Music courtesy of BlackIrisFilms.com

Andy Pickering – Host

Welcome to Unleashed with the Dacxi Chain – the podcast that features Experts from within Dacxi and from across the industry who are here to share their insights on developments shaping the global crowdfunding economy…

Andy Pickering – Host

My guest today is Kimmo Rytkönen. Kimmo is the co-founder and CEO of Income, which is a next-generation peer-to-peer marketplace offering a safer and more transparent way to invest in loans, to earn a passive income. So we’ll learn today exactly what that means. Welcome to the show, Kimmo. 

Kimmo Rytkönen – Guest

Hey, Andy. Thanks. It’s a pleasure to be here. 

Andy Pickering – Host

Pleasure to have you here, Kimmo. Let’s do what we do at the beginning of the show. Love to hear a little bit about your background and what you’ve been doing in the lead-up to co-founding Income. 

Kimmo Rytkönen – Guest

Okay, cool. I’m Kimmo. Basically, my background is in fintech, more so in consumer lending, SME lending. So that’s what I’ve done for most of my adult career. And then through different turns and events, I ended up on this side of the ecosystem, if you may, to provide funding to those lending companies through crowdfunding or peer to peer as what Income is doing. Yeah, and that’s what we do today. We’ve been doing it for two years. It’s available on Getincome.com. And what we really do is we don’t issue loans ourselves, but we cooperate with different lending companies around the world to provide them funding. And on the other side then, to allow the crowdfunding investors to invest in loans and earn passive income, as you mentioned in the intro. 

Andy Pickering – Host

Awesome. So let’s learn a bit about Income then. The idea is to provide people with an easy way to invest their money in assets such as consumer loans or real estate portfolios, anything like that. People that come through that funnel to you guys. So talk a little bit about, I guess, the vision for Income and where are you guys based and how long since you’ve founded the company? 

Kimmo Rytkönen – Guest

Kimmo yeah, so I’m originally from Finland, but I’ve lived in Thailand, Estonia already for about 15 years, and that’s where we’re based as well. Estonia has a vibrant startup community. So basically we decided to set up the company here. And where the idea came from was originally when we started during COVID times to develop the idea with my co-founder, we thought that the current peer to peer marketplaces were a little bit like fire and forget from an investor perspective, meaning that there was very little security for the investors. There had been a lot of frauds in the space as well. So we thought that, okay, we can do this better. And that’s where the idea came from.

Let’s take some of those things we learned during our careers in consumer lending. So we raised funding from institutions. They usually took the loan book as collateral to the investment. And that was something that was lacking in the peer to peer or crowdfunding space. So, in a similar fashion, if you’ve done real estate crowdfunding, the project is usually the collateral. Right? So you invest in a development project or a rental property, and you know that your money is backed, your investment is backed by something real, a real asset, as such. And loans are an asset just as well as a real estate project, meaning that they have a cash value. So if the cash value of a house is the money, you can sell it for, the cash value of a loan is the money it produces. 

So the cash flow that’s coming in from the loans, this is something we can use as collateral, as a security to, let’s say, keep the investors safe to improve their situation versus what was before. We launched in February 2021, and then essentially since then, we’ve been scaling up and growing the business. And today we have about 4000 active investors and around 10.5 million already on the platform invested. Cumulatively, maybe 40 million has passed through the platform already. But the outstanding investment is what’s my KPI that I’m keeping my eye on. 

Andy Pickering – Host

I can see that you guys did indeed start in COVID Times. I believe you were nominated in several categories for the Estonian Startup Awards in 2021. And I understand that you also, in the early days, as you were getting going, you completed a successful crowdfunding around yourself?

Kimmo Rytkönen – Guest

Yeah, we used Seed blink, actually. So during the round, we had a lead investor from Singapore who took most of the round, and then we cooperated, actually with two different platforms. One was Seedrs, the other one was Seed Blink, both successful in their own right. With Seedrs, we actually decided then not to go forward with it. So there was such a big gap between actually getting all the structures ready from their side that a lot of things had passed. Right. So we were closing that at the start of 2022. Then the war in Ukraine broke out, and there was a big gap between actually closing the round in terms of Seedrs and then actually being able to download the funds. And a lot of the fundamentals at that time had already changed. 

There was a downturn in the economy and all those things. So we thought, okay, let’s rather not download the money because our expectations on the growth of the business had changed. And then we discussed it with Seedrs and we thought, okay, let’s do this. This is the right thing to do for the investors, but seed blink, we downloaded and we did complete the round on both platforms. So all in all, a good experience of equity crowdfunding also. 

