Ask Me AnyFin with Martins Sulte: Offering a New Investment Asset

There are many sources of inspiration in business. One of them is technology which both feeds on new ideas and breeds them. This is, particularly, true for financial technology which relies heavily on communication technology. These two: money and the Internet create the most powerful media duo in the world. No wonder there are so many volunteers eager to come up with a new product that will thrive on this combination. Martins Sulte has succeeded in doing this. His company, Mintos, is a virtual marketplace which offers a new investment asset. We invited him to our Ask Me AnyFin conversation to learn more about his offering and the details of his entrepreneurial journey. 

Pioneer of investing in loans says: “Ask Me AnyFin.” and is ready to answer

Watch the conversation with Martins or read the transcript below. 

Symptoms of an entrepreneurial bug

Małgorzata Łabanowska: Hello, our Ask Me AnyFin session today is with Martins Sulte, the CEO and co-founder of Mintos. Mintos is a marketplace for investing in loans which connects lenders and investors all over the world. Hello Martins.

Martins Sulte: Hi, thanks for having me.

Małgorzata Łabanowska: Thank you for joining us. So how and why did you start Mintos?

Martins Sulte: Well, that was already some while ago. We’ve been around for six years. We launched in January 2015. That’s when the first loans were put on the platform and they were available for investors to invest in.

When it comes to the story of Mintos, I would say there was quite a lot of back study before we launched and I think a lot of things just came together. First and foremost, I would, perhaps, say that it’s having this entrepreneurial bug, like myself, which impacted the decision to start something. All my experience, even before Mintos, has been in finance, one way or the other. I’ve always been very eager to learn about new technologies, about what’s happening in the tech space… So that came together, too, and then, on top of that, I had finished my MBA, and I was looking for what to do after and I decided to take the plunge into entrepreneurship.

I was looking at what was happening in the world at that time, which was 2014, and I came across an idea that the financial technology space was heating up. I was, particularly, interested in the investing space and what was happening there. Maybe, less with the notion that we had to fix what was happening in the investing space in Europe. We just saw that the market is pretty huge… Looking for an exciting business model, we realised we can put a new asset on the table for retail investors across Europe.

More than 400,000 investors across Europe

Małgorzata Łabanowska: Okay. So how does it actually work, investing in loans? How does it compare to other types of investments?

Martins Sulte: What Mintos does, we provide a marketplace for investing in loans. That means that retail investors, when they come to Mintos, they can invest in loans. There’s a fairly straightforward way to do that. Basically, what they get is a fraction of the loan and when the borrower repays the loan, usually with monthly instalments, then, me, as an investor, or any investor, they get their principal back plus interest and that is how they earn a return on their capital. We’ve been working in that fashion for a while and we have already amassed quite a significant user base.

Today we have more than 400,000 investors across Europe and we have facilitated seven billion euros of loans, which have been funded on Mintos and that has helped investors to earn an additional return. Loans as an asset have been a good addition to any portfolio and we’ve seen that investors are picking it up, more and more, adding loans to their portfolio as a new asset. And I’m excited to continue and to go from where we are today…

Constant development of Mintos services

Łukasz Korol: That’s interesting. So I have a question about the services that Mintos is providing. I can imagine that it’s mainly managing the whole platform as a marketplace between investors and companies that are putting their loans there. But is there something more about services that you are providing? Some credit scoring or any additional services as Mintos?

Martins Sulte: Yeah. Sure. It’s been a constant development of what we do. There are complementary services which we provide, for instance, investors can invest in 10 different currencies on Mintos, and then, we provide foreign currency exchange on the platform as well.

Also, we have now developed Mintos Risk Score. We put a score for each and every loan on the marketplace so that it is easier for investors to pick and choose which loans they would want to invest in. It is important to emphasise that investors can pick and choose the loans themselves on a loan-by-loan basis, and even fractions of loans. And they can start very small. So they can start with just €10 or equivalent in another currency and build a very diverse portfolio.

