My Experience Investing in Crowdlending

Introduction: From Skepticism to a Core Portfolio Strategy

If you had told me five years ago that I would be entrusting a significant portion of my investment capital to complete strangers online, funding everything from solar panel projects in Portugal to short-term loans for UK property developers, I would have laughed.

My background is in traditional finance. Stocks, bonds, and real estate were the holy trinity. They were tangible, regulated, and understood. The world of Peer-to-Peer (P2P) Lending or Crowdlending seemed like a wild, unregulated frontier, rife with risk and promises that were too good to be true.

But like many, I was frustrated. The era of zero (or negative) interest rates had evaporated the returns from savings accounts and government bonds. The stock market felt overvalued and volatile. I was searching for yield, for a way to generate a stable, passive income stream that could act as a counterbalance to the whims of the public markets.

So, I dipped a toe in. That toe, over half a decade, has evolved into a solid, foundational pillar of my investment portfolio. As of today, my volume-weighted average annual return across all my crowdlending investments stands at 12.03%. More importantly than the number itself are the lessons learned, the scars earned, and the sophisticated strategy developed to achieve it.

This post is the culmination of my half-decade journey. It is not financial advice but a transparent, detailed case study of my experience. I will dissect the platforms I’ve used, the strategies I’ve employed, the mistakes I’ve made, and the key takeaways that allow me to sleep soundly at night while my money works across Europe.

Whether you’re a complete novice curious about this asset class or a seasoned investor looking to compare notes, I hope this deep dive provides immense value.

1. What Exactly is Crowdlending?

Before we dive into the numbers, let’s establish a common language. Crowdlending, often used interchangeably with P2P Lending, is a form of debt-based crowdfunding. It connects those who want to borrow money with those who have money to lend, bypassing traditional financial institutions like banks.

Beyond the Hype: The Core Mechanics

1. A Borrower needs a loan. This could be an individual wanting to consolidate debt, a small business needing to buy equipment, or a real estate developer requiring a bridge loan.

2. A Lending Platform (e.g., Mintos, EstateGuru) lists this loan opportunity on its website. They have typically already vetted the borrower (to varying degrees of rigor).

3. You, The Investor, browse the platform and choose to fund a portion of that loan. For example, you don’t fund a whole €20,000 loan; you buy a “note” or a piece of it for as little as €10 or €50.

4. The Borrower makes monthly payments (interest + principal) back to the platform.

5. The Platform distributes these payments to all the investors who funded that loan, minus their service fee.

Your return comes from the interest the borrower pays. The platform’s profit comes from the fees it charges the borrower and sometimes a small cut of the interest paid to investors.

The Different Flavors of Crowdlending

Not all crowdlending is created equal. The risk and return profile varies dramatically by loan type:

• Consumer Loans: The most common type. Individuals borrowing for personal reasons (car repairs, weddings, debt consolidation). Typically short-term (3 months to 5 years). Often higher interest rates (8-15%) but also higher risk of default. Platforms: Mintos, PeerBerry, Twino.

• Business Loans: Loans to SMEs (Small and Medium-sized Enterprises) for expansion, cash flow, or inventory. Can be higher amounts. Slightly lower interest rates than consumer loans but requires more due diligence on the business’s health. Platforms: Crowdestor, Crowdpeers.

• Real Estate Loans: Secured by a property (a first- or second-rank mortgage). This is my personal favorite for its added security. If the borrower defaults, the property can be sold to recover the investment. Loans can be for development, renovation, or bridging. Platforms: EstateGuru, Bulkestate.

• Invoice Financing: Businesses sell their outstanding invoices to investors at a discount to get immediate cash flow. The return is earned when the invoice is paid in full by the end customer. Platforms: Crowdestor, Viventor.

The Players: Platforms, Originators, and Investors

Understanding the ecosystem is crucial:

• Platforms: The marketplaces (Mintos, EstateGuru, etc.). Their reputation and operational integrity are paramount.

• Originators/Loan Originators: This is a critical concept. Most platforms don’t source the loans themselves. They partner with local, regulated financial companies (e.g., a consumer loan company in Poland or a micro-lender in Georgia). These companies are the Originators. They create the loans, administer them, and often provide a Buyback Guarantee (more on that later).

