EstateGuru Comments on its Approval to Operate Under ECSPR to Provide Pan-European Securities Offerings

EstateGuru, an established online marketplace for secured loans, has been approved to operate across the European Union under ECSPR or European Crowdfunding Securities Provider Regulation. EstateGuru will join a handful of other online marketplaces to issue securities and raise capital online in the EU.

As was previously reported, EstateGuru received its approval this past May.

ECSPR was approved in 2021, but the EU is going through a period of transition. Each platform that aims to operate under the new rules must be approved by the “relevant authority” in the member state in which it is based. Issuers using ECSPR-approved platforms may raise up to €5 million in capital online in any given year.

EstateGuru received its license from the Estonian Financial Supervision and Resolution Authority (Finantsinspektsioon),

In a blog post, EstateGuru said they are happy to be one of the first platforms to receive a crowdfunding licence for their main markets.

EstateGuru outlined the changes it has pursued in preparation for ECSPR approval. The company said that in an effort to fully comply with the regulation they have made some changes to enhance security and transparency.

The company said they have now included a questionnaire for aspiring investors:

  • to assess whether a user who registers as an investor is a sophisticated investor or a non-sophisticated investor and to assess the knowledge about loan-based crowdfunding services. We may have to limit your access to our services if you have not completed the questionnaire in due time.
  • EstateGuru has added a loss-bearing calculator to the onboarding process, which will allow investors to calculate their loss-bearing ability. The loss bearing ability is calculated as 10% of your net worth. They state that they do not store any data entered into the calculator other than the result which you submit. They will not restrict access to their services based on the result, but they may need to warn you if your investment exceeds your loss-bearing ability.
  • EstateGuru says it has improved the due diligence process for project owners (potential borrowers) and introduced project-specific key investment information sheets, which give an overview of not only the project and lending terms but also the background, activities, and financial status of the borrower, to the extent possible. Changes to the key investment information sheet during the syndication period may trigger a requirement whereby investors would be allowed to withdraw their investments into the project for which the key investment information sheet is amended. EstateGuru says it will give more specific information if any such circumstances occur.
  • The company has added a reflection period for investors who make investments. This means that investors have the right to withdraw their investments within 4 days of the transaction. For investors using Auto Invest, the reflection period applies within 4 days of activating Auto Invest (but not for any subsequent investment made after that 4 day period). For investors making manual investments, the reflection period applies for 4 days as of the moment the investor manually approved the investment.
  • The company states that disclosures and process descriptions have been improved.
  • The company has made changes to the General Loan Terms and User Terms for the documents to comply with the investor protection requirements applicable to them and they aim to further review and simplify the General Loan Terms by the end of the year.

EstateGuru said the process was difficult due to the newness of the regulation and the fact some standards are not yet in place.  The company said there were still multiple changes that need to be made and they hope to have everything in place by the end of this month

EstateGuru currently operates in a handful of European countries, including Estonia, Germany, Lithuania, Latvia, Finland, Spain, Portugal, and Sweden. Since its inception, EstateGuru reports over €725 million in secured loans funded. These assets are said to have generated a historical average return of 10.63%.


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