Last week, Karma SME Loans Exchange has started the Swap and fundraising campaign on Tokenomica. Now, we would like to tell you more about the platform and business performance of Karma in 2019.
Building the Economy of Trust
Even if your business is already profitable, SME loans might often be a headache for both banks and borrowers thanks to the standard litany of prerequisites.
“If you’re a small entrepreneur, it’s hard to get a loan if you don’t have collateral,” Goognin said. “With that in mind, we have launched Karma — a platform that offers an opportunity to have some leverage if you don’t meet the criteria of the banks.”
The founder of Karma George Goognin encountered a lack of leverage in 2013 when he tried to raise debt financing for one of his businesses. His enterprise was profitable and transparent, and he was current on the company’s taxes. But of the nearly 50 loan requests he sent out, Goognin received no response to most. The banks that did respond either declined or wanted collateral in the form of real estate worth double or triple the value of the loan.
“Karma was started back in 2014 as a mutual fund of investments doing Small-to-Medium Enterprise (SME) loans. We were just a small investment management team that created legal frameworks and documents,” said George Goognin, Founder of Karma.
One of the features that make Karma stand out of the crowd is its ability to let investors lend to SMEs anywhere around the world. By design, the platform is a unique enabler that gives SMEs access to additional liquidity.
In 2017, during the ICO boom, Karma has managed to expand the company’s user base and attract investors. Karma’s token sale raised some $10 million in BTC, ETH, and other digital assets. That success empowered Karma to provide a lending alternative to SMEs in countries with high-interest rates, tedious application processes, and regulations that functionally exclude them from funding.
Outside of providing special financing programs for SMEs that have been declined by the bank, wholesale amounts of borrowers. Karma’s mission lies in:
- Empowering entrepreneurs with fast access to capital and the ability to make their business more transparent and efficient;
- Cutting down the interest rates in emerging countries via increasing the level of trust, lowering the default rates and creating an efficient market;
- Allowing founders to focus on making better products rather than spend 90% of time seeking for funding.
Karma already has regular borrowers, who prefer p2p lending to bank financing. Furthermore, Karma is partnering with several financial institutions to work with customers, who do not satisfy bank requirements but still receive a high scoring rate.
“We see that a lot of borrowers who have been successfully raising money through our P2P platform over a few years managed to grow and become more mature, and then they go to the bank and apply for loans with much better terms and conditions,” Goognin said. “Our platform has helped them to bootstrap and thrive in those first, most difficult years of their business.”
Karma Didn’t Turn its Back on the Ideals it Proclaimed
After the end of the ICO boom, Karma managed to build a working business and wanted to help token holders benefit on their investment.
“Karma business is growing 43% each month for 12 months in a row. We’re on our path to self-sustainability and operational profitability. However, due to the major fall of the crypto market, the price of an asset offered during the ICO has significantly decreased. There is a paradoxical situation: the business is growing at a tremendous pace, while investors can’t benefit from our growth.” — Goognin said.
In order to heal this situation and to ensure the trust of token holders in Karma, they’ve decided to perform a Utility-to-Security Swap that is currently live on Tokenomica. After the Swap, all token holders will become full-fledged investors.
“Outside of building proper investor-company relations, we wanted to perform the Swap to live up to ideals of our platform.” — Goognin said.
Results of 2019
Long story short, Karma aims to reach self-sustainability and operational profitability.
Right now, Karma has more than 6 000 registered investors with the average IRR for investors of 19.6%. Outside of that, the platform grows roughly 43% each month, in 2019 the LTV/CAC ratio has surpassed the 3x mark.
In 2019, there were more than 100 loan offers, 20+ on the primary market and 80+ on the secondary. Deals volume has been growing steadily +43% each month. Total AUM has reached north of $1M, while the average investment size per active investor has grown from $500 to $2k.
Outside of that, Karma managed to cut down operational expenses from $500k in 2018 to $150 per quarter in 2019. Office rental costs were decreased almost by 3 times, made staffing more efficient, and focused on growing the user base.
Karma has focused on revenues from fees, and it has grown from $1,000 in January to $12,250 in December.
But it is not only the business Karma was working on. Karma team has established an Experts' Chamber in summer 2017 and one of their goals was to make crowdlending fully legal in Russia.
Finally, after all the negotiations with Parliament, a new law has been settled in 2019. According to the law, Karma will have to enter the Central Bank ledger of the investment platforms in 2020. Karma’s team will be directly reporting to the Central Bank and will become even more transparent.
Human Approach to Business and Investors
Ok, seeing high numbers is cool and all but it’s not the only thing important for Karma.
In 2019, Karma managed to build an even closer connection with its investors.
“We've made our first offline investors' meeting in December 2019. Our community is the most important part of the business, and we try to talk to the people as close as possible. We collaborated with our borrowers to deliver more than 130 gifts to the most active investors: flowers, candies, shoes, and fancy gadgets.” — Goognin said.
“Of course, we will continue to meet and will work closely with our community in 2020 as well. Karma is more than just business to us, it is more like a family and hopefully, our family will continue to grow in 2020.”
Visit Karma’s Website and Telegram chat for more information and become a part of the Karma family before March 31th on Tokenomica!