The desire to diversify investment opportunities in the Republic of Moldova led Tudor Darie to create the first investment marketplace for loans with fair interest rates and no hidden fees. Simple loans and smart investments can be found on „Fagura”.  We learn firsthand from the founder, Tudor Darie, about the process of developing such a business and its launching it in the Romanian market.

Explain, for those who are not yet familiar, what an online lending marketplace means?

"Fagura" means a platform for alternative investments in the loans of individuals and companies. In other words, we are a digital solution that allows investors to multiply their money by investing and helping young entrepreneurs develop their businesses. On the other side, borrowers, whether companies or individuals, can turn to Fagura to obtain the financing they need. In 10-15 minutes, they submit a financing request, and we conduct all the necessary checks regarding the company's or individual's income, credit history, a set of additional documents, and then subject them to automated scoring. If the individual or company has the ability to repay and has been responsible in repaying loans in the past, we approve them on the platform. In this way, we democratize investments in loans.

How secure is the future of the "Fagura" lending industry?

We have a mission to develop a digital community bank in Central and Eastern Europe. Our mission is a medium and long-term one. Today, "Fagura" is a crowdfunding platform, and we facilitate investments in loans. However, in the future, we aim to add specific digital banking services. We plan to add cards and bank accounts for our customers - individuals and companies - which they can manage directly from within the platform. At the same time, we plan to add the capability for payments and transfers for our customers. In terms of security, the funds will be in customers' bank accounts. It will be a bank account just like any other bank account opened at another bank or electronic money company.

"Fagura" has been on the market in the Republic of Moldova for four years and is preparing to launch in the Romanian market. What has changed since the beginning, when you were just developing the "Fagura" concept? Is the mission still the same?

Initially, "Fagura" was a peer-to-peer lending platform for individuals and other investors. A year ago, "Fagura" added the ability for businesses to obtain financing. Now, we have an increasing focus on business financing. We have also created partnerships to support these young entrepreneurs. Initially, we tested an idea with UNDP, which involved us providing the first 50 companies with a 0% interest rate. Later, we developed the concept, and currently, we have a partnership program with the Future Technologies Project (FTA/USAID), which allows us to provide 100 companies with a simple way to obtain financing and offers them a 20% cashback on the loan amount.

Do small investments generate profit?

I would say not to take my word for it that "Fagura" is a great project where you can invest and make a profit. The best approach is to test it yourself. Come and test it with 200-300 euros, see how it works. If you're satisfied with the results in three months, you can increase your investments. If you're not satisfied, we have a secondary market, and with a few clicks, you can sell your investments in the loans you've made and recover your money. The money you invest generates profits, and it also helps young entrepreneurs who, at the beginning of their journey, lack access to bank financing but need those resources to develop their businesses. A message for the diaspora, which, in fact, has access to much cheaper capital. Instead of sending money to Moldova, which is only used for consumption, it's better to put your money to work and generate a profit of 10-15% annually, much higher than what you could get in the European market. At the same time, you contribute to the development of the local economy.

What are the new challenges for the Romanian market in the context of recently obtaining authorization from the Financial Supervisory Authority?

We plan to launch in approximately one month. During this time, we are finalizing certain integrations, preparing our scoring system to analyze the creditworthiness of companies, and then we will launch on the Romanian market to facilitate investments and loans for small and micro-companies. We will focus on those young entrepreneurs in their early years of operation who have the greatest need for financing, as they are the ones who will benefit the most from our services. In Moldova, we serve both individuals and companies, but in Romania, we will work exclusively with companies. We have conducted some preliminary market research in Romania and are developing a hypothesis that we want to test, but there may be a need for some minor adjustments to ensure that Fagura's financing is as closely aligned as possible with the needs of Romanian companies.

Has the minimum investment amount of 25 euros remained, allowing anyone to continue benefiting from the offers of this lending marketplace?

In the case of investments on the secondary market, the amounts can be even less than 25 euros. Any investor who wants to test investments on "Fagura" can start with 10-15 euros on the secondary market and from 25 euros on the primary market. Two months ago, we developed a new module that allows investment fragmentation. If an investor had an investment of more than 200-400 euros and wanted to sell it in smaller portions, they can now split it into 25 or 50 euros and sell it more quickly through the secondary market. Investors who want to grow their portfolios faster have the opportunity to buy these fragments. The volume of transactions through the secondary market has increased several times in the last two months. In September, we intermediated 84,000 euros through the secondary market and approximately 270,000 euros on the primary market. We're already talking about a significant volume on the secondary market. Nearly one-third of transaction volume occurs on the secondary market, allowing investors to grow their investments more quickly and manage their funds more efficiently.

What is the number of investors and borrowers at the moment?

The other day, we passed the mark of one thousand investors with active investments, and the total number of investors is close to 2000. As for borrowers, we're talking about 1830 loans funded through "Fagura", with a total value of approximately four million euros.

Are there still risks that people may lose everything they've invested? How safe is the platform? Many people are cautious and still prefer to keep their money under the mattress, even if the currency is devaluing.

