Symbid Warns of Crowdfunding Trend: ‘Higher Rates, Higher Risks’

Campaign Highlights Unsustainable Interest Rates and a Limited Understanding of Risk among Investors

03 NOVEMBER 2015, ROTTERDAM, THE NETHERLANDS, NEW YORK, US
Summary
Symbid – one of the world's first investment crowdfunding platforms – today warned that crowdfunding platforms and investors are too preoccupied by interest rates and ignoring the risks. Symbid has launched an information campaign in cooperation with Marco Behling of Catena Investments and Prof. Armin Schwienbacher of Univ. Lille and SKEMA Business School titled “Higher Rates, Higher Risks.” The campaign highlights three key challenges faced by the maturing crowdfunding industry: a lack of transparency; unsustainable interest rates; and a limited understanding of risk. It also outlines three potential solutions and why the present market opportunity for small business loans dictates that we act sooner rather than later.

“There’s a danger our industry is becoming short-sighted, prioritising interest rates above all else. Crowdfunding platforms do not tell the whole risk-return story, and investors don’t seem to understand why a 6% interest rate can be attractive.” said Robin Slakhorst, co-founder and CCO of Symbid “As banks turn their backs on SMEs, crowdfunding has an opportunity to provide a sustainable alternative to the ‘shadow banks’ now entering the market. Our unregulated industry can shape itself towards the future, leaving the 14% interest rates to the loan sharks.”

The amount of credit lent by banks to SMEs is declining by 7% year-on-year, leading to a proliferation in the number of virtual loan marketplaces including credit unions, crowdfunding platforms and online lenders. In this context the crowdfunding industry has an opportunity to provide a sustainable alternative in the emerging SME loan market. One of the world’s first investment crowdfunding platforms, this year Symbid relaunched as a go-to funding platform for all types of finance – alternative and traditional.

The campaign – aimed at educating the crowdfunding market, stimulating discussion and influencing policy-makers – includes an academic white-paper, a series of video tutorials and print and online media coverage based on three challenges:

  • Lack of transparency – the internal, subjective models used by crowdfunding platforms to score risk and set interest rates do not give investors the whole picture;
  • Unsustainability – the gradual exit of banks from the SME loan market is enabling platforms and investors to push interest rates ever higher, ultimately profiting no-one;
  • Limited understanding – unlike professional investors, crowdfunders should be helped in building healthy portfolios and spreading the risks.

SMEs are vital to the European economy, accounting for 99 out of every 100 businesses. The financial dependence of SMEs on the banks has made them vulnerable now that bank credit is drying up; especially in the Netherlands, where banks rejected 39% of SMEs in 2014. The growth of online SME finance platforms – from 24 in 2014 to 36 today (27 of those are unregulated) – shows this market opportunity. With this campaign Symbid hopes to highlight three key ways for our industry to be part of the long-term solution, rather than the problem.

About Symbid

Founded in April 2011 as one of the first investment crowdfunding platforms worldwide, Symbid is now The Funding Network™, where companies get funded and grow. As a leading online funding portal for small- and medium-sized enterprises, Symbid (www.symbid.com) gives entrepreneurs direct access to traditional and alternative forms of finance, while offering investors full transparency on the potential risks and returns of their portfolio. Advanced investing, monitoring and data tools ensure companies connecting to The Funding Network™ are financed in the most efficient way possible. Built around cutting-edge technology and expert financial advice, The Funding Network™ by Symbid is the go-to platform for entrepreneurs in search of funding and investors in search of exciting opportunities. As of May 2015, The Funding Network™ has a monthly transaction volume of over $50 million with the potential for generating future revenue streams. With 50 funding partners already connected -- including banks, venture capital, angel investors and 34,000 private (crowdfunding) investors -- the total transaction volume of The Funding Network™ in 2015 is estimated at $800 million. Symbid Corp. is a U.S. publicly listed company (OTCQB:SBID). For investor relations, please visit www.symbidcorp.com.

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About Symbid

About Symbid

Founded in April 2011 as one of the first investment crowdfunding platforms worldwide, Symbid is The Funding Network™, where companies get funded and grow. As a leading online funding portal for small- and medium-sized enterprises, Symbid gives entrepreneurs direct access to traditional and alternative forms of finance, while offering investors full transparency on the potential risks and returns of their portfolio. Advanced investing, monitoring and data tools ensure companies connecting to The Funding Network™ are financed in the most efficient way possible. Built around cutting-edge technology and expert financial advice, The Funding Network™ by Symbid is the go-to platform for entrepreneurs in search of funding and investors in search of exciting opportunities. As of March 2015, Symbid (www.symbid.com) has successfully funded 70 small businesses for a total capital sum of $7.5 million. With over 40 funding partners already connected – including banks, venture capital, angel investors and 30,000 private (crowdfunding) investors – the total transaction volume of The Funding Network™ in 2015 is estimated at $800 million. Symbid Corp. is a U.S. publicly listed company (OTCQB:SBID). For investor relations, please visit www.symbidcorp.com.

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