How is the COVID-19 crisis affecting EthicHub?

A report on the consequences of the global health crisis on EthicHub’s projects, and how we deal with the economic uncertainty brought on by the pandemic.

LEER EN ESPAÑOL: ( https://medium.com/ethichub/c%C3%B3mo-est%C3%A1-afectando-la-crisis-del-covid19-a-ethichub-1535a5c1615)

For the first time since the start of the global pandemic, we present this report to examine how the situation has affected our projects or how it might influence them in the future.

Fortunately, we have not experienced any sick leaves among the EthicHub team — and that is the most valuable asset we have. Used to remote work and a somewhat decentralized organization, we joined the #istayathome initiative even before it became mandatory.

Timing has been on our side, the coffee harvest was ending and over 90% of loans had been successfully repaid. Our communities activated their own isolation protocols, blocking their neighborhood roads with stones that prevented access for vehicles. As of now, only our Local Node -Mario López- visits them to carry out professional duties, and he always follows proper precautions, keeping social distance, wearing a mask and avoiding large congregations.

Nature does not stop, and work in the field continues as usual.

The veteran groups have already applied for financing for a new cycle of their harvests and the number of participating communities is increasing. The projects are carefully selected, with farmers who have vast experience in cultivation and whose commitments are guaranteed by the production of an outstnding quality coffee, scored above 84 points on cupping tests.

We found the way to continue working despite current restrictions on mobility and the suspension of many public and private services, because food production and distribution have not been interrupted: COVID-19 has not been able to prevent our first coffee exports, both to China and Europe.

Global demand for coffee is growing year-by-year, but until now the excellence of their product did not generate them a proportional profit. They were the weakest link in the supply chain because they only had access to a highly conditioned local market. In the new direct markets we are opening, this same coffee can reach a price several times higher, generating a remarkable profit margin that secures user investments, benefits farmers and strengthens EthicHub’s business model.

Although the current economic uncertainty has slowed our users growth rate, recurring investment and a sustained increase in the investment volume are paramount indicators of the confidence in the platform.

A significant milestone will be achieved shortly as we are about to register a 0% unpaid debt for the second consecutive year.

In the first days of the pandemic, the Mexican peso registered a notable devaluation (currently it seems stabilized), affecting the profitability of some projects that were not yet returned. We are working on mechanisms to mitigate this risk as far as possible.

In contrast, the price of coffee, which is ultimately what determines the solvency of our farmers, has not been affected because on times of uncertainty investment in agricultural raw materials is usually considered a refuge of value, such as gold or Bitcoin:

So far Covid19 has not affected the price of coffee.

We have enough funds for a 10 months runway and investment commitments, but to be cautious we are already working on the next finacing round (seed extension). Soon a crowd equity campaign will be launched and we invite you to be part of it. If you are interested, write to investors@ethichub.com to learn more about it. We have a nice surprise for those who commit before the opening of the campaign.

As strategy adjustments, we’ve turned our focus from scaling to profitability, because we realize under current circumstances it will be tough to grow as fast as we expected, so now we are centered on generating the maximum busisness out of the value captured by the platfom: Over 50 tons of coffee are being exported to China and Spain.

With the upcoming opening of our online store, we are developing a new way of direct P2P coffee trading. This model allows for a higher profitability that increases the benefits for both, the farmer and EthicHub. At the same time it attracts new users to the platform -interested in lerning about the origin of the coffee they are tasting-. Encouraging facts: even before the opening of the store (expected to be in early June) and without having set a price, more than 20% of our lenders have already signed up to get the premium coffee from our small farmers through this questionnaire: https://ethichubforms.typeform.com/to/grFCLW (for now coffee is only delivered within Spain and Mexico).

An Ethic Hub

Our platform -based on synergy generation to benefit all participants- finances only productive projects resulting way more resilient than crowdlending platforms financing consumption -that will be greatly affected by the expected economic recession post Covid19.

Our portfolio is composed of projects 100% originated by us, so we are certain about its quality.

Finally, the socio-economic impact that we are generating has not been affected by the pandemic, but quite the opposite. In times of economic uncertainty, being able to continue operating with our unbanked farmers has a double added value: not only keeping on generating the same pre-COVID-19 impact, but also generating jobs and income during an unprecedented health emergency. One would think this vulnerable segment of the world population would have a tremendous difficulty withstanding an economic crisis of this magnitude. At EthicHub, we have proven that by standing together, we can overcome any peril and uncertainty.

Connecting people. Harvesting wealth.