October’s Data Dive: retrospective 2021

2021 was an intense year for October. Not only was it our best lending year so far with more projects financed than the last three years combined but also the one of multiple partnerships with important investment actors, a change in governance and a growing active lenders base. To know more about this crazy year, check out our Open Letter.

With October’s desire to put transparency first, we are starting the new year with the introduction of a new series of articles about statistics. Today, we begin this series with a retrospective of October’s key numbers for lenders in 2021.

A diversified project offer

In 2021, 884 projects were financed by around 29,000 active lenders for a total amount of €182M, breaking a record compared to previous years.

This last year represented a before and an after in our project offer. Why? The pandemic has changed the landscape for SMEs and has modified our habits making us more keen on using technology.

Since 2020, October has increased its range of products to adapt to the needs of companies, betting on technology to change the way of how businesses get financed. October, that was already distributing State guaranteed loans, went a step further by developing an Instant Lending process based on banking transactions (called Kea) to serve more companies while giving our lenders a chance to diversify their portfolio. Thanks to this innovation, more than 200 entrepreneurial projects were supported in France and Italy for €4 million, with an average loan of €20,000. These projects analysed by Kea were financed exclusively by our retail lender community, a great achievement that we intend to continue in 2022!

Lending preferences across countries

October has always had a European heart. Lenders from everywhere can support the growth of European SMEs on the platform. Of course, countries where October is active (France, Spain, Italy and The Netherlands) represented the majority of the community (90% of active lenders).

In 2021, close to 550,000 individual loans were made on the platform, with a current average loan of €60 (even though we can see a strong gap for International lenders who invest on average €83 per project). This represents a total amount of €21M injected in the European real economy by October retail lenders in 2021. They especially loved to support one particular project this year: Sandaya. The project was funded by a record of 5,671 lenders for a total of €459,000.

This year has shown us once again that lenders are looking for safety in their investments:

  • On average, they invested around 60% more on credit scores A+ than they did on C-, which reflects a higher appetite for safer projects.
  • Another hint that lenders are looking for safe investments is their preference for longer loans, which could sound counter-intuitive. In 2021, we mostly had projects with a duration of 0-24 months. However, the highest amount lent was in projects between 49 and 60+ months, that usually corresponded to projects with high credit scores.

Average loan per country depending on the project duration October portfolio (2014-2021)

Nevertheless, lenders seem to modify their behaviour if the interest rate goes to the extremes, especially if it is superior to 8%.

While we were analysing the investment habits of our lenders we also saw that lenders tend to have a home bias. This means that lenders prefer to invest in projects of their own country. The more this preference exists, the stronger the home bias is. While the country who home biases the least is Spain with only 4% more invested in their home projects, the Netherlands is the one home biasing the most by investing about 22% more to Dutch projects.

Average loan per country depending on the country of origin of the project October portfolio (2014-2021)

Even though lenders might have their preferences, a key element to keep in mind is diversification: spreading your investment over many projects with different characteristics is the best way to ensure a steady portfolio.

Customer first

In 2021, October welcomed 5.200 new active lenders, who lent at least to one project, driven mainly by France and the Netherlands.

During this year, lenders started 23,000 conversations and were answered by the Lenders team with a satisfaction rate of 85%. This team welcomed new faces: Federica became the customer success manager in Italy, Rachel answers all your questions if you are a Dutch lender and Fanny gives support to all French-speaking lenders. The main objective of the Lenders team is to support the lenders to give them the best experience on the platform.

Most of the conversations with our Lenders were about the verification of the account (16% of the conversations), bugs that you may have on the platform or with our providers (18%), the change of personal information (22%) or the defaults you may have in your portfolio to a lower extent (5%).

When lenders report a bug, the lenders team collects detailed information (web or mobile environment, the steps they follow, the device used…) to share with the technical team who can come up with a fix as quick as possible. This year with the help of lenders, 56 bugs have been fixed both on the web and on mobile app by our Tech team.

At time, companies can face financial difficulties, that can compromise the monthly repayments. In that case, you might have some questions. At October, we believe transparency is key: that’s why our statistics are available at any time on the website and why we regularly communicate on late projects. As of December 2021, the maximum internal rate of return of October portfolio is 5.71% and the net IRR was 4.17%, which means that default decreased the performance of the portfolio by around 1.5 points. We are always monitoring our portfolio and working on improving our credit processes and technology to **reduce the default rate**. By using automated scoring models, we have been able to halve the default rate in the last years (see more information here).

We heard your feedbacks in 2021 and intend to continue sharing our statistics in 2022.To do so, we will prepare a statistics recap per quarter that will be included in our newsletter to give you an overview of our progresses.

In 2022, we’ll recharge our batteries! October has the intention to raise new funds, recruit new talents to innovate and constantly improve our product, 54 positions we will be opening in Europe over the next 12 months! And we will continue with our mission: finance businesses better.