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Sustainable investing has been a hot topic in recent years, with fintech startups popping up all over the map, aiming to reinvent investment and build a better, greener future.
However, while the spotlight tends to focus on renewable energy, sustainability ETFs and carbon-offsetting, a number of businesses are taking the sustainability challenge head-on, from a different but equally important angle.
Lendahand, currently overfunding on Seedrs, gives investors the opportunity to put their money into emerging markets where capital can be hard to come by, to help innovative entrepreneurs build their businesses to drive economic growth – and eradicate poverty in the process.
We sat down with co-founder and CEO Koen The to discuss how the company is rethinking investing, and how Lendahand is creating opportunities where they’re needed most.
What is Lendahand’s vision, in your own words?
Hundreds of millions of people live in poverty around the world. Lendahand is working toward a world without poverty, where the opportunities you have aren’t determined by the country in which you were born. We aim to do that by supporting entrepreneurs and businesses to grow, succeed and employ. Our for-profit business model allows European investors to back crowdfunding initiatives in 28 countries across the world, to help drive a stronger, more inclusive global economy.
What encouraged you to build the company?
After working in the financial industry for so many years, I was in need of more emotional connection to my work. Thinking about the big picture, I wanted to work for a company that I would be proud to tell my kids about. As soon as I met our founder Peter Heijen for the first time, and he told me his vision for Lendahand, I was hooked. I became a co-founder and eventually became CEO. I’ve never looked back since.
How does Lendahand fill a gap in the market?
Lendahand provides financing to companies stuck in what we call “the missing middle”. This is the zone in which companies are too large to secure funding by way of microfinance, but usually too small to look to larger financial institutions for support.
By providing capital to these companies, we ensure they’re not left behind by a financial system that’s evolved over the years to ostracize smaller producers, and that they can access the capital that they need, and deserve.
What are some of the success stories from companies in the portfolio?
One of our coolest success stories is a company called SoKo. SoKo’s local artisans handcraft gold jewelry in Kenya, and all of their raw materials are ethically sourced. What makes them so innovative, is that their products are now available in department stores here in Europe. In fact, Michelle Obama actually wore one of their pieces on the cover of Essence Magazine!
To date, SoKo has successfully raised over €1.6 million on our platform, and all of their scheduled repayments have been made in full and on time. This just goes to show how many businesses there are out there that are, at their cores, engineered for success, but are held back by their geographical location and the broken financial systems they’ve historically relied on.
How does Lendahand stand out among competitors?
As far as crowdfunding platforms are concerned, we’re the only one that offers an opportunity to earn a financial return while giving access to so many emerging markets across the world. This means that within a model model that promotes sustainability, we also cater to the financial needs of our investors.
How does Lendahand benefit entrepreneurs vs. investors?
Entrepreneurs benefit from Lendahand because they’re able to access growth capital for their businesses that they would normally not have access to. As their businesses grow, they can hire more people, creating employment opportunities in their communities. They can purchase greater amounts of inventory, and make further investments into expansion, or the improvements of their marketing and facilities.
Investors that invest through Lendahand benefit from access to investments in emerging markets, as well as the ability to make an actual impact on people’s lives with the money they put forward.
Many of the apps and platforms today that overuse the buzzwords “impact” or “sustainable investing” are guilty of “green-washing” – a process where you put a marketing spin on a very normal, non-impactful investment, and in doing so, convince investors they’ve made a difference with their money. Lendahand champions transparency, giving investors the chance to choose the businesses they invest in, and see exactly how their money will be used, so they can know the tangible effects their funds have had.
Why is Lendahand a beneficial alternative to loan-providers and other options available to entrepreneurs in developing countries?
Most entrepreneurs in developing countries obviously don’t have access to a platform like Lendhand (hence our raising on Seedrs). Those entrepreneurs are normally faced with a range of options, most of them bad. Loan sharks are quite prevalent in emerging markets, as well as legal predatory lenders. There are also some small business loans available, but the collateral requirements (such as owning a home to put up against the loan) are usually far too extreme for a person of limited wealth and income. As a result, most entrepreneurs end up not growing their businesses at all; hurting their local economy and preventing wealth creation for them and their potential new employees.
What will the proceeds from this round be used for?
We have a number of exciting plans in the making. The largest investment we will undertake with the funds from this round will be in expanding our team. We will hire more investment managers, more web developers, and build out a support team that will allow those teams to focus on their core tasks more efficiently.
On top of that, we will be investing in pan-European expansion, so we can unlock even more seamless access to emerging market investment for investors all over the continent.
What are some exciting initiatives/product changes/partnerships in your pipeline?
Hopefully by the end of the summer, we will be rolling out investments in USD. This is an exciting opportunity for our crowd investors because the majority of deals in the impact investing sector are done in USD. This is primarily because it’s one of the safest and most stable currencies in the world. This initiative will allow us to offer investments in many companies that our crowd is currently not able to access.
We’re also rolling out a new impact-focused crowdfunding platform in the Netherlands called “PlusPlus.” The platform will have an impact-first focus and provides capital specifically to Agricultural entrepreneurs in emerging markets.
If you weren’t running this business, what would you be doing?
My heart has always been with kids that don’t get a fair shot at life. Some because their parents had to abandon them, some because they don’t have the skills that are rewarded in this society. If I was not running Lendahand, I think I would be helping those kids.
I hope that someday I can give it my best to help kids unlock their full potential, be proud of themselves, and be happy. In what form I don’t know yet, and it depends on many things. What I do know is that it doesn’t necessarily have to be ‘at scale’. If me and my family could help just a few kids that would already be a big win!
What’s one piece of advice you have for the future generation?
Be happy with what you have and where you are. Things don’t have to be bigger, faster or more prestigious. Live life on purpose!
Describe your company culture in three words
Transparent, impact-driven, team-focused.
To find out more, and for the opportunity to back Lendahand’s mission, visit the pitch.