Envestio is a small crowdlending platform that helps to connect businesses that seek a capital investment with small investors like you and me. In this Envestio review, I will be sharing my experience with the platform and my thoughts about whether investing on Envestio is a sustainable investment strategy.
I joined Envestio in July 2018 which gave me a good amount of time to get familiar with the platform and test their features. The initial reason why I joined this platform was the high yields up to 22% per year which is very attractive.
Who else gives you the opportunity to earn 22% p.a. on interest, unless you are speculating on the stock market?
Envestio offers financing to companies and entrepreneurs mainly from the energy sector, crypto mining and real estate business. It’s fair to say that Envestio is mainly listing loans with higher interest rates as compared to other platforms such as EstateGuru and Mintos.
- Investing in secured business loans
- Capital commitment up to 24 months
- Yield up to 22% p.a.
- Minimum investment in a loan = €1
- Minimum funding deposit = €100
Envestio currently offers investment opportunities only from investors from EEA (European Economic Area) with an EU account. Envestio is mainly listing business loans from Europe. All of the loans are funded in EUR. If an investor adds funds to the peer to peer platform in a different currency, it will be exchanged for the bank’s exchange rate.
Note that the rating for Returns does not represent the default rate but rather the amount of yield interest you will receive compared to other P2P platforms.
In this comprehensive PeerBerry review you will learn the following:
- Starting with Envestio
- Investing on Envestio
- Envestio Buyback Guarantee - this is what you should know
- How safe is Envestio?
- Diversification - how broad can I diversify?
- Envestio Statistics - relevant numbers you should be aware of
- My Envestio Portfolio - how much do I invest?
- My Envestio Rating
- Envestio Review | Final Thoughts - is it worth investing?
Signing up with Envestio is fairly easy and it only takes a few minutes. You will need to fill out a registration form with your personal details such as your name, birth date, country of residence, email and phone number.
No worries, no one is going to spam you. Envestio sends occasional Newsletters when a new project is listed. You can also set up notifications that will notify you when you receive interest payments from borrowers.
During the sign-up, verify your email and have your ID ready to confirm your identity.
As soon as you login you will need to add funds to your investor account on Envestio.
In order to view the bank details, you will need to click on My accounts -> add funds (by bank payment).
Note that you can only transfer money to your bank account via wire transfer or SEPA transfer within the EU. You can not add funds via credit cards or cryptocurrencies. Electronic money services such as Paysera or TransferWise* are not recommended. Investors should use their own accounts with their IBAN to transfer money to their Envestio account.
* You can use your borderless account with TransferWise to transfer money to Envestio. If you have your own EUR IBAN (usually German), Envestio can easily allocate your money to your account. Note that you always need to add your investor account number as a payment reference.
Investing on Envestio is easy if there are any available project to invest in. The demand after loans listed on Envestio is among P2P investors very high. In the last few months, most of the projects had been funded within minutes.
Envestio is sending out newsletters to all investors as soon as a new project is listed. You need to be very quick if you want to fund a part of the project. Many investors invest higher amounts of capital to secure high yields.
To view active and funded projects simply navigate to Projects and browse the selection. You can view key loan facts straight away.
Upon clicking on Learn More, you will get a full project description with a repayment schedule as well as some additional loan information.
If you are familiar with the P2P platform EstateGuru you will find it very easy to navigate. Envestio’s layout of the project page is very similar.
You can retrieve a few interesting points from the loan information that has been provided.
- Repayment of the Loan Principal gives you an idea when you will receive your investment back (duration of your capital commitment)
- The Financing Type educates you whether this loan is flagged as secured debt or subordinated debt. Secured loans are usually secured by some commercial pledge, mortgage and mostly personal guarantee of the borrower.
It is also quite good to know that you will receive your interest payments every month rather than once per quarter.
If you decide to sell your investment back to Envestio you will be charged a fee of 5% from your initial investment.
If you have been reading my guide on how to invest in P2P loans, you probably know what the buyback guarantee.