It is important to emphasise that investors can pick and choose the loans themselves on a loan-by-loan basis, and even fractions of loans.

We provide auto-invest tools. We also provide Mintos strategies so there’s a whole suite of services which we offer to make investing in loans easier for retail investors. Our average retail investor, they are investing something like €4000 or so. More often than not, we help them to do it in the most automated manner. They tend to use automated tools which make the user experience great. That’s what we’ve been doing since we started. 

The geographical view of Mintos market

Łukasz Korol: You mentioned that Europe is your main target market. Is this correct? Or maybe, you also have some plans to be more global? How does it work from your perspective?

Martins Sulte: We are a two-sided marketplace at Mintos. On one side, we have the retail investors. Those are the people who are looking to deploy their capital and invest, and get a return on that capital. There we focus mostly on Western Europe. Germany’s a big market for us… Spain, Netherlands… Most Western European countries are very well represented in our investor base mix. That’s one side of the marketplace and the other side of the marketplace is the loan supply where the loans come from.

So, in essence, what we do is, we connect the money which is sitting in Western Europe and is not put to good use. We connect it with people and small businesses in need in those regions and continents.

We have loan supplies, coming from 32 different countries all across the globe. It’s much more spread out. It’s going to be anything from Indonesia and Vietnam in south-east Asia. It’s going to be Kazakhstan and Armenia in Central Asia. It’s going to be Europe, obviously. It’s going to be Africa. It’s going to be, also, Latin America. It’s fairly spread out: 32 countries where the loan supply comes from. So, in essence, what we do is, we connect the money which is sitting in Western Europe and is not put to good use. We connect it with people and small businesses in need in those regions and continents.

Balancing the two sides of the market 

Łukasz Korol: I have an additional question because it’s quite interesting when it comes to the marketplace. What was a bigger challenge for you: to build the loan supply part or the investors’ part of the marketplace?

Martins Sulte: That’s a very good question, especially for the marketplace. It is a challenge to build them in a balanced way because we don’t want to push too hard on the demand side if there’s no loan supply available. It doesn’t make sense to bring in investors if they don’t have loans to invest in. And likewise, if you have a lot of loan supply, not having demand is also a challenge. So what we’ve been working on is balancing the two sides.

It is a challenge to build them in a balanced way because we don’t want to push too hard on the demand side if there’s no loan supply available. It doesn’t make sense to bring in investors if they don’t have loans to invest in.

I would say that, initially, for sure, there was more focus on the investor side: educating investors and showing them that loans are a valid asset class which you would want to invest in and you can get great returns from. So, on average, investors so far… An average is not a good number in the Mintos context because it’s a very wide range. But still, on average, they have earned something like 9, 10 per cent after all the recoveries and bad debts over the years.

However, as we grow, there have also been times when the loan supply is a challenge because there’s more influx of investors. So I would say the challenge is to build the market in a balanced way. Not necessarily one side or the other, but just maintaining the balance.

Reaching a regulatory milestone 

Małgorzata Łabanowska: Thanks. Mintos is at quite an important stage right now because you’ve recently received the investment firm and electronic money institution license. Congratulations on this! Can you tell us how important these two are for Mintos and how they add value to your services?

Martins Sulte: That’s, definitely, a significant milestone for us. Finally, we have a clear regulatory certainty on how to provide the services which we provide. Being a new player with a new offering, comes with some regulatory uncertainty. We’ve been juggling through that since the beginning and we’ve been working on getting the European investment firm licence and European electronic institution licence for quite some time: directly, I would say two years, indirectly, for even longer.

That’s, definitely, a significant milestone for us. Finally, we have a clear regulatory certainty on how to provide the services which we provide. Being a new player with a new offering, comes with some regulatory uncertainty.