• Investors: That’s us.

The relationship between the Platform and the Originator is the single most important factor to analyze. A platform is only as strong as its weakest originator.

2. My Crowdlending Portfolio: A 5-Year Snapshot

Let’s get to the numbers. Transparency is key, so here is a detailed breakdown of my portfolio’s performance.

Disclaimer: Past performance is not indicative of future results. My experience is unique to my risk tolerance, strategy, and timing. You could do better or worse.

Capital Deployed and Annual Returns

I started slowly in 2018 with a test investment of €10,000. As my confidence and understanding grew, I systematically increased my allocation. Today, my total capital deployed across all platforms is €800,000.

Overall Weighted Average Return (2018-2023): 12.03%

Geographic and Sector Allocation

Diversification isn’t just about multiple platforms; it’s about multiple countries and loan types. My current allocation:

• By Loan Type:

  • Consumer Loans: 45%

  • Real Estate Loans: 40%

  • Business Loans: 12%

  • Invoice Financing: 3%

• By Geography:

  • Poland & Czechia: 25% (Mature markets, stable regulations)

  • Baltic States (Estonia, Latvia, Lithuania): 20% (Tech-savvy, strong growth)

  • Germany & Finland: 15% (Lower yield, but very low default rates)

  • Other EU (Spain, Portugal, etc.): 30%

  • Non-EU (Georgia, Kazakhstan): 10% (Higher yield, higher risk)

Platform Diversification

No single platform holds more than 25% of my total crowdlending capital (€800,000). This protects me from a platform-specific failure.

• Mintos: ~25%

• PeerBerry: ~15%

• EstateGuru: ~10%

• Crowdestor: ~10%

• Twino: ~15%

• Other (Hive5, Esketit, Maclear, etc.): ~25%

3. The Engine Room: Deep Dive into the Platforms I Use (and Why)

Here’s a detailed look at my experience with each major platform.

Mintos:

• My Strategy: Mintos is a core platform for my consumer loan allocation. With a larger portfolio, I run several custom Auto-Invest strategies simultaneously, each tailored for different risk/return profiles and currencies.

  • Filters I Use: Maximum loan term: 12 months. Minimum Interest: 10%. Only loans with a Buyback Guarantee. Only Originators with a Mintos Rating of B or higher. I exclude certain high-risk countries. I also have strategies for specific, reliable originators.

  • My Strategy: I aim for a massive volume of small, short-term loans to maximize compounding, liquidity, and diversification.

• Pros: Unmatched liquidity due to the secondary market. Huge selection of loans and originators. Transparent reporting and a well-developed interface. Essential for deploying large amounts of capital efficiently.

• Cons: Can be overwhelming. Requires constant, active management of auto-invest settings. The “Mintos Rating” is not infallible. Platform risk is always present.

• My Verdict: An essential platform for any serious investor with a significant portfolio, but it’s a powerful tool that requires skill and constant monitoring.

PeerBerry:

• My Strategy: PeerBerry is the stable core of my consumer loan allocation. It’s run by the Aventus Group, a strong and consistently profitable originator. My strategy here is conservative and focused. I primarily invest in loans from Aventus Group and a few other hand-picked originators with impeccable long track records. The average loan term is under 9 months.

• Pros: Incredibly user-friendly, transparent, and reliable. Consistently profitable originator. The “Personal Guarantee” from the Aventus Group head provides an extra layer of comfort, which is crucial for a large investment.

• Cons: Less diversification than Mintos as it has fewer originators. The secondary market is less liquid, which can be a consideration for larger positions.

• My Verdict: My favorite platform for a “set-and-forget” allocation that generates consistent, predictable returns. I trust their management and operational consistency deeply.

EstateGuru:

• My Strategy: This is where I allocate a significant portion of capital for long-term stability and security. I only invest in loans secured by a first-rank mortgage in European countries with stable property laws (e.g., Germany, Finland, Estonia). I avoid higher-risk development projects. I manually select each loan, conducting thorough due diligence on the property’s location, the quality of the valuation report, and the Loan-to-Value (LTV) ratio. I strictly prefer LTVs under 60%.

