Category: Video
Discussion with the co-founder of Triple Dragon Pieter van der Pijl
Discussion with the co-founder of Triple Dragon Pieter van der Pijl:
We are glad to present our newest discussion online with one of the co-founders of Triple Dragon Pieter van der Pijl. We believe that this interview will help you to have a better picture of how this loan originator is working and why you should invest in their assets.
Martins: Firstly maybe you can tell something about yourself? About your background and role in Triple Dragon?
Pieter: My background was always been in finance, I am also really passionate about video games and investing in them for a long time. The co-founders of Triple Dragon are also Charlie and Diederik, so we combined mutual interest and passion in gaming industry and experience in finance and that’s how Triple Dragon was created.
Martins: So, there are three guys doing it, right?
Pieter: Three founders, but our team is currently 6 people.
Martins: Can you tell a bit about Triple Dragon? What exactly do you do?
Pieter: We finance video game companies, and we finance them on the stage when they have products, which are life and generating revenue, so we could reduce the risk by taking security over the store receivables. So video games or all companies especially mobile games are usually making their revenue trough app store, especially companies like Google that are collecting all the revenue from consumers and then paying to video games companies. It obviously takes time before revenue which is being generated, and then it takes time and it also takes like 30-45 days before the app store payout to these video games companies. So, they have receivables, the cash which they can’t use, and we are lending against those receivables. Its Apple, Google for mobile, Microsoft Nintendo for console gaming and Steam and Epic for PC.
Martins: As I understand you mentioned that approximately term is when collected plus 30-45 days but at the same time you manage to do loans that are around one year and even longer? How is that structured?
Pieter: Yes, so the payment terms what the app stores are usually from 30 to 45 days, but what we would like to do is, we are financing video games companies that are really at the growth stage so that the product is live. What they need is advertising and marketing for, their games. And if we can finance those companies, we would rather finance them for a longer period of time than just one kind of invoice discounting of the app store receivables. It’s a lot more trusting for video gaming companies to have access to financing, to grow their business, over the next 6-12 months, that it is currently like for 2-3 months. And the same thing for us, if we can finance company for 12 months, and the cost of doing this is the same, and it means the return that we are able to make is higher if we lend for a longer period, and that means a better return for our investors.
Martins: Structure means that. Throughout all that period your financing amount is less than receivables, or how does it work?
Pieter: Yes, we always want to be very conservative and make sure that we are fully secured, so as a requirement for a borrower is that there should be store receivables over at least 120 % of the amount we are lending. So, we are always overcolletarized.
Martins: Okay, it sounds great, but everyone is interested in what happens if your borrower, the game developer goes bankrupt? How do you ensure that your fund is getting back?
Pieter: Well, we are in so-called fairly fortune position that in most cases we are collecting the app store receivables, either ourselves or in the accounts of the major banks. So, the store payments are going directly to those accounts, if borrow would get into trouble financially, we basically are able to collect those funds. So, bankruptcy is not going to affect us, because we are overcollertarized, we are secured, and we have control of cash flows. So even in those scenarios, we are getting fully repaid including interest and penalty.
Martins: So, in essence, it means that even if everything goes bad, everyone who has invested in the loans you are providing, you believe that in any way they will be able to get all the funds back.
Pieter: The only scenario we would potentially occur a loss if the underlying payer of those receivables would go out of business, so for example if Apple or Google would go bankrupt, then yes, there would be a problem, but if the borrower goes out of business, it is not going to affect us or investors because of overcolletarizatin. So, we really look at how secure is our collateral, are we sufficiently overcolletarized, and do we have control over those cash flows, and if that is the case, we feel super comfortable lending to a particular borrower.
Martins: But if Google and Apple go out of business and most likely there is no business at all on theirs?
Pieter: Yes, then it would be out of things, more worrying going on in the world I would say.
Martins: Okay, it sounds very good, as I said it is the very beginning what you are doing in the niche of lending for the game industry, which is booming at the moment, as I understand many countries are quarantined I would assume that there are more and more users of those games, right?
Pieter: Yes, I mean it’s not a secret, that people are forced to stay at home, so they need to find indoor entertainment. Yes, we see the spike in demand for mobile games. That has been mentioned in the press of Microsoft Xbox live service going down because of a sudden so many people because so many people are tuning in Steam, which runs the biggest PC store have the biggest ever occurring a number of users, a lot of players at the same time, so yes, clearly there is an increase in demand. The thing that we sort of looking at coronavirus aspect, for us it’s not so much increase in demand, which is a fortune for the gaming sector which is not going to directly affect us, but we like about it that we are not exposed to supply chain risk, I mean video games are transmitted digitally to Apple and Google app stores, that will keep continuing running, that’s not going to destroy the business. So, yes, in this perspective we are in a fortunate position.
