Week 47 – Numbers

During the week 47, after sending the email and doing the poster on Monday…

  • Some of our group members continued with the calculations, which we finished this Monday (27th)
  • Others went through the requirements for the final resolution and report, did a rudimentary structure and division of labour for the report
  • We created a FB page for our service and started a FB promotion for our MR4
  • Rehearsed for the presentation on Monday 27th


One really important aspect we also need to validate is the existence of a real business potential. So far, we have spent most of our time examining the nature of the customer needs, as well as the relevance of our solution in satisfying those needs. Those efforts have been extremely vital, since we have now found out that there really seems to be demand for a service like ours. Now the next obvious step for us is to make our estimations a bit more detailed. We need to make our first serious financial estimations in order to further validate the viability of our business model.

And that’s exactly what we have been up to during the last few days. We have now built an initial financial model that takes some carefully chosen input parameters and outputs some of the most important financial indicators that will give us valuable insights about the true business potential and weather our platform really is a good investment or not. These key indicators include: needed investment, time to profitability, payback time of the initial investment, the critical mass of customers in both sides of the platform, the eventual small loan market share, and of course the optimal ratio of the sizes of borrower side and investor side. We still have some work to do in order to make our input parameters as realistic as we possibly can, but here are some estimations that we have made so far.

We are going to need approximately 730 000 euros of funding in order to maintain our operations until we finally start making profit. This is going to happen after 13 months of operation and our user base is then going to consist of 65 000 active borrowers and 27 000 active small investors. This is our critical mass of customers, distributed across the two platform sides in an optimal ratio of 0.416 investors per one borrower. Payback time for the initial investment is 27 months. In that point, we are making a monthly profit of 92 000€ and our share of the EU small loan market is approximately 0.28%.

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However, like mentioned above, we are still in progress of fine tuning some of the most important input parameters of this model. These parameters include customer acquisition costs for both investors and borrowers, as well as the mean and variance of the payback time of the loans. This means that these estimations are likely to change a bit, but the change is most likely not going to be too dramatic, since we already have a pretty good understanding about the underlying dynamics of the small loan market. We will discuss the final estimations a lot more in detail in our final report that is going to be finished on this week’s Sunday.

Friday 24.11

On Friday we really started to work with our solution report. We had a productive morning with group as we initialized our Facebook page, divided the work for the solution report and wondered together what was meant by the grading criteria.

Sunday 26.11

We had a session on Sunday evening after Junction. Plan was to get prepared for the forthcoming week. Our main goal was to create the presentation for the rehearsal on Monday morning, and be clear what is required to be done during the following seven days. Answer is: A lot needs to be done. We checked the status of our market research 4 on social media, and understood that it is not going to be as informative as we expected.

Monday 27.11

We had almost the whole team together the whole session we had. Pinja and Lauri gave presentation in the rehearsal, here’s a link to that: https://www.youtube.com/watch?v=Sc89ODQWcr4

Saska had made informative calculations during the weekend, and we can validate our profitability rather precisely based on those formulas! Conclusion of those is that we really are profitable, even rather quickly depending on the customer acquisition cost, both for investors and borrowers. We had a discussion together about the report solution, for which all of us are contributing heavily during the week.

Market Research 4 – Questionnaire in FB

Couple of weeks ago after our second iteration, we decided to conduct two more iterations, which included validating the idea both from professionals and the potential users. Since our market research 3 had multiple answers but from a quite narrow audience (and so narrow type of users) we wanted to conduct one more research with a wider audience. We decided to alter the market research 3 questionnaire a bit, create a facebook page and boost that questionnaire for a targeted audience in several EU countries.

Our Facebook – page can be found here: https://www.facebook.com/pg/Crowdsource-Your-Finance-377120946062125

We targeted the advert using Facebook audience -tool, and our target audience was 20-30 year old men and women in Finland, Sweden, Denmark, Germany and Poland. We also excluded the demographics that had the most income, since the target group for our service is 18-30 year olds with small to medium income. The target audience was way bigger than we expected (around 50 000 000) and due to time constraints we didn’t have time to make the target narrower.

Our add will run Saturday – Wednesday, and we have a 30€ budget to use on these days. By Monday, the reach has been around 3500 people, and we’ve got 30 clicks on our questionnaire link. Unfortunately, we have received only 2 answers on our questionnaire. Even though our estimates about the answerers were really low, this is even lower than we expected. On the other hand, people are usually not that active on FB on weekends, so we are hoping to have couple more answers by the end of the campaign.

All on all, there is quite a lot of things to be done before Sunday, but we’re confident that everything gets done. We planned to have a little hackathon of our own on Saturday to finalize the report.