• Pros: Tangible asset backing provides immense peace of mind for a large portfolio. Professional project descriptions and legal documentation. Predictable, long-term income stream.

• Cons: Capital is locked for longer periods (6-24 months). Early exit is only possible via the secondary market, which can be slow for very large investments. Lower expected returns than consumer lending.

• My Verdict: The cornerstone of my low-risk crowdlending allocation. It’s the antithesis of speculative investing and provides excellent portfolio balance and security for six-figure sums.

Crowdestor & Twino:

• Crowdestor: This platform focuses on higher-yield business and real estate projects. The returns are higher (often 14-18%), but so is the risk. My allocation here is deliberately capped and considered speculative. I only invest in projects where I have a strong belief in the business model and the management team. I expect a higher default rate here and am compensated for that risk with higher interest. Recently announcement about platform problems recommend not to continue investing on it.

• Twino: A smaller consumer loan platform focused on Central and Eastern Europe. I use it for a portion of my short-term allocation, particularly their “Payday loans” with terms of 1-2 months. It’s a useful tool for maintaining liquidity and earning a return on cash that is waiting to be deployed into longer-term opportunities on other platforms.

4. The Nuts and Bolts: My Investment Strategy Unpacked

A 12% return on a €800k portfolio doesn’t happen by accident. It’s the result of a disciplined, systematic, and unemotional strategy.

The Golden Rule: Diversification, Diversification, Diversification

This is the non-negotiable foundation of managing a large crowdlending portfolio. You must spread your risk mathematically.

• Across Platforms: Never put all your eggs in one basket. A platform failure would be catastrophic.

• Across Originators: Even on one platform, spread your investment across many different loan originators. My rule is that no single originator represents more than 5% of my total crowdlending portfolio.

• Across Loan Types: Balance higher-risk consumer loans with secured real estate debt.

• Across Geographies: Economic downturns are often localized.

• Across Currencies: I primarily use EUR, but have strategic allocations in other currencies, which I sometimes hedge.

Auto-Invest vs. Manual Selection: Finding the Right Balance

I use a hybrid approach optimized for scale:

• Auto-Invest for Consumer Loans: On Mintos and PeerBerry, the volume of loans is enormous. Manually selecting loans for a €360k allocation is impossible. Well-tuned, multiple auto-invest strategies are essential for efficiency and diversification at this scale.

• Manual Selection for Everything Else: For real estate (EstateGuru) and business projects (Crowdestor), I manually vet every single investment. This involves deep due diligence: reading project descriptions, analyzing financials, scrutinizing property reports, and assessing the borrower’s track record.

My Strict Due Diligence Checklist for Any Platform or Loan

Before I invest significant capital in a platform, I check:

1. Company Background: How long have they been operating? Who are the founders? What is their financial background?

2. Profitability: Is the platform itself profitable? (This is a huge green flag). You can often find this in their annual reports. This is critical for platform sustainability.

3. Transparency: Do they openly communicate about problems? Do they have a clear FAQ and easy-to-understand terms?

4. Buyback Guarantee Terms: This is critical. Read the actual legal wording of the guarantee. Is it a true obligation or just a vague promise? How long after a delay does it trigger?

Before I invest in a specific loan or originator, I check:

1. Originator’s Financials: Are they audited? Are they profitable?

2. Historical Performance: What is their historical default rate? (Platforms like Mintos provide this data).

3. Loan Collateral: For real estate: What is the LTV? Is it a first-rank mortgage? Who did the valuation?

4. Loan Purpose: Does the business case make sense? Do I understand what the money is being used for?

The Reinvestment Strategy: Compounding is King

The power of compounding is what makes a large crowdlending portfolio powerful. My strategy is to immediately reinvest all principal and interest repayments. This ensures my capital is never idle. On platforms like Mintos, my auto-invest is always active to scoop up repayments the second they hit my account. At this volume, the daily reinvestment flow is substantial and is a key driver of returns.

Risk Management: How I Prepare for Defaults

Defaults are not an “if,” but a “when.” I model my expected returns after an assumed default rate. For my portfolio, I assume a 3-5% annual default rate. My target return of 12% is high enough to absorb these losses and still leave a healthy profit.

