The Italian Lending Crowdfunding Profit Farm Collects a €200,000 Round

Carmine Saladino, founder of the Italian system integrator Maticmind (participated by Fondo Italiano Consolidamento e Crescita – FICC, managed by Fondo Italiano d’Investimento sgr) last week subscribed the third round of Profit Farm, an innovative Italian lending crowdfunding platform born in mid-January 2021 and dedicated to credits towards the Public Administration (PA), credits towards equally creditworthy private entities and secured credits.

This is reported by MF Milano Finanza, according to which the capital increase is about $225,000 (€200,000), against a valuation of the company of 3.5 million. The entrepreneur has also become part of the newly established board of directors of the company, which includes among others the CEO Roberto Macina and the creator and president of Profit Farm, lawyer Cristiano Augusto Tofani. The latter is one of the leading experts in Italy of impaired loans, with over 1,700 operations on NPLs and last April in an interview with BeBeez and Crowdfunding Buzz had announced the imminent opening of the third round of Profit Farm.

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Profit Farm does not operate on the real estate development market

Profit Farm is controlled by a stable group of operating partners: Risolve RE Npl srl, a company active in the NPL sector; Cristiano Augusto Tofani; Valentina Barbadoro, almost total partner of Risolve RE NPL srl; Roberto Macina, always active in the Italian startup ecosystem; Mario Costanzo, co-founder of WDA srl and chief legal officer; Francesco Sibilla, partner of the law firm SAPG Legal, expert in, among other things, corporate law, innovative startups and legal-tech; Giovanni Alessi, also a partner of SAPG Legal, expert in asset management, advisor to family offices and partner of Il Trust in Italia. The remaining 6% is in the hands of financing partners, without active roles in the company.

The idea to create Profit Farm came to Lawyer Tofani about a year and a half ago, when the top manager of one of the main Npl portfolios in Italy told him about the prospects of the crowdfunding market. “From that moment on, I realized that it was possible to transform a market (that of the early disinvestment of credits, ed), until then the exclusive prerogative of funds, into something accessible also for the masses, both in terms of underlying assets and structure. Together with the other co-founders, we worked on the idea for a year and then created a team to successfully implement it. After that, we moved to pre-execution, where we hypothesized and analyzed the business model, as well as identified possible industrial partners,” said the founder.

Profit Farm does not operate on the real estate development market (which also contains the business risk, to the successful completion of which it is subordinate) but simply on certain, liquid, collectable credits towards solvent subjects, mostly brought by judgments that have become final. “In other lending crowdfunding platforms, the proposers assume a commitment to the repayment of the loan, without, however, offering any real guarantee in favor of the lenders. In the featured operations on Profit Farm, on the other hand, the credit is segregated in a vehicle company, whose shares are held/given in pledge to Compagnia Fiduciaria Lombarda spa (a trust company registered both with MISE and in the special list ex-art 106 TUB and supervised by Banca d’Italia), which assumes the irrevocable obligation to repay the credit to the lenders”. It is therefore not possible for the proposer to “run away with the cash”, specifies Lawyer Tofani.

The activity of credit recovery (servicing) is carried out by professionals with more than twenty years’ experience in the sector. Profit Farm for the collection of capital for its campaigns relies on (and is an agent of) LemonWay: a community payment institution authorized to operate in 29 countries, including Italy, and subject to the control of the Bank of France. Users create their own account on Profit Farm and transfer the amount they wish to lend to a special account in the name of LemonWay, which they can then use to participate in individual campaigns featured on the platform. When the loan matures, users will be credited back with the amount they’ve financed, plus the agreed-upon, accrued annual interest.

As far as the campaigns are concerned, “we select operations that express a risk similar to the Btp, with solvent debtors and very short recovery times, also considering that in most cases the judicial process has already been completely exhausted, that is, it is nearing completion”, Tofani clarified. Certainly solvent Public Administrations include, to name but a few: Tuscany Region, Emilia Romagna, Lombardy, Lazio, Rome Capital, Milan Metropolitan City and Central State. “In these cases taken as examples, we rely on the rating of the major agencies and common sense: the default of certain PAs would have repercussions on the public debt and the spread,” explains Lawyer Tofani.

So far the platform has completed seven campaigns with amounts between $21,400 (€19,000) and $367,000 (€326,000). The return promised to investors is up to 8%, equal to the legal interest rate due by debtors in arrears. For the companies or the assigning funds, the advantage consists instead in the advance collection compared to the 12-24 months normally necessary to settle the credit. The platform intends to launch operations for at least one million euros per month, with targets by the end of the year of 2-3 thousand users and a total collection of 15 million euros. In 5 years, it aims to close 100 million euros of disbursed funds and to have 50 thousand registered users, thus gaining an estimated share of around 20-30% of the entire lending crowdfunding market in Italy.

In the future, Profit Farm intends to expand its range of action to bankruptcy procedures, focusing in particular on predeductible credits, and is in the running to take over a position of 500-600 thousand euros. To find other opportunities, the startup will soon open a communication channel with accountants. “For the future we are also analyzing a new product focused on credits assisted by an underlying real estate in the face of debt collection operations already agreed with the debtor party,” said Tofani. Also in the future, it cannot be ruled out that Profit Farm may act as an intermediary in the purchase and sale of credits between institutional investors.

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(Featured image by geralt via Pixabay)

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First published in Crowdfunding buzz, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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