El crowdfunding en tiempos de coronavirus: una herramienta necesaria para evitar la exclusión financiera de pymes y autónomos

At Inversa, we continue working. Because it's our job. And out of commitment to SMEs and self-employed individuals who, in this critical situation, may see us as the lifeline they need to cope with expenses. This is what we share in this interview published by El Referente. We also talk about crowdfunding, crowdlending, and our vision of economic evolution in general. This is the article written by Indra Kishinchand.

"The difficulty in finding traditional financing at all levels has led many companies and individuals to seek other alternatives."

Inversa is an online alternative financing platform that connects a community of investors seeking higher returns for their savings with companies, professionals, and self-employed individuals seeking liquidity through invoice discounting.

This specialized fintech, within the crowdlending segment, in what has come to be called crowdfactoring or invoice trading, was founded in 2017 by Atilano Martínez, Ana María Belén Olmos, and Berta Otero. "The three of us had a very rich experience in the financial sector. We noticed that the banking consolidation process left needs unmet, so we got down to work. From the very beginning, we saw clearly that the traditional business model had exhausted itself and that the application of the internet to finance is the solution, as it modernizes the sector and saves costs," say the entrepreneurs.

To develop this startup, they drew inspiration from other European platforms, such as Advanon from Switzerland, or Market Invoice from the United Kingdom. These are highly consolidated platforms that have demonstrated with their success the great potential of crowdfactoring and how underdeveloped it is in Spain. "At Inversa, we work to reverse this situation, to help implement a fintech like ours in our country," they insist.

Furthermore, the founders of Inversa assure El Referente that, after working in the financial sector, they all shared a certain disillusionment with how things were being done, clarifying: "Entrepreneurship has given us the opportunity to develop a project in which we believe and that excites us. Creating something from scratch is tough and involves stepping out of the comfort zone, but it is also much more rewarding, and achievements bring enormous satisfaction; so, yes, it's worth it, but it's not a valid option for everyone. You have to be willing to make many sacrifices."

Spain is going through a very difficult time as a result of the Covid-19 crisis, what can crowdfunding contribute to solving this situation?

Crowdfunding was born precisely in a crisis context like the one we are experiencing. It represented a fundamental financial alternative to maintain productive activity and employment, by guaranteeing SMEs and self-employed individuals the liquidity they needed.

Now, in this new crisis, crowdfunding can play a very important role in getting public aid approved by the government to reach SMEs. Since they are online platforms, they maintain their operational capacity, providing greater speed and flexibility. In fact, countries like the United States, the Netherlands, and Germany already include crowdfunding among the measures they have approved in this crisis.

Crowdlending platforms are also a necessary tool to prevent financial exclusion of many SMEs and self-employed individuals in times of uncertainty and credit scarcity.

And Inversa in particular?

At Inversa, we continue to offer our services as usual. Faced with an unprecedented economic halt and the consequent lack of income, being able to anticipate the collection of outstanding invoices and promissory notes is a lifeline to cope with all the expenses that, on the contrary, continue to arise. On the other hand, we offer a short-term investment alternative away from the volatility of the current stock market, which also directly benefits the real economy.

Inversa has already made itself available to the government through ACLE (Crowdlending Association of Spain) to help alleviate the economic consequences of Covid-19.

Why do you think crowdfactoring or invoice trading is booming?

The financial crisis has left two needs unmet. On the one hand, many SMEs and self-employed individuals cannot find financing for their working capital; on the other hand, the fall in interest rates for term deposits means that savers seek profitable alternatives in the short term with controlled risk.

Unlike crowdlending loan platforms, crowdfactoring allows very short-term investment, at very attractive rates (4 - 8%) and with the guarantee of the debtors, companies, or public entities that are responsible for paying the debt. Additionally, we have the added value of being able to insure invoices through credit risk insurance.

And crowdlending in general? Why has it become such a convincing option?

Undoubtedly, the difficulty in finding traditional financing at all levels, not only for working capital but also in the medium and long term, has led many companies and individuals to seek other alternatives. Observing these needs, platforms based on the crowdfunding model emerged, successfully used to raise funds for social and cultural causes, as collective patronage without economic counterpart. Turning it around, the "crowd" model, based on the community, has been used to obtain financing in exchange for profitability. This is what we know as crowdlending.

Why did you choose this model when establishing a business, a project?

We wanted to bet on a non-speculative model, based on collaborative economy and sustainability. A model that directly impacts the real economy and also provides multiple advantages, such as a fairer relationship between parties, greater transparency, speed, and flexibility.

