By hosting the fundraising of the crypto platform Bit4you, the crowdlending site BeeBonds is moving out of the real estate sector, its usual niche. By targeting business financing, BeeBonds is now positioning itself as a challenger to Look & Fin.
In an attempt to raise up to 5 million euros in crowdfunding to ensure its growth and buy a listed company, Bit4You, the first Belgian cryptocurrency platform, chose BeeBonds, a crowdlending company born in 2017.
In an attempt to raise up to 5 million euros in crowdfunding to ensure its growth and buy a listed company, Bit4You, the first Belgian cryptocurrency platform, chose BeeBonds, a crowdlending company born in 2017. Less known than its competitor Look & Fin, the Brussels firm has so far made a specialty of presenting equity loan files for projects in the real estate world. But it has now been three times that BeeBonds has come out of this very specific niche: before Bit4You (via the Chainius holding company), its platform had hosted files from Pitaya, a chain of Thai restaurants, and Yoga Room, a network of rooms for aficionados of yoga. “It was covid that made us get out of real estate, explains Joël Duysan, CEO of BeeBonds. We made the incredible observation that in the midst of the covid crisis, banks were cutting budgets for companies in certain sectors affected, such as well-being, catering or culture. It seemed logical to us, therefore, to help a company like Pitaya whose activity was very focused on delivery and take-out orders and which had lost only 5% of its turnover during the covid period. This chain, which now includes nine Belgian establishments, was the first non-real estate file offered to the community of 9,000 BeeBonds users. The first projects (and still the majority of files today) were real estate projects because “developers needed money while banks began to tighten credit conditions, particularly in terms of the amount of equity to bring”, recalls the boss of BeeBonds who, at the time (2017), did not yet have FSMA approval authorizing a public offering, which the crowdlending start-up obtained in 2019. The Beebonds model consists of offering participatory loans always subordinated to a bank loan. “We help to finance the contribution of own funds, continues Joël Duysan. We cover 75% of the own funds with a minimum of 500,000 euros.” In this way, the platform wants to reassure investors by the presence of a bank which has, for its part, studied the real estate project and considers it solid enough to lend money to its promoters. This is because trust is obviously one of the central points of the participatory loan model: even if they know that the amount lent is in no way guaranteed in the event of default by the company helped, the lenders want to be sure to take as little risk as possible. Competitor Look & Fin, for its part, has chosen to “structure loans with mortgage security at rates between 5% and 6.5% per year”, according to Frédéric Levy Morelle, CEO and founder of Look. & End. In addition, Beebonds also uses consultancy firms, the big four, for the production of the descriptive note of the project, the one which details the object of the investment as well as all the possible risks. “This offers us a double advantage, specifies Joël Duysan: on the one hand, the project leader sees his figures validated; on the other, the investor is reassured to see that he is lending money to a structure which has seen its numbers confirmed.” Unlike its competitor Look & Fin, BeeBonds therefore does not analyze the files itself. This for several reasons. First, it saves on in-house analysts for off-peak periods with no records. Then, it allows him to play only the role of intermediary without really taking sides. But the intervention of the big four imposes de facto on BeeBonds to propose only projects of a certain size: the cost of the intervention of the consultants can only be covered if the files raise between 500,000 and 5 million euros, the maximum allowed. Because BeeBonds, which currently employs seven people, is remunerated exclusively via a commission (4 to 6%) on the amount of the transaction. Below 500,000 euros raised, it would not be able to appeal to the big four. This is also the reason why the Brussels start-up does not surf on “proxi” type loans (in Brussels) which mobilize the savings of small investors while granting them tax deductions in the form of credit for tax. These loans are indeed limited to 250,000 euros. The commission on this type of file would not be sufficient. So far, BeeBonds has proposed 48 projects to its community… and raised around 48 million euros. This therefore makes an average of 1 million euros per file. Far from the maximum of 5 million euros. “We do not yet have the clientele that would allow us to go to 5 million euros, admits the boss of BeeBonds. We are addressing individuals, companies and even public bodies, but we still have to show that crowdlending can be seen as an investment tool that is not subject to volatility.” The platform has 9,000 users and each project attracts between 300 and 500 of them. By way of comparison, Look & Fin claims 45,000 members and displays 171 million on its counter of funds raised, for around 450 companies helped. Currently, BeeBonds does not display any default rate. Only one problem arose in connection with the financing of the creation of a hotel developed by the Cayman group in Ghent, which had made it possible to raise 2.6 million euros. But the group then entered into judicial reorganization proceedings (PRJ) and suspended all payments to creditors, making bondholders fear the worst, who have organized themselves to defend themselves legally. “But today, we know that they are doing everything to be able to reimburse and the file is not on the ground, specifies Joël Duysan. We can understand their situation after long months of closure during the covid. should normalize.” In the future, BeeBonds intends to continue to offer files outside real estate to support companies. Joël Duysan does not set a particular sector or a particular stage for the companies carrying out the project. Does this mean that there will be strong competition with Look & Fin? “The harmonization of the European markets and the extension of the services which can offer the platforms to new activities (management of discretionary mandates, possibility of organizing liquidity via a bulletin board, etc.) will most certainly create an increase competition in a single market”, predicts the boss of Look & Fin. Followed, according to him, by a phenomenon of consolidation of actors at the international level.