In Moldova, we experienced very high inflation last year. Any MDL or EUR kept under the mattress loses its value year after year. Let's look at purchasing power, what you could do with 1000 MDL a year ago when you went to the store and what you can do today. Now you can buy much less. When we talk about multiplying or investing money, of course, there is risk, but we still need to make smart investments. My suggestion would be for investors to use various mechanisms for investment. I don't mean that everyone should invest only in "Fagura." It's best for investors to have diversified portfolios, meaning they invest in platforms like Fagura, but also in the stock market, real estate, perhaps other mechanisms. Then, indeed, the portfolio becomes more diversified and safer. Maybe there's a crisis in the stock market or real estate one year, but you earn through Fagura. Last year, the stock market had a significant drop, while investors on Fagura continued to register profits.

Today, we have approximately 2% non-performing loans in the SME segment, a more qualitative indicator compared to many banks in the Republic of Moldova. We have a quality portfolio in the SME sector because we have a guarantee from the administrator and that 20% cashback through the partnership program with the Future Technologies program, provided that the loan is paid on time. This way, companies learn to manage credit, pay it off in a timely manner, build a positive credit history, and establish good governance. Fagura loans of 10,000 euros are typically funded by 200-300 investors. In this way, a company taking its first steps gains its first customers through Fagura. Besides the 10,000 euros, they get 300 people who learn about their business, believe in the idea, and can become customers of the business.

This summer, you went to the USA to the Meta corporation. What experiences did you come back with, and what new changes followed?

We visited several companies, including META, Apple, and the Google Campus. It was a way to learn and understand the culture of these companies and their plans. Speaking specifically about META, we met with a fellow Moldovan, Oleg Ciubotaru, who shared many interesting insights about Facebook's culture, how they implement employee motivation programs, how they develop services for large corporations, and what lessons we, as young entrepreneurs, can learn. For many companies in Silicon Valley, Europe is becoming like a digital colony. In Europe, we have many regulations that protect consumers but can be a significant hindrance to innovation. In countries with more freedom, entrepreneurs have the freedom to test and launch their ideas in a large market, such as the United States, which supports innovation. Similarly, in China, if an idea aligns with the authorities' plans, there is a lot of freedom to test and validate projects. We in Europe are lagging behind in the technological and innovation race compared to other regions in the world.

Recently, you participated in the TechCrunch conference in San Francisco, "How to Web" in Bucharest, and the Fintech Conference in Chisinau. What benefits do you gain for the development of the platform?

Each conference brought different added value to us. Referring to TechCrunch in San Francisco, it was essential for us to have initial contact with the global market. Such events in the USA attract entrepreneurs and funds from all over the world. We came back with valuable contacts that might benefit Fagura in the coming years. "How to Web" conference in Bucharest was more practical because it is in the market where we plan to launch. We had many people interested in investments and loans, companies proposing partnerships, and investors interested in making investments. In practical and immediate terms, "How to Web" was one of the most practical and impactful events. As for the Fintech Conference 2023 in Chisinau, it provided an opportunity to discuss with partners and authorities on the same platform and present the results of this program for financing companies. Financing through Fagura offers many benefits. For every euro invested by the Future Technologies program, we mobilize another 5-6 euros from investors, which go as financing to companies. There is a very effective multiplication effect, and we wanted to present this program and its advantages so that other development partners can get to know them, and we can create new partnerships in the future.

Fagura is a crowdfunding platform, but in the Republic of Moldova, we still don't have authorization for this profile?

Today, we are authorized by the National Bank of Moldova as a non-banking lending company. It is only from March 2024 that we will be able to submit our application and receive authorization for crowdlending from the National Commission for Financial Markets. In practice, it will take about five years of activity for us to obtain this authorization because, until now, we didn't have dedicated legislation for crowdfunding. If we had waited for crowdfunding legislation to emerge, we would have had to wait five years to start the project, which essentially kills any idea, dampens enthusiasm and resources, and by then, the market dynamics change. When we want to support innovation in Moldova, we need to find mechanisms that allow entrepreneurs to test and validate ideas much more easily. We have been talking about a regulatory sandbox for many years in the Republic of Moldova, but we haven't implemented it yet. In Romania, we received authorization within a year, even though it's a more bureaucratic process, it's much more predictable.

What are your plans for the future?

For the next year, we have two priorities. The first is the launch in the Romanian market, testing and validating the product. The second priority is to launch an MVP digital banking platform in Moldova, which would involve issuing cards and accounts for Fagura's customers.

If you could go back in time, what financial education advice would you give yourself?

In Eastern Europe, financial education is indeed at a lower level, and there is a fear of testing and implementing certain projects. I would advise us to expand internationally much faster. For young entrepreneurs looking to develop a business, the first piece of advice would be to think about solving a larger problem. Ideally, it would be best if it were a global problem or, at the very least, a regional or European one. Focusing only on the Moldovan market makes it very difficult to build a large startup in a very small market. Moldova is very useful for testing and validating an idea, but the market in which you operate should be international.