 6 months or a year, we get an additional guarantee from the mother company or group. So if a young or new loan originator is not performing well or we see a risk, Peerberry always gets an additional guarantee from e.g. Aventus Group. So there is a, let us call it, double guarantee. So if a young loan originator cannot cover the buyback, the group will help and cover the buyback. 

Georg: 
An investor in a forum was asking me this about Peerberry: “I often see a lot of loans on the platform with the same euros and cents amount, on the same day, from the same country. How can this be?” 

Arunas: 
Aventus Kazakstan for example and other loan originators sometimes runs campaigns or promotions. So let’s take for example a loan of 10000 tenges, that is a little more than 23,24  euros. Then they say that borrowers can only get this loan today at a 5% interest rate. So people borrow the same amount of money with a lower interest rate. 

Georg: 
Is there any plans to introduce a secondary market? 

Arunas: 
We have a lot of things we would like to do, but we are still a young company. Latest we focused on introducing more loan originators so investors could diversify more. Peerberry is planning a secondary market, but there is no specific timeline yet. But it is not going to be this year. That is for sure. It is not on our priority one list. 

Georg: 
It looks like the Peerberry auto invest is just investing ones in a while. Maybe a couple of times a day. Even if there are plenty of loans, it sometimes takes until the next day to get the funds invested. 

Arunas: 
Actually, our auto invest is running all the time. The thing is that we have been growing rapidly in terms of loan originators and number of investors this year. This means that there is a lot more traffic in Peerberrys auto invest strategies. There are thousands of strategies in the system. So right now auto invest is running a bit slow. So it can look like it just runs once in a while, but that is not the case. Our IT department is very focused on improving this, so hopefully, it will be resolved soon. 

Georg: 
Sometimes the response time of the site, in general, is also a bit slow. But I assume that is also caused by the growth in loan originators and investors? 

Arunas: 
Yes. The platform was originally built for 5 loan originators and we only had a few hundred investors. We now have 21 loan providers and a lot of new investors and a lot more operations. So our platform became slower and slower. We are working hard on improving this and the situation is a lot better than a month or two ago. Now it is only sometimes it works slower. But this is one of our top priorities to improve and we have a full focus on it right now. 

Georg: 
You were also at the P2P conference in Riga this year. What did you think of that and what did you get back from it? Will you attend it again next year? 

Arunas: 
I actually really liked it a lot. It was nice to talk to the other platforms and see what they were doing. Both the new and more established platforms. Also talking to investors and seeing the new products being launched. 

Gerda: 
It was really nice to see that even though we are competitors, it did not feel like we were competitive towards each other. I talked to a lot of other platforms. We could talk openly with each other. It felt more like a really nice community of people who are interested in investing and finances. It was a really nice event. 

Georg: 
I can see that the Peerberry site says that your company has an address in Riga? 

Arunas: 
Yes, that is Peerberrys registered address. At this address, you can find our accountant company. When Peerberry is having official communication, that goes to the registered address. And then Peerberry has part of the team sitting here in Vilnius. In Lithuania, P2P was quite new and you need a lot on licensing. Riga was where a lot of the platforms worked, so we decided to open the company in Latvia. In Latvia, this type of business was already established. 

Gerda: 
There were no regulations in place for this type of business, like there is in Lithuania. It is really hard in Lithuania compared to Latvia. For example, Mintos is located there. There it was easier to get set up as everything was not new. So Peerberry went there. 

Georg: 
But there will be regulations in Latvia at some point, right? 

Arunas: 
All the platforms in Latvia are preparing to get licensing. There are two types of licensing. An investment company brokerage license and a banking license. We are also working on this and Peerberry has already delivered the papers to the regulator. We are getting the investment company brokerage license. 

Some final thoughts about the Peerberry platform

Peerberry has been proving their ability as a platform for some years now and there biggest partner has a 10 year track record in consumer lending. They have had some problems with the speed of the platform, but it seems to be better now during the last month. Peerberry is located in the Aventus Group office. That possibility for close cooperation with a partner actually gives me more piece of mind. This year, due to the big addition of loan originators and loan types, Peerberry now offers more diversification options. Besides that, I think the extremely simple interface are a relief for novice P2P investors. I will keep a fair share of my portfolio with Peerberry

On a side note. From the 1st of August, Gerda will no longer be CMO of 
Peerberry. She will start working for Debitum Network, another very interesting P2P company that I recently started investing with and also interviewed in Lithuania. That interview will come out shortly. Sign up for my newsletter to get notified when I release new articles. 

What do you think about Peerberry?

Are you already using Peerberry? Would you like to? Why? Why not? What is your opinion? If you liked the article then share it with a friend who you know would find it interesting. If you have any questions or comments about Peerberry, please leave a comment below and I will answer it as soon as possible. Sign up for my newsletter on this blog to get notified of new interviews and company visits. 

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