Sergejs comments on his experience with Envestio

Before I share my interview with Sergejs, who is behind one of the projects that raised money on Envestio platform, let me give a short intro on how I got here.

On January 12th Kuetzal P2P investing platform informed their investors - that they are shutting down:

Unfortunately we have to inform that Kuetzal is announcing wind-down, furthermore the company will only process withdrawals of the funds, the company is no longer accepting new project applications, investors registrations and deposits. Company’s reputation was harmed sufficiently for the past weeks, and Kuetzal management does not see a way to recover investor’s activity, therefore we may not return to usual working process. The mission of the company may not be reached anymore.

This was a big surprise and many investors were asking themselves - could anything like that happen to other P2P platforms as well? I had some doubts about Envestio, so on January 14th I reviewed one of Envestio projects and you can read about it here:

From: kristapsmors.substack.com/p/envestio-what-is-behind-high-yielding-projects

For many investors my review was interesting and it got lot of attention, but there were different kind of reactions to it:

  • Some said this “Mezaparks hostel“ project was already checked out by other bloggers, so I just wasted my time and should have looked at some other companies, who took loans from Envestio

  • Some said that I am trying to do damage to Envestio, have ill intentions and I am the same guy who hides behind an anonymous Twitter profile “RPeerduck

  • Some were happy to hear that at least 1 project on Envestio is real and liked that Sergejs provided so many details, some of which were previously unknown. That gave them more trust that everything is fine with Envestio

  • Only few noticed the details I wrote about guarantees and that in case there is any issue with project, investors and Envestio might have a hard time getting their money back

What about Envestio? They answered couple of questions, but did not reply afterwards and instead chose to attack me in their statements and it seemed like they also believed that I am the “duck“ guy:

And then, only a week later, on January 21st, Envestio shut down as well. It is still not clear, why and what really happened, but since then Jevgenijs Kukins has deleted his social profiles and vanished, Liene & Alesia have distanced themselves, and no one has heard anything from Eduard or Arkadi.

This has influenced not only investors, but also Sergejs and his project that I reviewed before. And of course - as he previously received attention and is still reachable, he wants to provide answers to investors, who are now stuck in this mess along him.

Please note that I tried to compile all questions sent to me in several categories. Some of them might seem a bit random or out of context, but I asked them anyway.

Interview with Sergejs

1. Selling the software

What software was sold to Envestio and can this deal be proven (legal agreement, payment)? What was the price paid by buyer for this software?

Software had basic functionality for such a P2P investing platform. Don't want to share other details.

Was the same software sold to any other P2B platform?

I did not sell it to anyone else, and don't think that the company who originally built it or Kukins, who bought it from me, sold it to anyone else as well.

At what stage was the software? Was it tested and fully functional to launch campaigns? Or it still needed improvements?

It was almost finished and ready to use, had some bugs to be fixed.

Who developed the software? Can you share their contacts or company name? Did they continue to work on platform after it was sold to new owner?

It was built by a software development company from Riga, I did a small market research to select them, but don't want to share their name as I am sure that they later did not work with the platform anymore. When Kukins bought it, their IT guy took over the access and probably - either Kukins IT guy or someone else made all the future changes.

Who was the buyer - Kukins or a group of people, or someone else? If we look at "rights of representation", then Anton Kaletin had these rights the longest - from 21.02.2018 till 23.12.2019, but Kukins - only from 03.07.2018 till 19.03.2019, and there are 2 other persons as well: Andrey Degtyarev (rights from 14.05.2019 till 23.12.2019) and Arkadi Ganzin (rights from 23.12.2019 and still active). Were any of these or other people involved in buying of Envestio?

I talked only with Jevgenijs Kukins, maybe he had partners or investors, but my communication when I sold it, was only with Kukins. Anton Kaletin - I had seen him mentioned on their team page at the beginning, but have never talked to him. Andrey Degtyarev - have never seen him, Arkadi Ganzin - only saw his picture on LinkedIn and website, have had no contact.

When was the software sold?

January 2018

2. Crowdestor vs Envestio

Why did you first raise the money in Crowdestor (650k EUR), not Envestio? Taking into account - that Kukins was your friend, and you must have better contacts with Envestio?

Riekstins was the main investor in this project, and he had a very good relationship with Janis Timma from Crowdestor, and could get favorable conditions, so at the beginning we used Crowdestor and the idea was that it should be enough with their funding to finish all the project.

Why did you change platform from Crowdestor to Envestio?

Crowdestor as a platform grew very fast, Riekstins had several projects there and so there was quite a big exposure from Riekstins projects in Crowdestor platform. While doing renovation for hostel, lot of things changed and were not exactly as we initially planned - we spent much more money and our costs grew about 2x when we compare to our initial plans. We made very big investments in insulation and decided to spend more on things like showers, WCs, kitchen areas, so in the end the result is good, but it also cost a lot more. Heating costs per month before were around 12k EUR/month, now - about 4k EUR/month, and we can adjust temperature in each room. And to finish the first stage, we needed more money, but as there was already a very big exposure from Riekstins other projects there, we all agreed that we could look for financing in a different platform. We considered several options, had a short call with EstateGuru - but it was clear straight away, that they would not be a good option in our case - they have a bit different business model, and their due diligence can take up to 4 months, and they would need more guarantees, but as we wanted to close the process faster, Envestio was more suited to our needs.