I also maintain a “default reserve.” I keep about 5% of my total portfolio value (€40,000) in cash across the platforms. This serves two purposes: it allows me to quickly jump on new, high-quality opportunities, and it acts as a buffer to smooth out the impact of delayed payments or defaults, ensuring I never have to liquidate good investments to cover cash flow needs.

5. The Inevitable: Analyzing Losses and Defaults

Let’s talk about the ugly side. Here are two real case studies from my portfolio.

Case Study 1: The Crowdestor/LC Proventus Default (A Lesson in Platform Risk)

In 2021, I invested €20,000 in a project on Crowdestor for a company called LC Proventus, which was building a nursing home. The project offered a 14% return. Months after funding, it became clear the project was in trouble. Communications became sparse and then stopped. Crowdestor eventually declared the borrower in default.

• The Learning: This was a failure of both the originator (LC Proventus) and the platform’s (Crowdestor) due diligence. While I did my homework, the project-specific risk was too high. I broke my own rule by investing too much in a single, high-risk project. With a larger portfolio, the temptation to chase yield on individual projects increases, and this was a stark reminder to stick to the diversification rules.

• The Outcome: The project is still in recovery. I may recover 20-50% of my capital over the next few years from the sale of the underlying asset, but I have written this investment off as a total loss in my mind. It was a painful but necessary lesson that even with a large portfolio, discipline is paramount.

Case Study 2: Consumer Loan Defaults on Mintos (The Cost of Doing Business)

On a daily basis, I receive notifications that borrowers on Mintos or PeerBerry are 60+ days late on their payment. This triggers the Buyback Guarantee.

• The Learning: This is not a “default” in the traditional sense. It’s the system working as designed. The originator is contractually obligated to buy back the loan from me, including any unpaid interest. At a portfolio size of €800k, these events are frequent but small in individual value. They are a constant background process, not a crisis.

• The Outcome: After the buyback process (which can take from a few days to a few weeks), the full principal and accrued interest are returned to my account. The only “loss” is the opportunity cost of the capital being locked up during the delay. This is why the Buyback Guarantee is non-negotiable for my consumer loan investments, especially when managing a large sum.

How Defaults Have Actually Impacted My Overall Returns:
The LC Proventus default was my only major loss to date, costing me ~€20,000. The constant stream of consumer loan delays is a nuisance but not a capital loss thanks to guarantees. Factoring in the €20,000 loss, my gross return would have been around 13.5%. Net of this loss, it’s the 12.03% I currently report. This proves that a well-diversified portfolio can absorb significant individual losses while still performing well overall. The key is that the €20,000 loss was only 2.5% of the total portfolio, which was within my expected risk model.

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6. Beyond the Return: The Tax Man Cometh

A 12% return is not a 12% net return. Tax implications vary wildly by country, so you must consult a local tax advisor. However, here are the general principles from a European perspective.

• Interest Income: In most countries, the interest you earn is treated as income and taxed at your marginal income tax rate. This can be very high (e.g., over 50% in some countries). With a portfolio this size, the tax liability is a significant consideration and must be planned for.

• Capital Gains: If you sell a loan note on a secondary market for more than you paid, this may be considered a capital gain.

• Reporting: The burden is on you to track all your income and report it accurately. Most platforms provide annual tax statements, but they are often complex and cover multiple countries. With €800k invested, this administrative task is non-trivial.

My Process: I use a home-made spreadsheet where I record every single investment, every interest payment, and every principal repayment. At the end of the year, I can quickly generate reports on my total interest income per platform and per country to provide to my accountant. This meticulous record-keeping is absolutely non-negotiable at this level of investment.

7. Key Learnings: The 15 Commandments of Crowdlending

If you take nothing else from this post, take these rules. They are written with larger portfolios in mind.

1. Diversify Ruthlessly: Across platforms, originators, and loan types. This is your primary defense.

2. The Buyback Guarantee is Non-Negotiable: Never invest in a consumer loan without one from a reputable originator.

3. Start Small, Scale Slowly: Never deploy a large sum into a new platform or strategy all at once.

4. Beware of Yield Chasing: Returns over 16-18% are a major red flag. Consistency trumps hype.

5. Platform Risk is Your #1 Risk: The risk of the platform itself collapsing is your greatest threat. Diversify across platforms to mitigate this.

