Applying for a loan from a bank is a complex, lengthy business – and often unsuccessful. Many loan applications are turned down. This means the end of many a dream for start-up businesses, young entrepreneurs and private people. The start-up auxmoney offers such people a completely new perspective and enables them to reach their goals. The Internet platform brings credit seekers and investors together, completely independent of a bank.
The idea of the founders of auxmoney was to use the power of the crowd in lending too. Young entrepreneurs, the self-employed or private people enter their lending projects on the Internet platform to find sponsors. They explain why they need the money and what sum of money they require. When the lending project is 100 percent financed, the loan amount is paid out.
Young entrepreneurs and those starting a business particularly benefit from the start-up
The credit seekers are "as colourful as life," explains Philipp Kriependorf, one of the founders of auxmoney. 40 percent of them are self-employed. They particularly benefit from crowdfunding because start-ups only rarely get a loan from banks. The speed of financing through auxmoney is another plus point especially for entrepreneurs – especially if they need to buy goods or settle back payment of taxes.
High returns make start-up attractive for investors
For investors on the other hand, the start-up gives them the opportunity to invest their money profitably. The average returns are 5.5 percent. The starting capital is very low at €25. The investor can tell from the risk category how safe the investment in the project is as auxmoney examines the credit seekers very closely and evaluates the lending projects. For the investor, this means: The higher the risk category, the higher the possible returns.
High demands placed on start-up entrepreneurs by authorities
Founder Philipp Kriependorf and his companions Raffael Johnen and Philip Kamp relied on private investors for their business dream: friends and family. In addition to the financing, there were other obstacles to overcome. This included meeting the demands of the authorities for a start-up. "We had to battle our way through here," remembers Kriependorf. "You also need perseverance to get to the point when the concept pays off and the project bears fruit." Consultations and the unflinching belief in themselves and their own idea certainly helped.
Investors and banks recognise potential of fintech
It was worthwhile persevering. Now around 50,000 investors have financed over 70,000 lending projects via auxmoney and paid out 200 million euros. Even banks have recognised the benefits of fintech and are now cooperation partners of auxmoney. And even large corporations recognise the opportunities of crowdfunding. In 2015 the insurance company Aegon announced it would invest 150 million euros in the start-up's lending projects. This is the largest investment on a private lending marketplace in Europe so far and gives fresh impetus to the targeted growth path of the start-up entrepreneurs. The target objective: "By the year 2020, we will have made it possible for a million people to secure a loan." What they still need to achieve this is: "The right talents to generate interest in auxmoney is important, to expand our team and achieve our goals."
Idea to establish company: 2006
Founders: Raffael Johnen, Philip Kamp and Philipp Kriependorf
Number of employees: 140
Financing: Own capital