How much % in fees did you pay to Crowdestor? How much % in fees to Envestio?

Fees paid to both platforms were very similar, but don't want to share exact details.

3. Getting funding from Envestio

What was the process of getting loan like? How long, how easy/hard?

It took us about 2 months - we started in beginning of September 2019, got approved in the beginning of November 2019. We submitted all our materials, XLS calculations for next 3 years, presentation, floor plans, building project, photos of work done so far, etc. They also asked us to do market research about room rent pricing - to verify our business model. We also had to set up the pledges for Envestio, which was not done before in case of Crowdestor. So all the process raised no suspicion.

When was it agreed to fund the project between Spade and Envestio?

First week of November, 2019

Was Liene involved when discussing the deal?

No, I only saw here once, when there was a meeting with Kukin. But did not even speak to her. I think she was more responsible for attracting investors.

Did you meet anyone from Envestio team in real life before getting approval? Who?

My main contact was Kukin. I've met him and Alesia, who was assisting him with documents. Our meetings happened in restaurants in Riga centre.

4. Loan agreement between Spade and Envestio

Can we see the agreement (with confidential parts excluded)?

Don't want to publish it on internet, but if there is someone, who represents investors and can show anyone, who invested at least 5-10k EUR in Envestio, I will share it with this person or these investors. Also - if there are investors, who invested very big amounts of money, I am ready to meet them in Riga as well and discuss how to get out of this mess. Please contact me by writing to this email: spade.investors@gmail.com

Do you have a signed agreement?

Yes, we have a signed agreement, and pledges are registered.

When was it signed?

November 7th, 2019

Who signed it from Envestio side?

Jevgenijs Kukins

Did all info match in Envestio website with the actual agreement?

Yes, it did. But we provided much more info Envestio than it was displayed on website.

How must the loan be paid - Envestio fees first, interest each month, principal at the end or something else? Have you made any payments so far?

We have to return principal and interest together on 7th of November, 2020. So we have not made any payments so far.

Was there any reservation fund that you had to deposit additional money, which would be paid back at the end of the project?

Crowdestor had such a fund, Envestio - no.

5. Payments

Can we see bank transfers that were made between Spade and Envestio?

Don't want to share it for everyone, but again - if someone who represents investors, asks for it - sure. You can reach me at: spade.investors@gmail.com

Did you receive any money? If so, how much? Is it the same amount as advertised on Envestio?

There were 3 stages - each for EUR 300 000, for first two we received all money that was raised, but for last stage we did not get a big part of it.

Do you plan to repay the loan? To whom?

Yes, of course. It could be a court administrator or directly to investors, if some kind of agreement is made between me and investors directly, and if that is done according to law. This is a legal question, and that still needs to be resolved. The big challenge - that I don't have 1 or several investors in this project, but possibly - hundreds, and it is not clear - if they have any agreements. In any case both mine and Envestio investor interests are aligned - we all want to sort out this mess.

Won't you have issues with finishing the project and paying back the loan, taking into account that you were planning to get another 300k EUR loan from Envestio in February?

It won't be easy. After the episode on TV, RTU, owner of the building is very unhappy being mentioned next to Envestio. Some details mentioned on TV episode were incorrect and in our loan agreement with RTU there is a point that RTU can cancel agreement if their reputation is damaged. So I have to do everything to make sure that the agreement is not voided, and to solve financing issue to finish at least the first part of the project, so we can start generating cashflow. So there are issues, but it is in my interests to solve all of them.

Which bank account was used to receive money from Envestio and is it the same one that you need to pay back?

Baltic International Bank, and according to agreement it is the same account to which we also need to repay the loan.

Did you receive all money for each of 3 projects in 1 payment, or was it done in separate payments? If separate, how were they divided?

There were 3 projects, for the first two - as soon as money was raised, it was sent to us within 1-2 days. For last project which finished before Christmas, we received only part of money, the rest was promised many times over a period of about 3 weeks, but still haven't received it. The reason provided were cashflow issues.

6. About Envestio team

When did you study together with Kukins in SSE?

I finished SSE in 1997, Kukins - in 2004. We met in social events of SSE, they have a small community and many events for SSE alumni.

How good did you know Kukins? Was he a close friend? Were you surprised that he suddenly dissapeared?

We were not close friends, but had a business relationship and both studied in SSE. I am still very surprised that something like this has happened, I could not have predicted this.

What do you know about Arkadi Ganzin?

Nothing

What do you know about Anton Kaletin?