Andy Pickering – Host

Yeah, well, that was going to be my next question. So it sounds like a little bit of a convoluted process as you dealt with a changing macro environment. But all in all, that was a positive experience for you, going through the crowdfunding route? 

Kimmo Rytkönen – Guest

Yeah, absolutely. I mean, both platforms were actually a pleasure to work with as such. All in all, a very good experience. We learned a lot and I would definitely say that crowdfunding is a very good way to raise funding for startups. 

Andy Pickering – Host

Yeah, fantastic. And one of the things that people really did start to learn about during the pandemic, a lot of people had more time on their hands, as I’m sure you’ll remember. And as well as watching lots of Netflix, a lot of people started turning to the various different investment options and started exploring the world of fintech, certainly the world of crowdfunding cryptocurrencies, equity stock portfolios. Lots of different investment options are now available. And of course, one of the other, I suppose, knock on effects of the money printing that all the big central banks engaged in during their response to the Pandemic – It’s led to this situation with inflation, which is increasing rapidly in many parts of the world. 

And as a response to that, of course, how can people respond to inflation, how can they protect their money? One of the best ways really is of course for them to invest their money. So I suppose what I’m saying, Kimmo, is investing is well, it’s a hot topic again, right, I’m sure you’ll agree. Why is it important, do you think, for people to learn about investing? 

Kimmo Rytkönen – Guest

Sure, yeah. I think from my own part personally, but also from the people I know. And what we discussed at the end of 2021 was kind of when the music was at its loudest. And you’re absolutely right, I think people had a lot of spare time on their hands and a lot of extra cash as well to invest. And I think that in itself drew a small bubble, maybe even in many places. So we saw good growth, then cryptocurrencies saw very good growth, stocks as well. And there were a lot of projects on the market that even in equity crowdfunding that raised funding, but necessarily were just based on an idea. They didn’t even have a product yet, so money was being spilled all around. And I think VCs also saw that they had a slight hangover this year. 

Now what we hear is that they’re dusting their checkbooks again and looking at what other real investment opportunities that they could actually have in our case. Right? So what we offer is we offer a fixed income product as such. So when you invest in loans, it has a certain maturity. Twelve months equal installments. So if you put €1000 in, you get 112 back each month, plus you get an agreed interest from the loan company. We had capped these interest rates at 12%. Back in the day, this was when we still had the zero interest environment. Now today we’ve actually increased it. So now we’re capped at 15. So basically meaning that most of the loan companies that we cooperate with are happy to offer the 15% to our investors just to secure the fact that they have funding. 

So this was partly driven by inflation, partly driven by yields that have gone up investments. It doesn’t matter if you look at bond investments, if you look at even set-term deposits, those have all gone up while assets are then down. Like you mentioned, cryptocurrencies. So these are still mostly the yield comes from, well, staking, but mostly from increasing value, I’d say for a lot of people. So they have been a little bit depressed. So maybe fixed-income products have raised their head a little bit during the asset downturn. But yeah, I think it’s super important that people have a diversified portfolio. They know what and they try to protect their money because otherwise, inflation hits it all. 

Andy Pickering – Host

Yes, that is exactly right. Kimmo, just describe again how Income works and what you mean when you say that people can invest in the loans. So in my mind, if I’m explaining it really simply, you are providing a platform. So Income is the platform. So if someone wants to invest, they come along, they sign up to your platform, create an account, and then they can look at the different, what you call loans that they want to invest in. And on the other side of that is what can be a range of different entities, but it could be startup businesses, people like that are looking for new funding, capital injections. Right? 

Kimmo Rytkönen – Guest

In our cases, essentially, we don’t have equity investments at all. So we do purely the loans at this point. So yeah, exactly what you said. How it works is you register on the platform. You come to getincome.com you register, you go through our Electronic KYC. Once your account is set up, you deposit a little bit of money, or a lot of money depending on your preference. And then you can take a look at the investment options. Right? So the investment options in our case are different loan companies. So we have Indonesian, Mexican, Bulgarian, Finnish. There’s several different entities. These are all separate loan companies. 

And what we do with these loan companies before we onboard them or as we call it, investment opportunities when we open on board them, we do a due diligence on these companies. So we look at the quality of their loans, we look at the quality of their financial data and then we decide if they’re eligible to be actually listed on the platform. And once we say okay, let’s go, you guys look to be solid, then we integrate with their back end systems and then they can just list individual loans on our platform. So let’s say you have a Finnish entity giving SME loans and they give out a loan in Finland to a small company worth €5000, for example, they click a button on their loan management system. That loan appears in our system and now it’s available for investment. 