The key beneficiaries of that are our clients who as investors get an additional stamp of approval that we are regulated and the activities that we do are in line with European regulations. In practical terms, what they get is additional security: additional investor compensation scheme, the funds being segregated and other things which add to the security…

They get additional transparency when it comes to information disclosure. There is much more standardised form how they get the information about investments they want to make. So that is, for sure, a significant milestone and we are now very eager to realise the transition plan, transitioning from the previous setup to a fully regulated setup. Then, we will be passporting the licence and our activities across Europe and really grow the business from there. I’m very excited about the next few years and I think it’s going to be, it’s paradoxical to say, a new beginning for us, since we’ve been around for some years. Since we launched in 2015, this is really the beginning for us, putting it in a really scalable manner in front of investors. 

Łukasz Korol: I would like to ask you about a very specific aspect of regulations in the context of services that you provide. It’s a question about your onboarding procedures, which sounds like something quite challenging, when it comes to addressing many countries, many markets… Could you describe for us how it works in practice, the onboarding process in Mintos?

Martins Sulte: I think, these days, onboarding is fairly similar across many, if not most, FinTech players or any service providers. It starts with registering: providing information about your name, address, country – very basic stuff and, then, there’s verification. It is a very streamlined process, where you need your laptop or your phone to verify that you are who you say you are and, then, we run certain background checks, when it comes to AMLs. These are the things that lead to successful registration. All in all, that takes a few minutes and in most of cases, it’s super-smooth. In some cases, maybe, there are some issues but there’s usually a reason why there are issues. So I would say onboarding is fairly streamlined.

Mintos communication strategy and channels

Małgorzata Łabanowska: Thanks. In the context of communication, most probably, with retail investors, can you tell us something about your Ask Mintos Anything sessions? What role do they play for you?

Martins Sulte: Sure. So with Ask Mintos Anything, which is an adoption from Ask Me Anything, we put out a date or a theme and, then, run a session where investors can participate live and submit questions beforehand. And we go through all the questions and that is part of our culture… What we value very much is transparency, both inside the company and, also, when we talk with investors. That’s just one channel where we communicate with investors. It’s a fairly good channel but I think, similarly, email is a big part of our communication. Mintos social media is also a big part of communication channels.

We, basically, put ourselves out there and make ourselves super-reachable. We are there to answer any investors’ questions which is a part of our approach when it comes to building and fostering community.

We also have our Mintos investor community so that’s another channel where we communicate with investors. We use different channels for different investors, depending on their preferences. 

We, basically, put ourselves out there and make ourselves super-reachable. We are there to answer any investors’ questions which is a part of our approach when it comes to building and fostering community.

Mapping out short- and long-term plans

Łukasz Korol: Yeah. So before we finish, we would like to ask you about your plans. If you could tell us about your short-term and long-term vision for Mintos, it would be very interesting.

Martins Sulte: Yes. Short-term, we’ve already touched a little bit. It’s about rolling out the Mintos service across Europe and finishing the transition plan. Next, it’s passporting our licence and activities across Europe.  

I think loans is a great asset and with all the technologies which are available these days, retail investors can participate in this asset class

If you look at the medium term, then, it is really about putting loans as an established asset on the table for any retail investor who wants to invest. That’s what we’re going to continue working on. I think it is a great asset and with all the technologies which are available these days, retail investors can participate in this asset class. Also, in the medium term, we plan to expand to other assets and provide other investment opportunities. Because what we learn from our investors is that loans should only be part of your portfolio. They shouldn’t be the only investable asset and we should diversify. So we are now also working on ETFs to make them available on Mintos. And, then, in the medium term, we’re going to add other investment opportunities as well. 

In the long term, we are looking to build the go-to investment platform for retail investors in Europe. So anyone who is looking to start investing – the next generation of investors, they will be able to turn to Mintos and we will offer diversified and passive investing experience for anyone in Europe.

Małgorzata Łabanowska: Sounds really interesting and exciting. This was our last question and I would like to thank you for taking the time to speak to our audience. Good luck with all the developments!

Martins Sulte: Thank you.

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