Debitum CEO Sergei Demchuk: “We climbed over the 5 million portfolio mark and we are set for even bigger growth”

The pandemic has been a challenge for many, but not for fintech and Debitum, a digital debt marketplace that brings together investors and European SME's. Sergei Demchuk, the CEO of Debitum, told The Baltic Times Magazine that the company went through the entire pandemic period very smoothly and managed to adapt to changes promptly. “None of our partners, loan originators, defaulted and none of our investors lost money,” Sergei Demchuk underscored.

Why pick Debitum for small and medium business loans?

Debitum’s main strength is security. Our work specificity is based on minimising risk for our investors. We are applying strict criteria for loan sorting and trying to provide the best investment opportunities. We avoid uploading high-risk assets. Also, loan originators monitoring is coherent – we conduct a due diligence every quarter and try to notice any upcoming risks as soon as possible. None of the investors on our platform has ever lost money, so this is the reason why Debitum is a smart choice in terms of selecting SME investments.

How do the Debitum investors earn money on the Debitum?

Every asset on the platform has a fixed return – the interest rate is usually 8 to 10% per annum. You need to select the investment that meets your expectations in terms of duration, interest rate and risk level, and by one click of the button make an investment. For the majority of loans interest repayments are made on a monthly basis and principal at the end of the term, but we also offer invoice financing loans for which the investor receives the invested amount and earnings at the end of the term.

What do you offer financial brokers?

We are an intermediary between investors and loan originators. Financial brokers lend money for SME’s and Debitum helps to collect the needed funds, so that loan originators can fund more loans and provide their services to more small businesses.

What were the major milestones for your company?

We launched our platform in 2018. In 2019 and 2020 we paid a lot of attention to preselecting and on boarding proper partners – loan originators on our platform. We managed to establish partnership relations with 8 loan originators from 6 countries in Europe and thus we provide a wide range of investment opportunities to our clients.

In 2020 we applied for an investment broker license, although the process is still in progress - we already see the finish line and couldn’t be more delighted about it. Debitum is also now working on a new and unique product in the market, so it’s a challenging and exciting achievement. Moreover, we climbed over the 5 million portfolio boundary and are expecting an even bigger growth in the future.

How is the coronavirus pandemic and moving operations massively online effecting Debitum and its operation?

Actually, Debitum went through this whole pandemic period very operatively and managed to adapt to changes promptly. As our business is online, we haven’t faced any issues regarding business, and employees adapted to work from home quite easily.

In terms of risk for investors – none of our partner - loan originator defaulted and none of our investors lost money.

As we speak, the amount provided for investments stands at 39.72 million euros. Can you break down the sum? What kind of investments are you interested in financing most?

Approximately 40% of investments are business loans and 60% are invoice financing. But the proportion is related to loan terms. Invoice financing loans are shorter, so short-term assets are uploaded more frequently and take a bigger part of an overall portfolio. The type of loan is not very important for us, the most important aspect is the quality of assets.

You boast on your website of having the current average interest rate of nearly 9 percent. So how much will I earn in interest if I entrust Debitum with, say, 5,000 euros?

The potential earnings depend on the interest rate and term. The highest interest rate on the platform is 12% and the lowest – 8%. For example, if you invest in one-year loans with a 10% interest rate, you will earn 500 euros. If an investor is interested in short-term and liquid investments with a duration of 30 days and interest rate of 9%, he can earn 37 euros in a month and quickly reinvest a bigger amount.

What is the average repayment term?

At this moment the historical average term is 103 days, but as we mentioned before, the statistic is affected by the bigger amount of short-term assets. The average is not important in our case, because investors on the platform can always find various investment opportunities with different terms.

Is my money safe with Debitum?

Investment activity is always related to risk, but as we explained before, we at Debitum do our best to bring maximum safety and minimize risks for investors.

Are you to offer any new products soon? What will they be?

Yes, recently Debitum started offering structured products. By this new product, Debitum gives investors the same tool that professional investors have been using for many years - a classic bond structure. The bond structure is well-known in the professional investor world. But the paper workflow, once a month subscription model, and a lot of hand work made it heavy, long, bureaucratic and accessible only through Bankers and offline. With new technologies and fintech approaches we reinvented the bond and made it accessible for all.

What about the licensing? Is it hard to obtain the permit?

The licencing process is still in progress, but we are very close to this event. It’s not hard, but requires a lot of time, writing proper procedures, communicating with regulators. Nevertheless, we are glad that we took this step and will be one of 4 platforms that will receive a license first.

Who are the people on your team?

One of the biggest values on our team is that every member is very dedicated and professional.

Geographically we have people who work in Lithuania and in Latvia as well.

The cofounder of Debitum is Martins Liberts. He is a serial entrepreneur with 15+ years’ experience in tech and finance business development. He had 2 successful exits from non-bank finance and tech companies.

Personally – I have 15+ years’ experience in the financial industry, especially SME and Non-bank financing, successful experience in launching non-bank financial institution in several countries.

Other team members have strong expertise in IT, wealth management, credit risks and other relevant areas. Thus, we feel confident offering great modern fintech product to our clients!

What is the geography of Debitum operations?

Our team is located in Latvia and Lithuania, but as a pure fintech we have no geographical restrictions for our investors. Mostly we work with investors from all European countries, we have a lot of investors from the Baltics, also from Germany, France, the UK, Spain. If we talk about investment offering, we offer loans from Latvia, Lithuania, Estonia, UK, Romania and Ukraine.