If not, let me refresh your memory.
The buyback guarantee is the promise of the loan originator or the crowdlending platform to buy back your investment.
Peer to peer platforms that offer buyback guarantee usually take a certain percentage of the interest rate and use this to finance defaulted loans. That’s why you will rarely find loans with a buyback guarantee and yields above 12% per year.
Envestio takes a bit of a different approach. The crowdlending platform gives you the choice to use the buyback guarantee if you want to sell your investment before the principal is paid back. If you choose to use this option, you will be charged a penalty, usually around 5% of your investment amount.
Every investor's main concern is whether his investment is safe and to what extent. Investing in P2P loans is amongst investors considered to be a high-risk investment.
The only true way to decrease the risk is to diversify your portfolio, which means don’t put all of your cash into one project on one platform.
My P2P portfolio consists at the moment of more than 1.000 investments spread across 4 P2P platforms. Read more about it here.
Envestio is listing mainly secured loans. In the past Envestio was also helping finance subordinated loans which isn’t the case anymore - according to the project that had been listed in the last few months.
The loans are secured by a commercial pledge, mortgage or borrower’s personal guarantee. Envestio claims that in the unlikely event that a loan defaults, investors will receive up to 90% of their investment back.
Here is a short explanation of how it works:
Investor invested €1000 in one project, which is now overdue. If the borrower fails to repay the debt within five days after the end of the loan period, an Estonian debt collector agency will take over the case and the investors will receive 80% of their investment (in this case €800) back to their investment account.
For the remaining 20% the investor has a choice to make:
Either get 10% back instantly or wait until the debt is recovered from the borrower. This leads to the conclusion that 90% of the investment is fully secured.
You can find more information about this process on the Envestio Blog.
Envestio does not offer the best diversification options on the market. This has been the bottleneck of the P2P platform since its inception.
The demand from investors is bigger as the current supply. There are not many new loans listed on the platform.
The issue of financing in tiers
Envestio is presenting financing for long-term projects as new loans. You can spot those projects as there are flagged like Tiers. I was curious about this strategy and asked Envestio about it as it clearly does not help a lot in terms of diversification.
If a borrower cannot repay a part of their loan, let’s say tier 5, it will probably have difficulties with the follow-up loans as well. As an investor I rather diversify across various borrowers than tiers.
Envestio acknowledged my concerns and mentioned that many borrowers don’t need all the money upfront, which is why they ask for multiple individual loans. Another reason is that investors like to invest in newly published projects rather than loans that had been listed on the platform for a longer period.
Both arguments make sense, however, this does not help a lot with diversification.
Envestio does not have well-elaborated statistic as Mintos, however you can find at least some basic data about their operations on the Envestio homepage.
Here are the facts:
- Paid out interest: €1.045.274
- Average interest rate: 18.55%
- Registered investors: 7194
- Total funds invested: €18.485.079
These are some nice-to-know information however I was curious and approached Envestio with further questions.
Here is the short interview with Envestio:
EU/EEA residents may use our services. Investors from other countries should contact us by email with individual requests, and our legal department will make a decision about whether we may onboard that person. It is very recommended to have/use EU bank accounts since we provide free outgoing SEPA payments only. Payments to other regions can be at extra cost.
Currently, Envestio has a 0% default rate.
About 5000 investors have active accounts on Envestio.
Average portfolio size is about €3.500.
The team is actively working on the introduction of the AutoInvest function. The set up is ready and our IT department performs tests before its launch.
We are looking forward to introducing a big partner, with whom we plan to have a lot of common projects together, as the company will refer borrowers to us for mutual financing. At the moment the legal team is finalizing the agreement, and we hope to present the new partnership the next weeks at most. Once we do, we expect to increase the loan availability on the platform quite substantially (we have more than €10.000.000 worth of projects pre-approved with them).
We use a flexible approach for the evaluation of the potential borrower, including the overall business structure, experience, and background of the owner of the investment project and availability of strong personal guarantees.