Had seen him only mentioned on Envestio website.

How much contact did you have with Envestio team? With who? And when was the last time you talked to them?

All the main communication was done with Kukins, who also signed the agreement on 7th of November. In the first week of December he mentioned to me that Envestio business is expanding, that they will have a new office and new people, and Eduard will later be responsible for communition with borrowers. Around 20th of December Eduard called me, wanted to arrange a meeting with a blogger Jorgen - and only then when Jorgen asked me what I think about the owner change in Envestio, I became aware of it. I've also met Alesia maybe 2-3 times who helped with paperwork, looked like she was assisting Kukin with documents. My last contact was with Eduard on January 18th.

Which persons did you meet while discussing this project?

Kukins and Alesia. And Eduards after project was already funded - to have a meeting with a blogger, and show around our object.

Which names are on contract?

Jevgenijs Kukins

7. Other Envestio projects

Could it be that your project was the only "real" one there? Maybe you know about other legitimate businesses that had loans there?

I have not done lot of research, but to me it looked like at least 2-3 other projects were fine - with working companies, VAT nr, paid taxes, etc.

Do you know anything about the fruit factoring project?

No

Did you notice any projects, that seemed fake/suspicious to you?

Everything that is related to Bitcoin seems suspicious to me, so the crypto mining projects seemed sketchy. But to be honest - that is based on my own prejudice against crypto currencies.

Do you have any insight into the first failed project of Envestio? How was it covered up?

I've no idea if any project failed. The information provided to me was that all projects are fine.

8. Other crowdfunding platforms

What do you know about Barona 72 project and Monethera?

Nothing. I only read about a possible connection on internet after reading this question.

How do you plan to continue (you were planning to raise another 300k EUR)? Discuss the project again with Crowdestor? Or some other platform?

No P2P platforms, we will probably use private money in form of debt or equity. The goal is to finish the first stage - first 3 floors and start generating cash flow.


Statement from Sergejs

Dear Envestio.com Investor,

I am Sergejs Sergejevs representing SPADE SIA/HOSTEL RENOVATION projects. Spade SIA receives numerous questions regarding the current situation, so I hasten to answer them.

Fists of all, our company is fine and plans to repay the loan!

Here are some details on our relationship with Envestio.com: in the beginning of 2019, we have successfully started the hostel project with partner Mr. Andris Riekstins who initially invested his own money and took the project to Crowdestor since he had very good experience with Janis and Gunars, i.e. the team of Crowdestor, also in other projects. However, by the autumn the project needed more investments to install new heating and thermo insulate systems in the building that would allow significant savings on heating bills. The project ran out of money, but Crowdestor wanted to see first cashflow of the project before further investments and how other loans perform connected to Mr. Riekstins. Andris himself also had major investment/development projects undergoing and had no quick funds. We believed in the project and were eager to bring it to life therefore we were considering any possibilities and options.

There were several leads available for financing, but Envestio was the fastest one. It took about nine weeks from the first meeting before receiving the first funds from Baltic International Bank. The process of due diligence was standard: we provided the business plan, our financial models and construction and other technical documentation, as well as pictures and architectural plans, various legal documents, and etc. Also, we had to conduct an additional quick market research on pricing of our product. We had dully signed a credit agreement with Envesion SI OU represented by Mr. Kukin, my personal guaranty and pledge of Spade SIA shares acted as a guarantee. The process was handled by Mr. Kukin and his assistant Alesia Nikalaichyk. Once I met another person – Liene, Mr. Kukin presented her as being responsible for Envestion.com marketing. 

During cooperation with Envesion SI OU I mostly communicated with Mr. Kunin and much less with Alesia. In December 2019 to my surprise I was introduced to a new manager of the company called Eduard. Since 20th of January I cannot reach Eduard or Mr. Kukin since their phones are constantly out of range. We have not received the credit in full from Envestio SI OU, the last part was not transferred to our account.

The term of credit repayment with all interest is November 7, 2020. It is most likely that an official state administrator for bankruptcy will be appointed by this date. Spade SIA can repay the debt to the administrator account who shall distribute proceeds among all creditors (investors). It is a question whether the distribution will be carried out by project rather than proportionally to simply total claim to Envestio SI OU from each creditor. We haven’t got the detailed information on who were our investors.

Even though our plans to raise final EUR 300K with Envesio in February vanished, Spade SIA will find money and will finish the project with a minimum of delay. As the property is leased to us, there is reputational risk of rent contract termination, thus It is in our interest to repay the credit and to get out of this mess asap.

Realizing the seriousness of the situation and complying with all legal requirements, we will provide all detailed information and legal documentation, bank statements, and etc. to official state representatives of investigation or to dully and legally proven investors of Envestio SI OU or its representative in person only. This definitely cannot be done over Facebook or like.

I hope for your understanding.
Best regards,
Mr. Sergejs Sergejevs

For investor relationship please contact me at spade.investors@gmail.com


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