Martins: I believe that’s it for this quick Q&A I think it gave a lot of insights for everyone who will watch. Thank you, Pieter, for that, see you another time!
Pieter: You are welcome, it is a pleasure working with you guys!
Go the platform and add Triple Dragon assets to your investment portfolio by clicking here!
Q&A on the current situation around coronavirus with Sergei Demchuk
Q&A on the current situation around coronavirus with Sergei Demchuk:
Due to many questions from our investors about the effects of coronavirus to Debitum Network platform, we answered the most frequently asked questions which you can find below on YouTube or in a written version.
We hope it will help our investors to have a better look at the situation which is happening now!
1. How this crisis will affect the alternative lending market?
Well, like in any other crisis the downturn will happen. Of course, small businesses who are our clients are affected and some of them will experience a delay with repayments. At the same time, I believe that any crisis is also the time for new opportunities. I’ll give just one example: Governments already consider using alternative lenders to deliver support for small businesses. Previously they consider only commercial banks as a channel. Online channels and digitalization, working with clients remotely will be even in higher demand than before. And this is what we in Debitum are doing very well. That is why I believe that when we overcome this crisis. We will see future growth and development of alternative lending and alternative investment platforms.
2. What happens if the final borrower or loan originator goes bankrupt? Do I lose my investment?
You have a buyback guarantee provided by the loan originator. In case of a delay of 90 days Loan Originator, we repurchase the asset and you will get your money back.
3. Does Loan originator have enough funds for that?
We monitor key financial indicators for each loan originator, such as debt to equity ratio, level of defaulted loans, operational sustainability. We monitor on a monthly basis to make sure that our partners have enough funds to cover buyback. And even in unlike case of Loan Originator default you still have claims of right and you can collect the debt either by yourself or local debt collection company.
4. Does Debitum Network have enough funds to pay me back? What if Debitum Network goes bankrupt?
We always segregate the money from investors from our funds. They are kept on separate accounts. And the only investor decides where to invest. We just execute your order. So when an investor purchases an asset, we transfer funds to Loan Originator. When the loan is repaid, money transferred to investor account and the only investors will decide either to withdraw or reinvest. As to Debitum, we keep our operational expenses on a low level, and we have enough equity to support our sustainability during the next 12 months even in the worst-case scenario. So we are confident that we will work and develop our business in the future.
5. During last days many loans on Debitum Network were repaid but no new ones appeared to invest? What should I do?
During this week we talked to all our partners – Loan Originators, we wanted to check how well they are prepared for new circumstances. Now we additionally check all assets before uploading to the platform. That is why it took some time. However, already yesterday we uploaded new short term assets, and we keep doing it in the next days. So go to the platform, have a look and invest! Don’t forget that money for investments needs to work – let’s keep investing and supporting businesses around Europe! And don’t forget investing in Debitum Network doesn’t require face-to-face contact and can be done during quarantine safely.
Stay safe! Keep investing!
Interviewing our Advisor Andrius Nikitinas on Small Business Financing
Interviewing our Advisor Andrius Nikitinas on Small Business Financing
We had an interview with our international business development advisor Andrius Nikitinas. As an Attache for commercial relationships with 3 countries, Andrius represents Lithuania at the highest levels of diplomatic activity including meetings with Heads of State and senior politicians.
Andrius is advising Debitum Network on International Business Development, opening his great network of connections as well as valuable insights on global projects among various regions. We are grateful to have Andrius on board, as he brings a wider perspective of what is important for developing business globally.
This time we have touched the question of alternative financing from the global perspective, especially when small and medium enterprises (SMEs) are expanding abroad and need funds for it. You most probably remember our Fernando story on how Debitum model works that shows an example of an SME owner willing to export its production to other countries. In this video, Andrius is sharing the story about one of the former missions that he had as a financial Attache discovering barrier for the SME to receive financing from foreign banks.
This mission has revealed that incoming SMEs were perceived as too small to be in the target market of local banks and have a higher risk rating. However, we believe that small companies have a huge potential for growth and one of the main goals of all countries is to create great conditions for business growth and economic development.
Watch the interview to discover why companies need alternative financing and financing in general.
Transcription
Monika:
Hi, I am Monika from Debitum Network Team, and today my guest is a business development advisor, Andrius Nikitin. Andrius, nice to see you here.
Andrius:
Nice to see you too.
Monika:
Andrius is a commercial attache at the embassy of the Republic of Lithuania in London, and he currently lives in London and is visiting the Republic of Lithuania. So nice to see you here, can you say more about yourself?
Andrius:
Well yeah, basically I’m residing in the UK, but currently, I’m on paternity leave, but as a commercial attache actually I’m serving three countries. So the UK is probably the main one, Oman the second, and Portugal the third. And as a commercial attache, yes I have a duty to represent various businesses, so various Lithuanian businesses, especially SME sector, which has a will to export to certain countries, to my certain countries, and also my duty is to attract business to Lithuania.