It is also considered as common that during a certain period of time the interest is paid using the income from another business of the investment project owner. That is one of the reasons why offered interest rates at the platform are as high as they are now. We are not a bank, and we are not planning to become a one (at least in the short run).
If a start-up would be interested to be listed on Envestio we would ask them to prepare a 25-page long project presentation, including detailed business plan, CVs of the key personnel, introduce supervisory mechanism, etc. It is unlikely that a start-up could provide all the sufficient data to become listed on Envestio.
My current investment on Envestio is a bit over €615. More than €200 of my funds are not invested at the moment. I haven’t had the chance to get to invest as the loans get funded immediately.
If Envestio keeps up with their promise and will list bigger projects with higher loan volumes I am happy to increase my investment.
My strategy on Envestio is to invest max. €100 in one project (no tiers). That way I can somehow diversify my capital. Although this isn’t perfect and some of the capital might not get invested, I prefer this approach over the strategy to invest everything into a handful of projects.
If there is too much-uninvested capital on one platform I shift it elsewhere, where I can get some returns for it.
As you might have noticed yourself, the diversification options are very limited. The supply of loans listed on Envestio was in the last few months rather short.
This issue is common amongst small crowdlending platforms such as Envestio and I don’t blame them for it. Building up a P2P platform and making sure investors are happy isn’t an easy task. Furthermore, it requires a lot of capital to secure investor’s funds and develop functional features.
Envestio is still a very young platform that launched officially at the beginning of 2018. Since then it acquired over 5.000 active investors and paid out over €1 million in interest.
This isn’t bad for such a small company. I also like the fact that most of the investors hear about Envestio from friends or other investors. There are no big advertising campaigns required - the product sells itself.
My average interest per year is 19.54% which is the highest yield I receive from any P2P platform. Unfortunately, you have to calculate it yourself as the dashboard does not present this data yet.
The historic average interest rate from all investors combined is 18.55% which is for a crowdlending platform that lists secured loans very decent in my opinion.
Functionality & Usability
Envestio isn’t the most functional peer to peer lending platform out there. It is in fact very simple to use. Unfortunately, there is not an auto-invest function yet. I hope it will get introduced soon as it’s quite a hassle to make the investment before the project gets funded.
In terms of other functions. Envestio allows you to create an income statement that you can use to report your income from capital gains and pay the income tax.
There is also an overview of your current investments, where you can track their performance.
If you are looking for advanced functions and statistics you won’t be too happy with Envestio.
The platform is made so even investors without any experience in P2P lending can create their own portfolio.
Envestio support is surprisingly fast. All my questions had been answered within less than 24 hours. I suggest using the chat function on their website to reach customer support. You can also send them an email with your questions to email@example.com. There is also a phone number available +372 6012559 which I haven’t had the need to use it yet.
As until now, I would rate my experience with Envestio rather positive. Many investors have a similar positive experience which you can read on websites such as Trustpilot or Reddit.
I haven’t had any default loans and the repayment schedule for the active projects works just fine.
The lack of diversification options is, however, an issue. I would not advise to put all your eggs into one basket but rather approach it with care and diversify across multiple projects and multiple P2P platforms.
I believe that Envestio is aware of this fact and that they are working on introducing more loans with higher loan volumes which will make it easier for you to diversify your investment.
The real unique selling point of Envestio are the secured business loans with a buyback option and high returns.
I can certainly see the potential of the platform as soon as they increase the number of available projects. Until then I would not consider Envestio as my primary P2P lending platform but rather an alternative option that will help to lower the platform risk.
I believe it is good to be active on a platform where you don’t invest in payday loans only but also support businesses that create new jobs and bring some value.
If you are keen to invest on Envestio, you can register through this link and get yourself a €5 bonus as soon as you transfer €100 to your Envestio account. You don’t need to invest it right away to obtain the bonus.
Additionally, you will get a 0,5% bonus calculated on your investment amount during the period of 270 days. A €10.000 investment will give you a €50 bonus.
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Last Update: 13 June 2019