Waiting to hit the billion euro mark



Interview by Ieva Jakone on June 6, 2018.

Loans worth EUR 660 million have been funded on the Mintos marketplace. In addition, the company has earned almost a quarter of a million euros and won prestigious awards. But Mintos is not going to stop here — they have taken only their first steps.

Martins Sulte, CEO and Co-founder of Mintos

When Mārtiņš Šulte established the first marketplace for loans in Latvia back in 2015, and one year later attracted venture capital funding of two million euros, start-ups as a concept were still frowned upon in Latvia. At least Mārtiņš thought so.

“Everybody thought that these companies are run by a couple of guys or girls who do something and perhaps are not even sure of what they are doing. It might have seemed somewhat superficial,” remembers Mārtiņš.

His ambition was to prove that you can build a business in Latvia that can compete in the global market. And he did it. Last year, Mintos opened its offices in Mexico City and Warsaw and for the first time ended the year with profit — 240 thousand euros.

Meanwhile, the amount of loans issued within the platform has increased to more than 660 million euros. They have published an estimate to reach one billion by the end of the year.

During a conversation with Ir, Mārtiņš quickly thinks it through once more and clarifies: “I think it will happen already in September.”

To find Mintos, one must wander through the labyrinths of SWH Office Centre on Skanstes street. It has been a little more chaotic due to some construction work — one of the office’s buildings are being renovated in the backyard. After renovation, the top floor with 114 workstations will be given to the team of Mintos.

“It should be big enough for some time,” says Mārtiņš when teased that soon even this space will be too small for the team.

In 2015, Mārtiņš together with four software developers started their work on the marketplace.

“I remember how we sat down at these white desks. We had an idea, but… what do we do now?” he waves his hand at one of the desks.

Back then, they started their work at a hundred-square-meter-apartment-type office on Krišjānis Valdemārs street.

“We then thought that everyone had their own little corner,” exclaims Mārtiņš.

But soon enough the space got too small. In spring 2016, they moved to Skanstes street. All the desks in the open office are pushed close together. The business is growing fast and so is the number of its employees. Currently, the marketplace employs 50 people. The smallest percentage of employees work with technology solutions, while the others deal with risk management, sales, customer service, financial management and accounting.

“By the end of the year, our numbers will have grown somewhere in between 80 to 100,” estimates Mārtiņš.

Over the years, only two employees have left the team. While some of the new members who joined the team come from Estonia, Germany, Poland and Australia.

“Some of them have a connection with Latvia. A girl from Australia had lived here before and was thinking of moving on to a different country, but then she had the opportunity to join Mintos so she decided to stay. We believe Riga is international enough. People gladly consider the opportunity to stay here. Locals who are working here perhaps had considered going elsewhere but after they graduated, they decided to stay here — at a global company with a big influence.”

Mārtiņš is convinced that the key to the company’s success is a good team, and they put in great effort to strengthen it. For example, when an employee has worked in the company for a certain period of time, they have the opportunity to become one of the shareholders of the company.

“It unites us because then we are all in it together,” says Mārtiņš.

Also, they pay great attention to the work environment.

“What difference does it make if I work from an office, my home or a café? Everybody is free to choose the way they work. All that matters is that the work gets done. The environment should be pleasant to work in,” explains Mārtiņš hoping that over time Mintos would have the same effect as Skype had in Estonia — people who have gained experience working in a start-up move on to develop and implement their own start-up ideas.

In the office, there is also a board of ideas hung up on the wall with various suggestions of what is still needed in the office. Fans are already crossed out from the list and unboxed, however a pug and a jacuzzi most likely will remain only as ideas on the board.

Every risk has its own price

The Mintos marketplace brings together around 60 thousand investors from 72 different countries and lenders who are looking for funding for their loans without banks as intermediaries. Mintos itself does not give out loans. It is merely an intermediary between investors who have funds available at their disposal and different loan originators through whom this money gets to borrowers.

“We are linking the capital from places where it is accumulated to places where it is not as accessible,” explains the company’s Chairman of the Board.

The investors mostly come from Western Europe — Germany, the United Kingdom, Switzerland. However, loan originators in the platform represent 40 different companies from 23 countries, including Latvia. Among local lenders and cooperation partners are Mogo, AgroCredit, Banknote, Capitalia and others. Mārtiņš sees great potential in Latin American, African and Southeast Asian markets. Lenders from Southern Europe and Central Asia also operate in the marketplace. The investors have the opportunity to invest in different types of loans — collateral loans against cars or real estate, loans to small businesses and also personal loans.

When asked, whether it feels like this business is based on the less fortunate who cannot afford to take a loan from a bank and instead, choose to take out an expensive loan in the non-banking sector, Mārtiņš shakes his head dismissively. He looks at it from a different point of view.