You claim that the collaborative economy has a positive impact on the economy, sustainability, etc. What example would you give us about your own platform? What specific impact has it generated?

We have had clients who came with very high amounts of money pending collection and with all their borrowing capacity consumed. Their situation can be described as financial suffocation where jobs and the company itself were at risk. By working with Inversa, they were not only able to cope with these expenses but also had the opportunity to accept new contracts they couldn't attend to before due to lack of initial liquidity needed to start them.

You believe that the financing needs of SMEs are neglected, what other aspects besides Inversa are needed to reverse the situation?

Traditional financing is based on studying the volume and size of companies to determine their borrowing capacity. For SMEs, this is a problem because we are talking about medium and small companies. However, on the other hand, they are forced to accept payment conditions imposed by much larger companies they work for.

Crowdfactoring platforms like Inversa provide a solution, as we mainly base ourselves on the solvency study of the payer, usually the large company or a public institution, and also does not consume CIRBE (banking borrowing capacity).

But there is no doubt that this is not enough to alleviate the situation of SMEs. From Inversa, we demand legislative measures that facilitate bureaucratic procedures, contributory measures, and other training measures that represent a decisive support for innovation and exportation, allowing our SMEs to be competitive nationally and internationally.

In this regard, do you think public institutions have any role? What is your relationship with them?

In addition to the aforementioned aspects, we cannot forget that any economic aid is insufficient at the start of activity. Grants and public financing play a fundamental role. Also important is the fulfillment of payment commitments by the institutions themselves. In this sense, Inversa has been the first Spanish platform to finance invoices from state, regional, and municipal public bodies.

However, there is still a long way to go, and let us give you an example: In the UK, the Bank of London invests directly in platforms as a measure to channel financing to SMEs. In Spain, there is still a lack of institutional support.

What is the profile of the investor and SME that come to you?

The majority profile of SMEs that come to Inversa is a company that is expanding, recently created, or with new lines of business, which leads them to face new investments that, in many cases, they cannot afford due to lack of liquidity. Traditional banking models are not willing to finance this type of company due to the higher risk it entails.

As for the investor, we have different profiles depending on the channel through which they come to Inversa. The online client is young, more informed, and likes to have control over their finances. The offline client is usually older, more conservative, but with higher savings and investment levels and tends to delegate their finances to an advisor.

You have just joined the Fintech Madrid cluster, what implications does this have for you?

Being part of the Fintech Cluster gives us visibility, projection, and offers us the strength of belonging to a group with common interests and the possibility of finding multiple synergies and collaborations.

What is the situation of SMEs according to autonomous communities in Spain?

From the scope in which we operate at Inversa, we observe differences in payment behavior from one autonomous community to another. In general, according to what is published in the Bulletin of Bad Debt and Business Financing, the northern half of the peninsula has an average DPO closer to the legal one than the southern half.

Aragon stands out, with only 10.7 days of delay over the legal period. It is followed by Castile and León, Asturias, Catalonia, and La Rioja. The worst performance is observed in Murcia, Andalusia, and Madrid.

Regarding the public administrations' arrears, those with the highest DPO are Murcia, Cantabria, and Castilla la Mancha; the most agile are Galicia, the Canary Islands, and Andalusia.

How would you like to adapt to these different realities?

In a way, the existence of platforms like Inversa is more necessary the longer the payment terms are. In this sense, we can be a tool to "balance" the situation of SMEs in different communities as long as the paying company is solvent and within a period not exceeding 180 days, which is our financing time limit.

What about your international expansion? What problems do Spanish SMEs have that do not exist in other countries?

This year our priority was to create a solid foundation from which to grow. From there, we are already in the national expansion phase and have already financed the first international invoices supporting the exportation of our companies.

In the near future, we want our first international expansion to be towards Portugal, an underexploited market close to us. We can also say that given the power of the internet, we have several foreign investors who finance the invoices we publish.

Now that you have a settled model, what are your plans? How do you expect to grow?

Crowdfactoring in Spain has great growth potential. As it becomes better known, more companies and investors will turn to it as an alternative or complement to other options. We will take advantage of this trend to position ourselves as one of the best and most innovative platforms in the sector. We will increase our presence in different events, various media, social networks, forums, networking initiatives... And of course, word of mouth and the daily good work of the entire team behind Inversa.

A wish for Inversa?

Allow us a double wish: to reach the figure of €10,000,000 financed this year in 2020 and to be a benchmark in crowdfactoring for our commitment to innovation, collaborative economy, and society in general. In fulfilling both objectives, we believe we are on the right track.