In this post, let’s look at a peer-to-peer (p2p) leading platform for home improvements.

Mintos Clone for Good

This is not an original idea. Are there any original ideas, though? Are those not just using what worked in the past for another sector or niche?

Ever since I learned about p2p finance I was excited. It feels like a win-win to both lenders and borrowers. Lenders get the way to invest money with better interest than savings accounts, and lenders get lower interest than banks would charge.

The first such platform I learned about is Mintos. Later, I discovered an even cooler platform Trine, which takes the win-win and adds one more win to it – the environmental impact.

Side note. I reached out with this idea to Sam Manaberi, the CEO of Trine, and he offered encouragement! Cold emails do work 🙂

Why lending?

During our so-called industry sprint, we learned a lot about what housing market problems are. It boils down to a strong push towards making existing buildings way more energy efficient than they are now in order to reach the climate goals.

75 % of buildings are not energy efficient

https://www.europarl.europa.eu/doceo/document/A-9-2021-0321_EN.html

This means stuff like replacing lightbulbs with energy-efficient ones, adding solar panels and energy storage tools, but quite common that is adding insulation.

For all of those, we need money from somewhere. Loans are one way to make these renovations happen. We also thought about a twist on the terms of the loan where the savings on energy costs would cover the interest payments.

Why peer to peer?

In order for these loans to be competitive with what a bank can offer, they have to have better terms. Namely, the interest needs to be lower than what the bank can offer.

In peer-to-peer scenarios, investors are regular people. We figured it could be people living in the property or maybe people living in the neighbourhood. These folks would get indirect benefits from the investment, which would be great motivation. So, say I live in an apartment building. If I invest in the insulation of the house, I will no longer get interest paid back on my loan I also would get a lower utility fee each month.

Compared to existing housing associations, this solution doesn’t require equal participation of all the tenants, which is really difficult to get. This is still a loan, so it is okay if one tenant provides the majority of it or their parents… you get the picture.

Why not?

Although the idea is solid, it would be hard to get off the ground as it suffers from the curse of marketplace.

The problem with the marketplace is similar to social networks. You need a lot of people in the network for it to become valuable, but how do you get people in if it is not valuable yet?

In the marketplace, there is increased complexity of needing a set of users – lenders and borrowers. So you would have to run marketing and sales, the toughest part of a startup, twice, and both need to succeed for the whole idea to work.

Secondly, providing financial instruments such as loans is no joke. There are tons of regulations (for a reason), and as none of us in the team looking into it had a real financial background, we ultimately decided to drop it.


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