Landbay

Market

Target market

The initial target market of borrowers are owners of property in England & Wales who are looking to borrow £100,000 - £1 million on a Buy-to-Let basis, with fixed-rate terms of 3-5 years.

The target market of lenders is anyone who has at least £100 to lend. As all individual loans are split into 3 risk bands, we believe that the lower risk portions of each deal (ie A+ & A bands) will be an attractive option for many retail lenders/savers as they are planned to yield annual returns of 4-5%.

The higher risk portion of each deal (ie B) is expected to yield annual returns of 7-9% and is therefore more likely to attract sophisticated investors or those with significant assets.

Landbay Projects plans to offer levels of risk & return that are more akin to equity/mezzanine finance. Accordingly, each Landbay deal would present investors with the opportunity to match their funds in line with risk/return parameters that meet their particular lending requirements.

We believe this significantly increases the appeal of our offering and the potential size of our lender catchment. People are increasingly becoming accustomed to lending on P2P platforms, and as the sector becomes regulated and the rates available on other platforms drop, we believe that a significant opportunity exists for new entrants with straightforward yet differentiated product offerings.

Characteristics of target market

Banks have been reducing their level of lending to the property sector, outside of traditional owner-occupied residential mortgages.

The founders have discussed their product offering with a number of brokers in the market and we do not envisage any difficulty in sourcing lending opportunities.

The market for lenders is competitive as individuals with savings have a wide variety of options.

A large number of peer-to-peer lenders exist in the UK - Zopa, Ratesetter and Funding Circle are the largest of these. The sector is growing quickly and will be regulated by the FCA from April 2014. Landbay expects to be FCA compliant when it launches in Q1 2014.

Landbay will also be competing with other savings and investment products by traditional players.

Marketing strategy

Our initial launch will be via the founders' extended networks. We are confident that this will allow us to fund a couple of small deals in Q1, 2014. Following that we will attempt to raise additional capital that will be used to further market and promote the site.

We are aware of a number of institutional players that are in the process of launching funds to invest, on a platform-agnostic basis, across P2P sites in the UK. We expect many of these will require a 12 month track record before they lend on sites, but this may well provide Landbay with a further revenue boost in 2015.

Competition strategy

Landbay is building a comprehensive technology platform that will automate much of the lending process. This system will include the management of the loan auctions, lender portfolios/reporting, loan and scurity documentation as well as day-to-day loan administration.

Many smaller P2P sites have not yet made this technology investment, and thus limit lending to individuals with a minimum of, say, £5,000. We believe that this is a too big a hurdle in order to seriously scale a P2P platform over the long-term.

Our website and its back-end technology should enable Landbay to efficiently manage large numbers of small lenders, some of whom will evolve into big lenders over time. We believe that many P2P lenders like to stick their toe in the water before they commit significant savings to a particular platform.

Landbay would allow anyone to lend with as little as £100. Landbay plans to offer a strong risk-adjusted rate of return that will compare favourably with other P2P offers.