And then our investors on income, they will be able to buy a part of that loan. So you can think of it sort of as a small share or a percentage of the loan that they buy. So let’s say the €5000, they can buy the whole loan or they can just buy €500 worth it or €10 worth it or €100 worth of that loan. And then they get the economic rights related to that piece they bought and an agreed interest that the loan company is willing to pay them. And then as the loan gets paid back, they get part of the capital pack and they get also part of the or they get the interest that has been agreed for the invested capital. 

And then most investors put it on an auto invest, meaning they don’t need to log in and choose the individual loans. They can just say my portfolio is €5000, I want to invest it in these loan companies. So they click the ones that they want to invest in and they say that I want to put €100 per loan. I don’t want to be exposed to just one loan with a full 5000 and I want to have 50 loans or 500 loans or whatever. And then the system itself keeps a track of it and keeps investing in the loans based on the parameters you as an investor have given. So your money rotates and earns interest. And then if you wish to stop investing, you just stop your auto invest. 

And as the loan gets paid back, the money gets returned to your account and then you just withdraw it normally onto your bank account in a similar fashion as you would do a deposit. 

Andy Pickering – Host

Got it. Thank you. Kimmo and can you explain who can use Income? Are there any restrictions on which people from which jurisdiction are able to use income? And maybe also talk about is Income regulated? 

Kimmo Rytkönen – Guest

We decided early on that we’ll only take investors to start with from the European Economic Area. And essentially we’ll take a look if we’ll add Asia, so forth, other regions. But today we’re doing a European Economic Area mainly because of the Kyc Aml. It’s much easier to deal with the banks in that sense. 

Andy Pickering – Host

Yeah, that makes sense. Kimmo thank you for that. If we zoom out a bit, I’d like to just get your thoughts on how you see, I suppose, the global crowdfunding industry at the moment. It seems to us here at the Daxci Chain that there are lots of interesting innovations happening all around the world, but we’re missing the pieces that can bring it together to really bring everyone together. So we have a truly global crowdfunding ecosystem where different participants can get access to those early stage investment opportunities and of course, innovators can get access to the capital that they need to take their businesses to the next step. But yeah, what do you think is going on with crowdfunding at the moment? 

Kimmo Rytkönen – Guest

Well, I think I’ll continue from the regulation part you asked before. I think regulation is one of those things that we see. I mean, it’s in crypto, it’s everywhere, and it’s sort of tied perhaps to the anti money laundering KYC things, which anybody dealing with banks these days knows that they ask a lot of questions. I think regulation is kind of somewhat targeted at that, but also ensuring that there are only good players or honest players on the market. How well that has been implemented so far is a question mark, but shortly on incomes regulation status, we’re not regulated today because we are not an equity crowdfunding platform. We’re also not a real estate crowdfunding platform which were the main targets of the EU regulation. 

And at the moment in Estonia, you don’t have a regulation for anyone doing loans such as us, I mean, loan, crowdfunding investments. The legislation is being penned by the local legislator, but it hasn’t arrived yet. We’ve seen some early drafts. Essentially it all turns around, the investor security, stability of the platform, and so forth. I don’t expect any problems there. But yeah, the status of income today is we’re not yet regulated. Looking forward to seeing the final draft of the legislation before I can say how much it will affect our business, if at all. So that’s definitely one of the things that I see overall coming more and more, is regulation. We know some similar platforms that are in different jurisdictions. 

They have gone the route of offering securities as such, meaning that the investment opportunities need to have a prospectus and basically listed with the local regulator. So that’s kind of the heavy end of crowdfunding, if we talk about equity crowdfunding, then is it viable for many of these early stage projects, for example, to do a prospectus similar to IPO? And on that scale, I think crowdfunding fills a space. If we talk about equity somewhere around, what I say maybe between VC investments or similar to VC investment. Whereas if you go the security route, if you go to the prospectus route, then you’re turning more into this IPO route, which is probably not the space crowdfunding is at its best, so it should find some sort of a balance in between. 

So that’s definitely one thing. And then if we talk about how to get the companies to be able to operate in sort of like more globally, then we probably boil down to money movement, how to ensure the ownership of these investments. So perhaps some sort of tokenization or some sort of, I don’t know if it’s Bitcoin or whatever, but something that enables you to fast and cheap transfer money without too much hassle to those projects. But I think we’re still a long way from a really global crowdfunding ecosystem as such because a lot of it is based on local regulations and then country specific regulations. 

Andy Pickering – Host

Well, that is exactly right, Kimmo. You’ve really identified the problem there. And that is really what we here at the Daxci Chain are working on. We’re hoping to provide some solutions to that, you said it yourself, through tokenization and working with various locally owned crowdfunding platforms in different jurisdictions around the world. So those local platforms would do their own due diligence on the investment opportunities. And then eventually the Dacxi Chain would build out this tokenized global crowdfunding ecosystem and create a secondary market so that investors are able to access the liquidity in their Tokenized investments. So it’s a massive project and it’s a big project, but can you see the ambition and the potential of something like that? 