“Every risk has its own price. If the borrower earns less or his job is not as stable, it does not mean that we should take away their opportunity to take a loan. It is better for them to have the opportunity to take a loan in an organised process, rather than having to satisfy their needs in a different way. We do not have to look too far for proof — if we go to Mexico we can see that there are loans that everybody gives back 100 %. If they are not able to do so, somebody will come and break their leg or take their car. It is easy to sit in an office in the heart of Riga and believe that everybody has the opportunity to take a loan at 2 % per year,” he explains noting that there is a loan segment which will have lower interest rates than in banks.

“It is very stereotypical to think that alternative lending is only for those who are not able to get a loan from a bank.”

In addition, the company carries out a thorough risk assessment before starting cooperation with its lenders. They have declined many offers, “because we do not believe that they will be able to perform well. We would not feel confident if investors were to invest in them.”

The marketplace makes sure that the interest rate reflects the risk.

“Of course, there are loans with higher risk, but their rates are also higher. We have a whole team that deals with risk management assessing the borrowers, loans, loan originators and whether they know what they are doing. The process is very thorough,” explains Mārtiņš.

Last year, the company opened its offices in Mexico City and Warsaw. In other countries, it operates remotely from the office in Riga. Currently, full support is available in seven languages on the marketplace.

What is the worst that can happen?

The Mintos marketplace has been operating only for four years.

“The beginning is always exciting,” smiles Mārtiņš when asked about the very first steps of the business.

During high school years, he was very interested in computers. At one point he realised that he is spending too much time by the computer screen, so he decided to sell it. After high school, he started his studies at the Stockholm School of Economics in Riga and worked at SEB Investment Banking for six years. In 2013, Mārtiņš took up studies at the INSEAD business school in France and Singapore studying in an MBA programme.

“After INSEAD I was thinking of working someplace else for about 3 to 5 years and then return to Latvia and start my own business,” remembers Mārtiņš.

But he changed his mind. “I wanted to do my own thing right away. In the end, business is the one place to which you can add the most value. I like creating something completely new. It seemed like there was no point in waiting any longer. What is the worst that can happen?” he remembers what he was thinking about back then.

Mārtiņš gets his business mindset from his parents. In the 1990s, they opened their own shop and grew tulips for retail. However, the first time Mārtiņš came across peer-to-peer lending was when he needed money for studies in INSEAD. The tuition fee was high, and study loans available in Latvia were not big enough to cover it. School graduates had created a lending platform offering loans to people who wanted to become students. Thanks to this platform, Mārtiņš was able to do his studies.

The idea to create his own peer-to-peer lending platform flashed across his mind in April 2014 when he was reading the TechCrunch portal. The idea came to life shortly after — in January 2015. Business was picking up fast.

“Back then, everything that happened within the marketplace was truly exciting. When an investor registered. Cool! When a loan was funded. Awesome! Today, it works the same way, only hundred times faster,” smiles Mārtiņš.

The first EUR 60–70 million issued in loans on Mintos was reached within 21 months. Now, loans worth EUR 70 million are funded every month.

We can see the most notable key elements of the company’s success if we look at other peer-to-peer lending platforms in the European Union and compare them to Mintos. With 43 % market share Mintos takes a strong leading position in the number of funded loans. The great number of awards also shows how successful this start-up is. Last year, among the most loved brands in Latvia, Mintos was praised as “the loudest” Latvian start-up. It also won the prestigious AltFi People’s Choice Award. This year in Spain, Mintos was named “Most Influential Startup” at the Spanish Fintech Awards 2018.

“All of it is very gratifying, but at the end of the day the most important thing is our product and its ability to meet everybody’s demands so that investors will be satisfied,” Mārtiņš is humble about all the praise.

Has there been a moment of crisis over the years when you wanted to quit everything? “No, it was quite the opposite. I have had a feeling that this is only the beginning.”

He believes that Mintos can conquer the global loan market. “We are making our way towards it. We have taken the first steps but there is still a long way to go to make our vision come to life.”

Driving force for having a business

“When you are a part of a startup, you can see opportunities. You have this feeling that you are able to do so much. But the question is — how fast can you get it done? You achieve something today, then you move on and look around to see what else you could do.”

Biggest mistake and a lesson learnt

“I would not want to name my biggest mistake because it would not be fair to my other mistakes. We make mistakes all the time. Through them, we can experience progress.”

Best advice for a new business

“No matter how tempting it might sound to build your own startup right after graduating school, it would be more advisable to join an established startup first which is already in its development stage. To gain experience. To see how it is when a company grows by 500 % instead of 5 % year on year.”