Investment in crowdfunding projects entails risks, including the risk of partial or entire loss of the money invested. The crowdfunding services are not covered by the bank deposit guarantee scheme or by the investor compensation scheme established for the clients of investment firms.
On this page, you will find important information about costs, financial risks, and charges related to crowdfunding services or investments, about the crowdfunding project selection criteria, and about the nature of, and risks associated with, their crowdfunding services.
When registering, the investor must provide identification documents and undergo an identification procedure to prevent money laundering risks. Requirements and limitations for registering on Capitalia platform are laid out in the Capitalia Crowdfunding Platform Terms and Conditions.
Before non-sophisticated investors can start investing on the platform, Capitalia requests information about the prospective investor’s experience, investment objectives, financial situation, and basic understanding of the risks involved. However, irrespective of the assessment results, the investors make independent decisions and assume the full risk of taking an investment, including the risk of partial or entire loss of the money invested.
We advise all investors to build a loan portfolio of at least 10 projects for purposes of diversification. The more diversified the portfolio, the less risky it is. The best way to achieve maximum diversification is by using the platform's Auto-invest functionality.
If you are a non-sophisticated investor, we advise you to invest at most 10 % of your net worth in crowdfunding projects.
Capitalia policies stipulate a minimum amount of information and documents that have to be submitted for Capitalia to start project evaluation. After receiving all necessary information, Capitalia will begin evaluating the project owner and the project to establish if the project complies with the platform’s requirements and to approve the credit score and pricing for the project.
The data input in the evaluation process model is obtained from the project owner, Capitalia's own records (regarding the project owner's credit history with Capitalia and other factors), public databases, and internet search engines. The model inputs are both quantitative and qualitative. There are minimum mandatory criteria for approving the projects, including, but not limited to:
The decision to approve a project and the terms of the project is made by the Investment Committee. The composition of the Investment Committee depends on the size of the project. It consists of senior managers including those from the risk management function.
The Investment Committee also determines the risk score and corresponding risk grade for each approved project. The risk score for the approved projects varies between 60 and 100, and each score corresponds to a risk grade between D and A+. The risk score and risk grade are used to rank projects by the expected loss through the lifecycle of a loan. Capitalia risk grade does not indicate the probability of default but ranks projects in terms of the expected loss.
Each risk grade has an estimated Risk premium. The following table summarizes the risk premium used in the pricing of projects that are published on the platform.
| Description | Risk premium | |
| A+ (96+) | Extremely low risk + collateral | 0.0% |
| A (90 - 95) | Extremely low risk | 0.7% |
| B (80 - 89) | Low risk | 0.9% |
| C (70 - 79) | Moderate risk | 1.3% |
| D (60 - 69) | Acceptable risk | 4.3% |
The Risk premium for each risk grade is based on the adjusted historic loan loss rates adding a safety cushion for higher risk grades. Premiums are based on the performance of Capitalia loans originated from 2015 to 2022. Last updated on 2024.01.10.
More detailed information on credit risk assessment and pricing can be found here.
The full statistics for the portfolio of projects financed by Capitalia, including mandatory Default rate disclosure can be found here.
Information about concluded loan agreements, received and planned payments, as well as related documents, can be accessed by each investor after authorization on the Capitalia website in the My Loans section. Also, investors have access to the Account Statement section, where one can see the movement of the loans' cash flow over a certain period according to the investor's choice.
After the financing is issued to the company, Capitalia conducts regular monitoring, which includes the control of tax payment discipline, registered debts, registration data, and other changes, to mitigate risks. If the project owner is significantly late on the monthly payment, Capitalia contacts the project owner and takes other steps to ensure that they comply with loan agreement obligations.
If the project owner defaults and cannot meet the obligations arising from the loan agreement, Capitalia decides to start the collection process. The collection process may include attempting to agree with the client on the restructured schedule, starting a court case for the collection of the debt, filing the claim in bankruptcy or in-court protection proceedings, passing the case to the external collection agency, or selling the loan to the debt collection company. The decision must be based on maximizing recovery prospects, after taking into account the costs and uncertainty associated with the chosen collection approach. If the approved solutions exceed the powers given to Capitalia by the Platform’s Terms and Conditions, the case is brought for the Investors’ vote before the implementation.