Kimmo Rytkönen – Guest

I think this secondary market is something where a tokenized environment or tokenized assets could really work much better. Individual platforms, tokenizing, having their own token, each of them, you’ll end up with the same problem. So where’s the liquidity? Where’s the aftermarket? We thought, when we started, we thought about, okay, should we do something in a blockchain environment? But then we thought also that okay, actually what we’ve built in the background is a ledger which tracks all the interest payments. It tracks all the other things, capital payments, how much interest do you need to pay? So we built that. 

But we thought that should we go to Blockchain, we thought that, well, a centralized ledger as such run by individual companies such as ours, it doesn’t give us too much benefit because the real benefit would come if a lot of the companies would adopt such a ledger and then really these assets could be in one place. In loans cases, same thing. There’s a huge aftermarket if you would find a way to tokenize individual loans and you could push it to the loan companies and then there’s a lot of players, institutional players, buying loans, non performing loans, right? So even though they have an aftermarket for institutional players, everybody’s doing it a little bit batch based, portfolio based and individually. 

So in a similar fashion, it would be great if all of these assets would be if we talk about loans or equity, if they all would be in one blockchain or one ecosystem, and then the liquidity would come, investors would just come, they could buy, sell, and they would have the economic rights to whatever asset they’re holding. And definitely but as you said, it’s a massive project, and it would require a lot of the market players to adopt. 

Andy Pickering – Host

Yes indeed. We’re working on it, Kimmo, we’re working on it. Well, as we start to finish off it would be good to understand just what is the average rate of return, if there is such a thing that investors can potentially earn on income? 

Kimmo Rytkönen – Guest

I think historically we are around 12% per annum, but we just quite recently increased it to 15%. So the maximum amount that the loan companies can actually offer to the investors. So I would assume it will be going up a little bit. So I would say it’s probably today, depending on your preferences, 13%, 14% is probably realistic, yes. And that puts it a bit higher than some bonds, for example, from similar companies and definitely higher than, I would say, bonds from your traditional banks or others. I think still, let’s say low to mid double digit is still a very good yield. And looking at the current inflation figures, it should leave you even a healthy profit after inflation. 

Andy Pickering – Host

Yes, I think so. Very well said, Kimmo. Well, it has been a pleasure talking to you today, I have very much enjoyed it. As we finish off, please tell people where they can go, particularly if they’re based in Europe and are able to invest on your platform. Tell people where they should go to learn all about the income platform. 

Kimmo Rytkönen – Guest

Yeah, so we’re available on Getincome.com so you can find everything you need, all the information or more information about the company, about who we are, what we do, about the loan opportunities so you can read more about there. There’s a lot of resources online already, a lot of affiliates, and a lot of bloggers are writing about it. So I would say the ecosystem is growing in loan investing. So there’s a lot of stuff available for you to read online, but Getincome.com is a good place to start to understand a bit better what investing in loans means and how it looks. 

Andy Pickering – Host

Got it. Fantastic. Thank you so much for coming on the show, Kimmo. All the best and bye for now. 

All right, well, there you go. That was Kimmo from income. Fascinating talking to Kimmo. And look, if you’re listening to this podcast, you are probably aware that a crowdfunding revolution is coming and it’s set to unleash innovation, world changing potential. It’s the world’s first global equity crowdfunding network. And that is what the Dacxi Chain is. That is what the Dacxi Chain is trying to do. We’re trying to create a new, fully regulated ecosystem where everyday investors all around the world have access to new investment opportunities. And for those founders who have innovative ideas, they need funding for those ideas or they can access that global investor pool. And of course, it’s done in a safe, sophisticated, and mature way. Now, of course, if this is going to be done at scale, what’s the answer? Well, tokenization. 

So tokenization of those equity shares means it can be done at scale and anyone can invest at whatever amount they wish in line with the regulations in their own country. So the Dacxi Chain is working on all of this via tokenization at the local level through a network of locally owned crowdfunding platforms. And then, as mentioned, Dacxi will launch a specialist secondary market so people can offer their tokens for sale. And that all-important liquidity is there. So lots going on. That’s the very brief and concise overview of the Dacxi Chain and what it is. But of course, we’ll be learning more about it as the podcast continues. So do please make sure you’re subscribed to the podcast and ready for each new episode and then you can learn more. 

Thank you for listening and bye for now. 

https://getincome.com/