EstateGuru raises equity ahead of institutional funding deal
EstateGuru has raised capital from its founders, existing shareholders and other investors to safeguard the business against macroeconomic challenges and support its plans for growth.
The European peer-to-peer lending platform said it is finalising the latest funding round this month, as it prepares for additional institutional investment in the form of credit lines that will require corporate capital, an increased runway and reserves.
“Given the recent market landscape, which has been fraught with geopolitical tensions, rampant inflation, interest rate hikes, and generally volatile conditions, EstateGuru management decided to increase the capital reserves of the company at the start of 2023,” the firm said.
Since its launch in 2013, EstateGuru has raised over €9m (£7.9m) from angel investors, founders, equity crowdfunding platform Seedrs and other institutions.
“This relatively low amount (when compared with other market players) of raised capital has been strategically invested with the company’s next phases of growth in mind,” it said in a blog post on its website. “EstateGuru has always tried to keep profitability close by growing our revenues and investing profits back into the business.”
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EstateGuru had a challenging 2022, in which it cut its international workforce by more than a third and reduced its external development costs, with the aim of increasing the firm’s profitability in the first quarter of 2023. It revealed in January that it has shelved its plans to expand into the UK and Spain, while in Germany it decided to temporarily halt new investment projects on its platform while it addresses issues with the portfolio.
“After a profitable month in February, it seems fair to say that EstateGuru’s transition from a focus on hyper-growth to sustainable profitable growth is proving a success,” it said.
“We are focusing on core markets during the current cycle and this has also allowed us to review and reduce costs when compared to last year. We continue to monitor costs, rationalise the business, and tighten credit policies and origination processes to establish a more sustainable, profitable business that can withstand turbulent market conditions, while servicing the investment needs of our investor clients and the funding needs of our borrowers.”
Read more: EstateGuru reaches €500m funding milestone
In 2022, EstateGuru increased revenues by 12 per cent, with €18m paid to investors. Loan volumes fell 10 per cent compared with the previous year. The total amount funded through the platform was €183m, a 10 per cent decrease compared with 2021’s figure of €203m.