For the valuation of issued loans, Capitalia uses the provisioning policy stated below that takes into account late loan payments and other factors indicating serious impairment of the loan value.
| Provision (of remaining principal) | Conditions |
| 10% | Overdue 31-60 days |
| 30% | Overdue 61-90 days |
| 60% | Overdue 91-180 days |
| 80% | Overdue 181-360 days |
| 100% | Overdue more than 360 days |
All restructured loans are automatically assigned a 10% provisioning amount. Loans can be restructured only once, while in case of further amendments to the loan repayment schedule, the loan will be assumed to be in collection and will have a workout recovery schedule. Capitalia’s loan provisioning policy allows for several exceptions and additional circumstances that can be applied in loan provisioning. Loan provisioning has an impact on the return calculation (IRR) for the investor as visible in the Dashboard (requires login). The aim of the provisioning policy is to provide investors with a more realistic reflection of the investment return from investing activities.
All projects are subject to credit risk. Credit risk is exposure to potential losses in case a project owner is unable to pay their contractual obligations to the investors. This could be due to various reasons, such as economic downturns, business failure, market volatility, regulatory changes, and management failure, including fraud.. Credit risk can arise also for businesses that have successful and profitable operations if they work with insufficient working capital liquidity or are unable to refinance maturing debt liabilities. Credit risk has to be particularly considered in situations when loan principal repayment is scheduled for the end of the term as opposed to a regular amortization schedule.
Loans may be secured by a pledge or a guarantee from the business owner. Although Capitalia takes reasonable steps to evaluate the value, liquidity, and other aspects of the collateral, the investor should be aware that in the event of a debt collection, there may be unexpected difficulties in quickly realizing or taking control of the collateral, and the realization value of the collateral may differ from the determined market value. Especially, such a situation can arise if the collateral object is specific and with low liquidity.
As a rule, an investment in a crowdfunding project on Capitalia platform cannot be resold to the third parties Therefore, the investor must consider that the investment is illiquid and it must be held until the repayment term. If the project owner is late for the repayment, the investment may be held for an even longer time. As the investment repayment term can be unpredictable, we advise you not to invest funds that might be needed in a short time.
Income from the platform investing may be subject to personal or corporate income tax, depending on the investor's country of residence and legal status. All transfers made to investors are net of withholding taxes if such are applicable. The tax rate may depend on the investor's country of tax residence. In the Account Report section, by choosing a specific reporting period, investors can download an automatically prepared Tax Report.
Capitalia has implemented a policy to prevent conflicts of interest. Capitalia does not accept projects where the project owner is:
If a project published on the platform has other links with a Capitalia employee, shareholder, council or board member, the person with a conflict of interest is in no way involved in the evaluation of the project and the loan management.
Capitalia allows the parties related to Capitalia to register as Investors on the platform with the additional rules to prevent abuse of a preferential access to the project information. Parties related to Capitalia may not invest in individual loans but are granted access to invest only through the Auto-invest function (individual loan portfolio management service).
Capitalia earns income by charging companies a success fee of 1-5% for a successfully funded transaction, as well as a regular management fee that is added to interest payments. All Capitalia fees are visible in the Capitalia Interests section of each project.
More information about Capitalia’s conflict of interest policy can be seen here.
Capitalia has worked out its business continuity plan to ensure the servicing of outstanding project agreements if Capitalia suspends its operations.
The investors' money is held with a regulated French payment institution (Lemonway), which ensures that the Investor's funds are kept separately from Capitalia's assets.
Capitalia is the leading financer for small and medium enterprises in the Baltic sea region. Operating since 2007 we have financed more than 5000 businesses investing over EUR 100 million in their development.
Latvia +371 2880 0880
Lithuania +370 6168 0880
Estonia +372 881 0880Crowdfunding services are provided by Capitalia, SE, operating under authorization from the Bank of Latvia. Investment in crowdfunding projects entails risks, including the risk of partial or entire loss of the money invested.
Partner of Lemonway, a European payment institution accredited in France by the ACPR (CIB 16568).
