Dreams are never big. Especially if necessary strides are taken and they are accompanied by auspicious intermediary results. Launched at the end of 2020, LendSecured, a groovy lending platform for the Latvian agricultural sector, has already issued more than 2-million-euro loans for farmers and is swinging at 2030, envisioning itself by then as the biggest EU platform for small and medium agricultural businesses. The Baltic Times Magazine spoke to the lender’s CO/founder Edgars Talums and CEO/founder Nikita Goncars.
What was the start of LendSecured? Why are you focusing on the agricultural sector?
Edgars Talums: We have been in the lending business for almost 15 years, however, a couple of years ago agriculture became topical for me as well. Already for several generations our family has owned a property in Smiltene County, but in recent years, it was totally overgrown and the farm was left neglected. Gradually I started keeping bees, I bought several bee-hives. I met a number of grain farmers and livestock farmers in this environment, so there was a chance to see what problems they regularly faced. Farmers did not seem to know their potential: they did not receive the wanted and earned remuneration and development opportunities. This motivated me and Nikita to set up this platform for crowd financing, which would act as a tool for attracting investments to farmers, enabling them to develop – to buy land, machinery – much faster and without excessive formalities. We believe that funding for farmers should be available more freely.
Nikita Goncars: As per my education and conviction, I am more a financial person, although I have worked with my hands as well – both in Latvia and in Ukraine, where my grandparents were doing farm work and I participated as well. It was a good experience during childhood and youth, both to understand how food grows and how physically difficult working on a farm is. Just like Edgars, the initiation of this business was motivated by the desire to address the well-known problems of the availability of funding for farmers. Many farmers, particularly from new farms, are still working with worn-out machinery. This should not be so, because currently there is enough money in the world as such and a vast supply of modern machinery.
Edgars Talums: Together we have built successful lending companies in Latvia. We were and still are working with local banks and long term private investors and since our cooperation, there is zero capital lost for them. We treat investors' money as ours - with high responsibility.
Nikita Goncars: We launched LendSecured at the end of 2020, so we count that we started to work at the beginning of 2021. Since then we have issued more than 2 million euros in loans to farmers.
How does it all work? Take me through it briefly!
Nikita Goncars: We bring together investors from any country in the world, with farmers, who have particular needs. So people lend money to people, the same way that the savings companies once worked. After evaluating an application we decide toaccept it or not. If accepted, the project is published and investors start to invest. As soon as money is collected, the farmer receives it. It’s important to note that all funds are kept in a segregated account from LendSecured, operated by payment institution LemonWay, operated by BNP Paribas Bank.
Some may say the agricultural sector is riskier than others – due to its heightened risks, like droughts, heavy precipitation or less EU support than expected and et cetera. Yet you’re not distracted by the risks. Do you believe the opportunities the sector offers outweigh the risks?
Nikita Goncars: Based on the survey published in November 2020 by the European Investment Bank, the financial gap for the agriculture sector has been estimated to be on the order of 19.8 billion euros to 46.6 billion euros for the EU 24. The gap represents financing sought by economically viable enterprises that is not granted. Small-sized farms, young farmers, new entrants, and innovative investments find it harder to access financing.
Edgars Talums: There are 3 different asset classes available for investments: grains (as seasonal funding), heavy machinery and land plot (mortgage loan), so investors can choose the asset class they are most interested in.
Nikita Goncars: We try to keep our average LTV (loan to value) under 40 percent.
What can a small farmer in rural Latvia expect from LendSecured?
Edgars Talums: Farmers appreciate a fast evaluation process. If there is an urgent need to buy fertilisers because of the price of fixed machinery, a loan is issued in 2-3 days.
Nikita Goncars: Farmers don’t have to leave their farm to get a loan - all the processes are automated and agreements can be signed remotely.
Who is on your team?
Edgars Talums: Part of the team has been working together for more than eight years, part of them we onboarded since we opened the platform. So we know each other well enough, we know our goals and what we want to achieve, so we’re working hard to become the leading agricultural platform in EU.
Do you operate only in Latvia? Any plans to expand? And where to?
Nikita Goncars: At the moment, we are operating only in Latvia, but we plan to expand to the other Baltic States and, later this year, in the third quarter, to other parts of Europe.
How has the COVID-19 pandemic impacted your activities?
Nikita Goncars: We increased our portfolio during COVID-19, as farmers mainly were not impacted by COVID-19. The demand for farmland is higher than the supply, so farmers are forced to rent land plots. Our agricultural portfolio had a much lower default rate than loans to consumers during covid.
Any achievements you would like to share?
Nikita Goncars: In 2021 we were chosen as one of the TOP 40 start-ups in the biggest Baltic event – Start-Up day for a pitching event. The event is a three-day festival with a marvellous stage program. We were pitching on stage with other great start-ups. At the end of 2021 we were recognized as one of the hundred most powerful Fintech start-up companies in the world; as a result we visited Abu Dhabi and met representatives of other financial companies.
What milestones has LendSecured set for the year 2022?
Nikita Goncars: The main goal is to finish campaign and we see that it could be done by the end of the second or the beginning of the third quarter. In the second quarter of 2022, we will finish the merger with brand LANDE, which is one of our lending brands for farmers and already well known in Latvia. There won’t be major changes as we are merging two brands we already have. And we plan to issue 5M on existing markets and establish a lending operation on the new ones.
Where do you see your platform by 2030?
Nikita Goncars: We will be the biggest platform focusing on agricultural loans based in the EU.