So I’m working both sides, I do represent Lithuanian companies abroad, and also I’m dealing with foreign companies, which have plans to work in Lithuania, to invest in Lithuania, to build something, and as we see in Lithuania now, it’s the fastest growing economy and we’re receiving a lot of investments from foreign countries, from foreign companies. And I would say that Fintex is our strongest one at the moment. Of course, we do care about manufacturing service and some more activities.
Monika:
So, Andrius, could you tell them all what you think about these new technologies, and blockchain and all other developments?
Andrius:
I’m really excited because I’m lending myself, I’m really following all the new technologies. I do like the approach of Debitum Network by connecting so quickly so many people around the world. So that ecology, I think it’s a miracle for the SME sector because it’s going to provide great opportunity to attract new investors, to connect proper investors with the proper clients, and in Lithuania we always, on the technology side, we have a lot of new startups with the leading technologies. I can mention many of them, which working for the apps, with the IT projects we have in Lithuania many technology parks, the bank back offices, which provides IT services for the international banks. And Debitum Network actually wants to be the part of the new technology, and this really excited me because I see what great opportunities could be achieved by connecting all the different cultures, peoples, investors, clients, etc.
Monika:
So, you are a Debitum Network advisor, and what are the key areas you advise in our project?
Andrius:
Well basically I have a financial background because I use to work in a Lithuanian central bank, but at the moment the key area I would say is my network because I’m well connected with many financial institutions in Europe and abroad. So my knowledge actually is to bring the proper investors from my network would be probably useful with the Debitum Network to connect with the relevant partners, even relevant advisors, and I’m doing it already. So we have some British people considering and, some Arabic people as well to be involved in Debitum Network activities.
Monika:
Nice. And you had a huge experience, and I know several years ago you had even a special mission. Can you tell more about that?
Andrius:
Well, yeah, I had many missions, but especially I’d like to highlight that we have an agency INVEGA, which is a government guarantee agency, and when INVEGA became capable to provide collateral to Lithuanian companies and to enable Lithuanian companies to borrow from foreign banks, I had a special request from governments to approach international banks, and to approach international institutions to finance our SME sector. Everything was perfect, we had a million inquiries from foreign banks, but the one problem was that the projects portfolios from Lithuanian companies was too small for the foreign banks, and the profit yield for the international banks was too low. So the projects I would say was unsuccessful because there was no interest from foreign banks to lend or to borrow to certain Lithuanian companies. So that special mission I wouldn’t say failed, but it wasn’t a great success, but I’m still looking for the opportunities to find alternative financing for Lithuanian SMEs from foreign financial institutions.
Monika:
And let’s talk about alternative financing, why companies need alternative financing, and why in general companies need additional financing and investments.
Andrius:
Because in countries and at home it’s always easy because you have a background, you have an infrastructure, we’ll say. When you are going abroad it’s always tough, you have to maintain your running costs, you have to pay certain consultant people you have to invest manpower, you have to invest your time, even you have to invest in certain expenses like running or having an office, and producing your product, where you need really the relevant cash flow. So why the, I would say, relevant budget it is very important for those SMEs, and banks usually are not lending to companies where it’s very difficult to measure risk, because we never know whether your product will be recognized in a foreign country or wouldn’t. So it means you are always in a great risk position, so usually, the banks are very cautious to lend the money for such projects. So why alternative financing is probably vital for those startups, just to be or to have enough power, or enough strength to expand in foreign countries.
Monika:
So, what do you like about Debitum Network project? What are the key confidences you value most?
Andrius:
I do like that the platform is very transparent. I really like the Debitum Network has recognized partners, and I see that transparent platform, and I know the people actually were in the management boards, and I will trust Debitum Network. Seeing all the picture, I do believe that Debitum Network will be able to finance SME sector. As I told, it’s my duty to promote the Lithuanian companies exports abroad, and I do see that those companies usually need some alternative finance. So this is a great opportunity for Debitum Network to fulfill that gap, which exists now in our market.
Monika:
Yes, and actually we’re aiming to connect companies all around the world with investments.
Andrius:
Yes.
Monika:
Not just Lithuanian companies, but in general small and medium-sized companies.
Andrius:
It’s also fulfilling my duties to attract investments, so for me, it’s easing my task. When I see international investors investing in Debitum and investing, so I do believe that all the investments were spread out among the Lithuanian startups, or even SMEs.
Monika:
Thank you, Andrius.
Andrius:
Thank you.
Monika:
Thank you all for watching, and I invite you to visit our website, debitum.network, and join us for a discussion on our Telegram channel.