An In-Depth Review of Leafround: A Platform for High-Yield Fixed-Income Opportunities

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Start Earning Inflation-Beating Monthly Income On Leafround

As an investor seeking higher return fixed income alternatives to low interest bank fixed deposits, exploring new digital investment platforms like Leafround can open up attractive opportunities.

Leafround allows you to earn monthly cash flows by investing directly in leased equipment and invoice financing deals. You can now access income generating asset classes that deliver yields beyond traditional options like FDs, bonds, stocks, gold etc. right from the comfort of your home.

Let’s look at how Leafround works, its key benefits and things to keep in mind as a potential investor.

The Problem with Bank Fixed Deposits

Over the past few years, interest rates offered by banks on fixed deposits have been on a declining trend. Most top banks now offer between 4.5% to 6.5% pre-tax returns on FDs currently.

However, inflation has remained consistently higher than FD returns during this same period. So in real terms, after adjusting for the eroding purchasing power of the rupee, your savings in fixed deposits have delivered negative real returns.

Banks and NBFCs also predominantly finance large ticket size loans of Rs 25 lakh and above. This leaves small businesses like SMEs and startups starved of working capital financing options from traditional lenders.

How Leafround Helps Investors Like You

This is where digital investment platforms like Leafround come in — bridging the gap between investors like yourself seeking higher return investment avenues and businesses looking for alternative financing solutions.

The Leafround Advantage

Leafround allows retail investors to earn inflation-beating returns by investing directly in leased equipment and invoice financing deals. You can now access income generating asset classes that deliver predictable yields far higher than the 4.5%-6.5% offered on fixed deposits.

The offerings open up new avenues to diversify your portfolio beyond conventional options into fixed income alternatives that provide regular monthly earnings.

Two Offerings — Leasing & Discounting

Leafround offers two main investment options:

Asset Leasing

• Purchase equipment like laptops, furniture, machines, tools etc.
• Lease them out to businesses for 6–24 month contracts
• Earn monthly rentals from the lessee company
• Leafround buys back the asset at maturity at predetermined price

Invoice Discounting

• Provide short-term financing to companies by purchasing their invoices
• Get repaid the invoice amount plus interest when companies get paid
• Tenures range from 1–6 months depending on credit period

How Does Leafround Work

Leafround operates an online marketplace model connecting investors seeking fixed income opportunities and businesses looking for financing.

The platform’s process works in four simple steps:

1. Browse deals and select one aligning with your investment objectives
2. Invest the principal lease amount or invoice value through integrated payment options
3. Leafround credits pre-agreed monthly rentals or invoice repayments into your bank account
4. Your principal is returned at maturity through asset buyback or invoice settlement

Key Benefits of Investing through Leafround

By providing access to leasing and discounting deals, Leafround offers you several advantages as an investor:

• Higher returns — Earn 12–24% pre-tax returns across both offerings, significantly higher than 4.5–6.5% FDs
• Fixed tenure deals — Pick tenures ranging from 3 months to 2 years
• Monthly cash flows — Recurring income through rentals and invoice repayments
• Low minimum investment — Get started with a ticket size as low as Rs 10,000
• Greater liquidity — New deals available every week vs. illiquid bond market
• Easy process — Discover, evaluate and invest in just a few clicks
• Diversification — Allocate capital beyond conventional fixed income
• Reinvestment — Redeploy principal amounts periodically into new deals

Mitigating Potential Risks

While Leafround offers significantly higher returns than fixed deposits, you should be aware of some inherent risks:

• Default risk — Delayed payments by lessee company
• Liquidity risk — Inability to exit early, principal locked till maturity
• Asset risk — Depreciation in leased asset’s residual value
• Buyback risk — Receiving lower buyback price than expected

However, Leafround aims to mitigate these risks through strict due diligence of deals, legal agreements, escrowed payments and proactive monitoring. Defaults or delays are also actively managed for optimal outcomes.

Evaluating Deals on Leafround

Onboarding Process

First, you need to complete a quick one-time online signup on Leafround’s website or mobile app. This is followed by online KYC submission.

For companies, Leafround conducts extensive due diligence including checking director and company credit scores, historical financial statements, industry benchmarks etc. before onboarding them.

Discovering and Evaluating Deals

Once logged in, you can browse through all active leasing and discounting deals on offer as per your preferences.

The deal cards on the platform provide all key investment parameters like:

• Expected returns
• Tenure duration
• Lease amounts
• Asset details
• Repayment schedule
• Buyback terms etc.

You can use filters for tenure, returns, company ratings etc. to discover deals that match your investment objectives.

Comparative Analysis

Analyse the available deals on parameters like:

• Returns offered vs other fixed income options
• Tenure duration suiting your horizon
• Lease amounts vs minimum investment required
• Company credibility based on ratings
• Residual value of assets upon lease expiry
• Reputation of invoice debtors and credit history

Do your due diligence on the lessee company, leased assets, invoices financed etc. to make an informed investment decision.

Investment Process

Upon selecting a suitable deal:

• Pay the principal lease amount or invoice value through integrated payment modes
• Modes include: UPI, credit/debit cards, netbanking, mobile wallets, bank transfers
• The investment amount is held in escrow by Leafround until deal execution

Completing Investment

To complete the investment, you need to digitally sign the:

• Licensing Contract: Governing lease terms between you, company and Leafround
• Agreement to Sell: For future buyback of leased asset (for leasing deals)

Ongoing Management

Post asset leasing or invoice discounting:

• You receive monthly rentals or invoice repayments directly into your registered bank account
• Income statements on your dashboard reflect payments received and management fees deducted
• At maturity, principal amount is returned through asset buyback or invoice repayment
• You can reinvest the matured principal into new deals upon lapse of existing tenure

Closing Thoughts

By taking on some additional risks compared to guaranteed fixed income products, you as an investor stand to earn ~12–24% pre-tax returns by investing through Leafround.

Diversify beyond conventional options into these fixed income alternatives that deliver predictable monthly earnings. The short tenures allow you to periodically redeploy principal amounts into new deals.

Carefully evaluate all key parameters before investing to assess how each deal fits into your overall investment portfolio and financial goals.

If you have the risk appetite to look beyond low interest fixed deposits and bonds, Leafround can open up new avenues for earning inflation-beating monthly income on your investments.