Crowdestate review after 1 year of investing

In this post I will outline my review of Crowdestate platform after one year of investing.

It is one of the 5 platforms I chose to invest 1000 EUR in September of 2018.

The short version.

I am not sure if I was greedy or unlucky or combination of both, but I can say that this is the least successful investment out of 5 other platforms I tried.

For now I will not add any more investments in this platform.

More detailed explanation

2 projects 1 mistake

I think my biggest mistake was that I my very first two investments were development projects which were offering great returns and thus came with higher risk.

Crowdestate project – https://crowdestate.eu/opportunity/Agenskalna-24
Crowdestate project – https://crowdestate.eu/opportunity/Balozu

Currently, deadlines of these projects are postponed and thus the expected return rate is 0% or below that.

To make the matters worse. I did not invest in the initial offering. I bought these in the secondary market because I was too eager to invest and there were no initial offerings at the time.

Total expense for these 2 projects is the following:

Secondary market transactions – 67.5 EUR + 64 EUR = 131.5 EUR

Principal – 200 EUR + 200 EUR = 400 EUR

Total – 531.5 EUR

This is more than a half of my total deposit. Result of this is that in the best scenario I am barely getting my investment back in 30 months.

I will try to sell them with a loss, so I could re-invest somewhere to break even.

The rest of the portfolio is late

There are several other projects currently in my portfolio. Unfortunately, all of them are late.

Each project has its own explanation. Here are the explanations.

Successfully finished investments

To be fair, there are 3 projects which finished on time as expected. All bought in the secondary market, therefore the low average return rate.

Risk rating overview for current projects

Most of my current investment volume is under “not available” and B3 risk rating which is in the middle.

Blue dots depict what risk evaluation my investments have

Takeaways from investing in Crowdestate

  • Minimum investment is 100 EUR. With 1000 EUR it practically gave me a chance to invest in 9 projects. Diversification possibility was too little.
  • Initially, I chose Crowdestate because they offered good yields. Drawback was and is that there is no buyback guarantee. From other platform experience, buyback guarantee puts an extra layer of security towards investor. Here it is not the case. Feels like the investor is on its own.
  • Communication about late projects will not be smooth. I wrote several times to support asking for more specific information. They would like to answer as good as they can, but they will not risk misleading with false statements. That ends up with responses – “we will let you know when we know”.
  • Crowdestate is for more seasoned investors who can better assess the projects and risks involved. Even though I would like Crowdestate team to assess borrowers more thoroughly I do not think it is feasible. Their assessment on the risk is published for almost every project. It is up to me to decide how much risk I am willing to take.

Good news are that Crowdestate does not have any defaulted projects. This means they were able to settle all of delayed cases.

I am sure I could wait out for payments and learn from my mistakes, however, other 4 platforms (Envestio, Mintos, Fast invest, Twino) seem to be much more forgiving. Not to say that they are without flaws.

For now I will focus on those which give best result or take one of the next in line from the comparison list.

6 comments

  1. Hello Janis!

    I completely agree with yor takeaways on the portal. I would like to add that Crowdestate does not pay additional fee for late interests/ loan repayment. Many of “non-defaulted” cases have been dragging on for a while without earning investors any interests.

    Also, I noticed that you have invested in Baltic Forest OÜ. I’d like to give you heads up that company financial situation is questionable. They have involved high interest working capital and considering that the price of raw wood in Estonia considerably higher than elsewhere, I suspect a potential bankruptcy case in the future. Unfortunately it’s impossible to sell the investments on the secondary market without taking a loss due to high supply.

    Cheers,
    Investor Marko

  2. Hi Marko,

    thank you for writing, much appreciated.
    About the late fees. Actually, this month got late fees from Nord Company (https://crowdestate.eu/opportunity/416) and Käokella tee 3 (https://crowdestate.eu/en/opportunity/341) so it depends on the project agreement.
    “Zero default” project platform sounds really good for potential investors, however, I agree that sometimes it can be possible only due to weakening the restrictions on deadlines. This in turn for investor like me, comes with a price of barely making it even.

    Finally, thank you for the extra info on the Baltic Forest OÜ. Sounds like this can definitely become a problem. Could you please share some of sources for this info?

    Kindly,
    Janis

    1. Thanks Marko for the extra info!

      Skimmed through the latest posts from the link you shared. Looks like people are seeing a trend with delayed payments throughout the last year.

      Talking about particular case the latest update on Baltic Forest OÜ states the following:

      “Baltic Forest has been proceeding with its activities as planned and is currently finding solutions to the companies biggest problem today – the shortage of working capital. As previously informed, we have been engaged in the sale of off-line equipment for this purpose. This way, we are reaching an agreement on the sale of the boiler house equipment, which we expect to receive next week.

      The receipt of these funds is so close today, but withdrawing the promised interest payments today would significantly undermine the current production plan and thus indirectly also the interests of investors.

      We hereby inform you that we will pay the interest payments on the loan agreements of August VI, IX and X no later than the 4th of October and all interest payments of September on the loan agreements no later than 15th of October.

      We apologize once again for the delays, but we assure you that this will allow us to quickly restore our former correct payment behavior to investors.”

      Will be interesting to follow up on this promise.

      Just an idea came into my mind. If one would follow the count of offers in the secondary market, it should serve as a good indicator for what is happening with projects in general.

      Kindly,
      Janis

  3. Beware. Crowdestate is heavily moderating inquisitive comments on their Blog, they are not transparent and they are trying to withhold and cover “bad” information from investors. If this is not a red flag, I don’t know what is. My post highlighting an issue with one of their projects where delay on repayment was more than 100 days already yet the loan was not marked as “red” and no information to investors was provided on actions being taken, instead the loans from the project were barred from secondary market (without any prior announcement), was not approved. I wonder why. https://ibb.co/vYykKCn

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