The following Q&A is part of an interview that took place on May 3rd 2019 between me and Alberts Cevers, the CEO of the business crowdfunding platform Kuetzal.
Question: Can you briefly explain to our readers what Kuetzal does?
Answer: Kuetzal is connecting investors from all over the world with promising projects from Europe. All the deals are in debt form and offer fixed returns per concrete timeframe.
Q: Where are the origins of the name “Kuetzal” and what does it actually mean?
A: Initially, we wanted to name the platform Quetzal. It is a rare bird which Aztec and Maya tribes considered as sacred. The bird associated with trust, magnificence, brilliance and we decided to use this name. Another reason is we wanted to differ from competitors which have a lot of invest, lend, crowd in their names. The market is overloaded with such names so we decided to bring freshness. We just made a change from Quetzal to Kuetzal as we believe it will be more Europe-oriented.
Q: Is the platform regulated?
A: There is no licence or regulation in Estonia to acquire for such kind of platform, but we are following best practice written by FinanceEstonia and Deloitte, we are also working directly with attorney-at-law who is the author of that document. Also, the platform is a member of major European crowdfunding community – Eurocrowd. If someday regulation comes to Estonia, we are among the first companies to acquire it.
Q: How is Kuetzal financed?
A: Kuetzal is financed by us, the founders of the company. At the start-up stage, Kuetzal also attracted several private investors.
Q: What has been the greatest challenge in launching Kuetzal?
A: During the launching stage many challenges were faced: team-building, long-term strategy, precise vision and mission, but the main challenge I believe was to automate the process. As the main advantage of p2p platforms and fintech in general is the fast, transparent and easy service, the most of the work at start-up stage was on the shoulders of IT department.
Q: What are the main advantages for investors and borrowers?
A: The main advantage for investors is higher than market average interest rates, the Kuetzal Care program, Buyback Guarantee, additional value such as affiliate program opportunities, easy and clear website using process.
Q: With fierce competition from Envestio, Crowdestor, etc. what do you think is Kuetzal’s competitive advantage and why would investors choose you over your competitors?
A: I think the overall market demand is way higher than Envestio, Crowdestor and we might offer, that is why the competition is not really felt, at least for now. But if we speak about the competitive advantage, our Kuetzal Care service remains unique. Even though the interest rates for us and for mentioned platforms are all higher than market average, Kuetzal also offers attractive bonuses such as affiliate system and other promos. We also have planned many other interesting opportunities that will be introduced soon.
In addition, the buy-back that Kuetzal offers is not just the classic one, but also gives investors a chance for the early exit. If we sum up all the aforementioned arguments, I believe Kuetzal is a very attractive product for investors.
Q: Can you give us some examples of the investments partners that will cover the difference of the investment required under Kuetzal Care?
A: Unfortunately, the contracts that we have with current partners in Kuetzal Care do not allow us to disclose their identity. What I can say is that these are private investors from Baltic countries, and a private fund that is operating with money of Asian private and institutional investors in Northern Europe.
Q: I imagine you have many applications, how do you select the best ones? What procedures does Kuetzal take before accepting a borrower into the platform?
A: First of all, we are checking the history of these borrowers, if they had problems with other companies or government. Then we need to know their future plans, if they are ambitious and know their job and market. After this we are analyzing the company’s statements and market in general. This is the stage when most of the companies stop as our policy is rather strict, since we want to provide only safe and secured deals. The final step is agreement establishment and confirmation of both parties.
Q: How many applicants have you had in order to publish those 11 projects?
A: Few of them we had from the very first day of the platform, after that we received more than 50 applications, and only a few of them were published.
Q: How reliable is the credit history data provided for the projects listed on the platform? How do you receive them and verify their authenticity (Do you pull the income statements from public records or does the borrower provides a Copy and do you verify the copy somehow)?
A: We never use statements from public records for companies from Latvia or Estonia. The most common method we use is we ask the statements of the company, and then we just go to them ourselves and check that they really do what they say they do. Usually it is very easy to check whether the company really has the assets and the history they are telling initially. If the company has the credit history we also check it. With real estate we always do independent valuation attracting professional companies.
Q: Where do you see your platform in five years?
A: We set only the highest goals, and in five years we expect to be among the most successful crowdlending platforms in Europe, with branches in most demanded European countries.
Q: How many people does your company employ?
A: We are currently 4 people in day-to-day office work, but we outsource all the IT and legal part of our activities.
Q: Why would someone pay such a high rate? Is it true that only businesses with very poor credit rating take these loans?
A: I do not think so. Bank rates in Baltic states for businesses are now high. Even if you are running a business with good history and fully clean and transparent operating process, the interest rate for your company will be 7-11% depending on some variables. Most typically companies that are listed on the platform just do not want to face any deals with banks, others were unable to agree with banks or other financial institutions on terms.
Several companies also see platforms as a nice marketing opportunity for their businesses and an effective way to increase brand awareness and reputation, we think so too.
Q: What is the return an investor can expect when investing via Kuetzal?
A: Average return to date on Kuetzal on all the investments made- 17.9% p.a.
Q: How many registered investors do you have?
A: 1,676 investors (03.05.2019)
Q: What is your anticipated default rate?
A: We aim to keep the default rate at 0%, and I think it is one of the crucial indicators that will affect the platform success in future. For now, all the interest was paid on time for all the projects.
Q: In case of borrower default, is Kuetzal sufficiently capitalized to execute the buyback guarantee after 60 days even if you can’t seize and sell the asset in such a small period of time?
A: Yes, Kuetzal has enough funds to cover possible losses of the companies supported with buy-back. Most probably, in the worst case scenario, it will take a few weeks as latest. Here I would like to add that it is the worst case scenario and it is highly unlikely.
Q: Has Kuetzal sufficient capital to cover a potential mass exit of investors (At the 10% loss)
A: I really don’t believe that such scenario (mass exit) is possible, but still we are keeping sufficient capital as a backup in case many investors will prefer to use this tool one day.
Q: What would happen if the company goes on bankrupt? Is there a designated plan and will investors still be able to receive their payments?
A: We are preparing a document which will support each investment made on Kuetzal. This may add some trust of investors and they will be able to use it against Kuetzal if the terms will not be complied. Even is the worst case scenario, Kuetzal will do the maximum possible to provide investors with not only the initial investment, but the interest payments as well.
Q: I would remiss if I didn’t take this opportunity to ask you for a special promotion for my readers. Is there a special promotion that you can extend to the readers of the blog?
A: We can extend the special promotional code “P2PINCOME” to your readers which will give them 15€ bonus towards their first investment. All they have to do is register through your link and enter the promo code during the sign-up process. This promotion is on top of the 0.5% cash back offer for investments made during the first 6 months after registration.
That concludes my interview with Alberts. Let me know what you think in the comments bellow. You can read my in-depth review of Kuetzal here and if you want to sign-up on the platform click here to be eligible for the 0.5% cashback bonus. Also, don’t forget to use the code “P2PINCOME” for a free 15€ towards your first investment.
Thank you for taking the time to read this,