When considering my P2P portfolio, there are two active platforms that I want to reduce exposure as soon withdraws are possible: TFGcrowd and Wisefund. While Wisefund is completely blocked and promising to resume payments by the end of July, TFGcrowd keeps paying investors on a regular basis, offering immediate withdraws of funds in balance, and reporting diligently on project updates. They actually shared a product roadmap update… Will TFGcrowd be among the unlikely survivors of COVID-19?
If you had the change to read 7 Lessons to Protect Yourself From P2P Scams, TFGcrowd presents multiple warning signs. However, it is clear that they should be doing something to maintain their cash flow capacity, keep up with all investor pressure and paying interest rates and capital on time, justifying delays. How is that possible?
TFGcrowd: Cash Flow Status Update
When looking to TFGcrowd, the type of projects presented for funding changed in a significant way over the past few months. From real estate and business loans looking for €100K to €300K, now the typical investment opportunity is based on invoice financing from €8K to €30K. Also the maturity of this loans decreased in a significant manner.
More concerning is the entire lack of connection between individual investments done by a user and the actual project execution window for repayment. Imagine these scenarios: you invest today €100 in a project. One of your friends does the same but one week later. The project maturity arrived and the first investor is waiting for the buyback guarantee to kick-in, while his friend decided to “reinvest” the amount into another project while the first was not even paid… Another scenario that also happened is having one investor receiving full payment from one particular project and his friend receiving only a partial payment with the promise that the full amount will be transfer soon.
All this is highly concerning and brings complete confusion on what will happen next. I don’t know if it is a scam, but I was not expecting them to survive the COVID-19 crisis. Now, they even shared a platform roadmap update!
TFGcrowd: Platform Roadmap Update
Back in February, TFGcrowd shared their platform roadmap and plans for the future. Since then, some of the roadmap tasks have been implemented.
Business Accounts: TFGcrowd now allows the registration of business accounts.
Referral Program: If you invite people to the platform and they invest over 100€, you will get 20€ plus 2% bonus on what they invest within the first 90 days.
Invoice Financing: a justification for the business model shift described above, they state offering investors the flexibility of shorter investment periods with attractive interest rates.
Among the ongoing activity, these are the main points:
Moving to the UK Jurisdiction: right now the TFG Crowd corporate structure is almost impossible to disclose. Now they state that TFG Crowd Limited has been established in England, UK and they are applying for an FCA license for crowdfunding there.
Migrating European projects to German jurisdiction: another element adding to the overall corporate structure, TFG Crowd announced the establishment of TFG Crowd GmbH in Berlin to manage European projects. They state that are preparing all the necessary documentation to be filed for a crowdfunding license in Germany.
Electronic Money License: what they call TFG euro IBAN and TFG VISA card. They state are currently undergoing VISA approval process.
Until the platform shows the FCA and German crowdfunding and EML licenses, everything is just a promise, and not even such licenses provide additional security for your investments. So consider that before investing.
Among the plans for the future, these are the main points:
Secondary Market: to allow investors to sell their investments.
Auto-invest Feature: to allow a fully automated investment option to investors.
Insurance Market: to allow investors to buy insurance on their investments, to replace what they call TFGCrowd’s Buyback Guarantee EXTRA.
Mobile App: expected in 2021.
All these updates are interesting, however the lack of transparency on corporate structure and financials from borrowers is keeping me awake. I lost all interest on this high-risk, high reward platforms, but I understand all investors that still knowing this decide to take their chances.
What do you think of TFGcrowd?
Definitely, after my experience during the beginning of the year, I just want to see the projects I invested in paid and withdraw funds to a level of risk more adequate to my platform assessment. What is your personal opinion on the future of the platform? Will you continue to invest or reduce your exposure? It will be very interesting to learn what the future will bring for TFGcrowd, taking into consideration I was not expecting it to survive the COVID-19 crisis.