As we announced here on the blog last week (in the post Impact Investing – Utilizing MYC4 as an Investment Vehicle for Socially Responsible Investing), we are currently looking to increase the available liquidity on the MYC4 platform. One important step in that direction is to engage our Providers in fundraising through their networks – and even for them to participate directly in funding their own loans.
The largest MYC4 Provider, Gatsby Microfinance Ltd, has made the first move this week by opening an investor account that holds 60,000 euro. The account has been set up with an auto bid to ensure that Gatsby bids 10 % of the loan amount on all their loans. So far, they have made 6 bids. While this definitely increases the chances of their loans funding, it is far from enough – they still need help from other investors.
One alert investor, Peter Dörrie, has already picked up on this development and writes about it on his blog:
I think that this is a generally positive development. This way, providers can put money where their mouth is and build trust with other investors, by committing some of their resources into loans on the MYC4 platform. Depending on how providers manage their investment portfolio, this could also lead to fewer underfunded and cancelled loans.
But herein lies a certain danger as well. Providers could be tempted to use their investor status to push down the interest on their own loan portfolio. After all, they are already getting a fixed share of the profits, so why not lower the interest rate just a bit further to make their offer more attractive to borrowers?
What do you think? Go to Peter’s new blog MYC4 Investor to discuss this and other questions with him.