6. Do Your Own Due Diligence (DYODD): Never blindly follow “gurus” or platform marketing. Take ownership of your decisions.

7. Reinvest Everything: Harness the power of compounding. It’s your most powerful ally.

8. Prioritize Liquidity: Favor shorter-term loans. The flexibility to reallocate capital is worth a slightly lower yield.

9. Understand the Tax Implications: A gross return is not a net return. Factor taxes into your target returns.

10. Never Invest Money You Can’t Afford to Lose: This is not a savings account. Capital is at risk.

11. Focus on Euro-Based Platforms First: Currency risk is a complex layer you can add later, if at all.

12. Read the Fine Print: Understand the exact terms of the guarantee and the recovery process. What happens in a default?

13. Trust Your Gut: If something feels off about a platform, loan, or originator, walk away. Immediately.

14. Patience is a Virtue: It takes time for strategies to work and for compounding to show its magic. This is a long-term game.

15. It’s Not Passive Income: It’s passive once set up, but it requires active monitoring, strategy adjustments, and administrative work. The larger the portfolio, the more important this becomes.

8. The Future of Crowdlending: My Outlook and Predictions

The industry is maturing rapidly. I see several key trends:

• Increased Regulation: The “wild west” days are ending. EU-wide regulations (like ECSP) will bring more security but may also compress returns. This is a positive long-term development for larger, serious investors.

• The Rise of the “Originator” Model: True person-to-person lending is rare. The market is now dominated by professional originators selling loan portfolios to investors. This is more efficient but changes the risk dynamic from individual borrower risk to originator risk.

• Market Consolidation: There are too many platforms. I expect many smaller players to be acquired or fail. This is why I only invest in established, profitable platforms with a long track record.

• The Role of AI: Credit scoring will become even more precise, potentially lowering default rates. However, it could also lead to over-reliance on algorithms without human oversight.

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9. Frequently Asked Questions (FAQ)

Q: Is my capital guaranteed?
A: NO. Unlike a bank savings account, there is no government deposit guarantee. Your capital is at risk. The only “guarantee” is a contractual Buyback Guarantee from an originator, which is only as good as that company’s financial health.

Q: How much money do I need to start?
A: You can start with as little as €50-€100 on most platforms. However, to properly diversify across hundreds of loans, a minimum of €1,000-€2,000 per platform is advisable. For a portfolio to generate meaningful income, a five-figure minimum is recommended.

Q: What’s the single biggest risk?
A: Platform risk. The risk that the marketplace you use goes bankrupt, is poorly managed, or turns out to be fraudulent. This is why multi-platform diversification is the most important rule.

Q: How much time does it require?
A: The initial setup and research can take 10-20 hours. Once your auto-invest strategies are running, it requires about 30-60 minutes per week for monitoring, reinvesting, and reading platform updates. For a large portfolio, monthly deep dives into performance reports are also necessary.

Q: Should I invest in my local currency?
A: Generally, no, unless you have expenses in that currency. Currency exchange rate fluctuations can easily wipe out your returns. Stick to your home currency (e.g., EUR) to start.

10. Final Conclusion: Is Crowdlending Right for You?

Crowdlending has been a fantastic investment vehicle for me. It has provided double-digit returns, low correlation to the stock market, and a predictable passive income stream from a €800k portfolio.

However, it is not for everyone.

The ideal crowdlending investor is:

• Financially literate and understands risk.

• Technologically savvy and comfortable using online platforms.

• Diligent and willing to do ongoing research.

• Risk-tolerant and can accept that defaults are part of the game.

• Patient and has a long-term horizon.

If that describes you, then crowdlending can be a powerful addition to a well-diversified portfolio. Start small, choose one or two top-tier platforms like PeerBerry or EstateGuru, learn the ropes, and gradually build your strategy from there.

The journey to a 12% return is a marathon, not a sprint. It’s paved with careful research, disciplined strategy, and an unemotional acceptance of the risks involved.

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Disclaimer: I am not a financial advisor. The content of this post is for informational and educational purposes only and should not be construed as professional financial advice. Please conduct your own due diligence and consult with a qualified financial advisor before making any investment decisions. Capital at risk.