Our shortcomings

We need to better understand the real impact of our investments

Ask yourself this: what’s the true impact of providing fair loans to entrepreneurs in developing countries? It’s not an easy question. Is it the improvement in quality of life? The number of jobs created? CO2 reductions? Or should we combine everything into a complex formula that no one truly understands? In our mission statement, we offer our perspective: we believe the real impact of a fair loan lies in creating equal opportunities for people born in emerging and developing countries compared to those born in Western countries.

But how do we measure equal opportunity? That’s another tough one. This challenge isn’t unique to us - it’s something the entire world is grappling with. Some answers come in the form of ESGs or SDGs, others rely on complex methodologies, and sometimes, there’s no answer at all.

On our Impact page, we explain how we measure the impact of our investments and how we quantify it. It’s a step in the right direction, but two critical pieces of the puzzle are still missing: - A reliable, objective measure of the impact return on your investment. - A structural, qualitative analysis of the borrower, answering the key question: how has this loan positively or negatively changed the borrower’s life? Answering these questions can help both us and you as an investor. It enables us to choose better projects in the future and helps you make informed investment decisions.

In the past, we didn’t focus enough on the investor’s benefit

Lendahand was founded to address global inequality in opportunities. That idealism is ingrained in our DNA and will always remain. But sometimes, idealism can lead to blind spots. For us, that manifested in not paying enough attention to the needs of our investors. Let us explain. A good impact investment strikes a healthy balance between impact, interest, and risk. - Impact ensures the funds reach the right place. - A fair interest rate is both reasonable for the borrower and attractive for the investor. - Risk is manageable when loans are repaid on time in nearly all cases. Our idealism ensured that impact was always front and center. However, we sometimes overlooked the balance between interest and risk. This resulted in too many investors experiencing a negative net return on their portfolio between 2018 and 2022. We’ve made significant changes in recent years, and things are looking much better now. In 2024, for example, there were no new missed repayments at all. We’ll stay vigilant with our updated risk policy to ensure you’ll continue to find a healthy selection of projects on our platform in the years to come.

Our team is under high pressure, which occasionally affects workplace happiness

Our motivated team of passionate impact and finance professionals works hard from our Rotterdam office to achieve our mission. Lendahand is proudly independent, and we aim to keep it that way. Over the years, we’ve been funded by a mix of angel investors, crowdfunders, and more recently, larger impact investment funds. We’re not yet profitable, though we’re getting close. That means at least one more round of financing will be necessary. These rounds are always high-stakes and often come together at the last moment. This creates a constant (and sometimes subconscious) pressure on the team. It’s a type of tension we don’t need to stay motivated - our team already brings plenty of that to the table. This kind of stress is something we’d love to throw out with the garbage. While that’s not yet possible, we’re on track to ensure that by the next edition of our shortcomings, we’ll be profitable and no longer reliant on external financing.

What shortcomings do you see?

Do you have any feedback or suggestions for how we can improve upon these shortcomings? Please let us know by sending us an email at [email protected]. We always welcome feedback from our crowd, positive and negative alike!