Populous – Size Does Matters!

Expansion is the key to growing a company and by expanding the PPT price will also go up. The PPT price can only drop if the liquidity pool shrink. Once investors sees the returns they can make on the Populous platform the funds they deposited in the liquidity pool will stay deposited.

The bigger the liquidity pool the more markets Populous can expand into.

Who’s Bigger!

The global market for “trade” factoring is estimated at $3 Trillion (2013) and growing. If we consider the trade factoring market growing at a rate of 10% per year, the global trade factoring market would be approximately $4.4 Trillion by the end of 2017. This means an increase of around 46% since 2013.

In 2013, the share of the European factoring market was approx. $1.9 Trillion of which UK accounts for $400 billion and the largest market within the European Union. France second at $276 billion, Italy in third position with $245 billion and Germany fourth at $236 billion. By region, the EU is the largest trade factoring market in the world and will still be even after BREXIT.

China on the other hand is the largest trade factoring market by country with a market size of approximately $486 billion followed by Japan and Taiwan. Japan, Taiwan and the rest of Asia totals approximately $324 billion.

The US comes third place with only 8% of the world trade factoring market of approximately $240 billion.

The share of the global trade factoring market in Europe and the US has been falling whilst the Asian share of the market has been growing. Europe has seen a decline of its share of the invoice factoring market from 72% to 60% and the US has declined from 11% to 8% based on the 2013 numbers. However, that is not to say that their market value have decreased but because the trade factoring market in Asia have increased considerably.

The trade factoring market have been steadily growing with the UK growing at a rate of 10% per year from 2008 to 2013. Projecting this growth rate to 2017 the UK market value is probably now approximately $625 billion. The China market was growing at a rate of 15% annually prior to 2013 so this was used as the yearly growth rate from 2008 to 2017 and the estimated market size by 2017 is considered as $850 billion.

Reference: The global “trade” factoring numbers used in this post are based on http://www.ucfunding.com/world-factoring-industry-3-trillion-business/ which in turn were summarised from the press release dated 8 April 2014 by FCI. The numbers after 2013 are my own projected values because the actual numbers are not available at the time of posting.

My Bad, I Goofed Up!

The assumed market numbers used in my PPT price prediction update in my post “Populous – PPT Price Updated Forecast, My Take!” is for the size of “trade” factoring and not invoice factoring!

The “trade” factoring market encompasses all type of factoring instrument used in the market of which invoice factoring is one. My updated price prediction forecast is yet again off the mark.

The Competition

MarketInvoice is based in the UK and is considered one of Populous’s competitor according to information published. Like Populous, MarketInvoice uses technology to help provide access to liquidity so is considered as one of Populous’s competitor. Populous will be adopting blockchain technology and deploying its XBRL engine.

However, MarketInvoice does not seem to be the main target in the UK market. Populous have positioned itself to tackle the likes of HSBC, RBS, Lendy and Investly to name just a few in the GBP2 billion invoice factoring market. They are shown in Fig 4 of the business plan and MarketInvoice does not garner a mention in the business plan.

If you don’t have a copy, you can download it their twitter link here.

The China market business plan have not yet been released and it would indeed be interesting to know the size of the Chinese invoice factoring market and who the competitions are.

In Conclusion

The projected trade factoring market size is optimistic because it assumes a constant growth rate annually but in reality the growth rate varies and may slow down. Nevertheless, it is no surprise that Populous chose the UK and China to begin operations in the factoring industry because sizes seem to matter.

France, Italy and Germany may be the next target country in which Populous will expand into in Europe from the UK. Once we begin to see results from the China market, Japan and Taiwan could be the next target market out of the Hong Kong office.

Will Populous expand into the US?

Populous has many advantages over the existing competitors so taking market share from them should not be difficult. The players in the invoice factoring market still depend on doing things the old ways and using old technology to process their invoices and all this bodes well for Populous.

By considering the $3 Trillion trade factoring market as pertaining to the invoice factoring sector the predicted price may be optimistically high. However this goes to show that there is enormous potential for growth in the factoring market. Populous can grow its market share of the factoring market by entering the different sector of the factoring market using the information that can be compiled and interpreted from the XBRL data set.

With the capability that Populous have created in the XBRL engine, Populous can use the predictive analysis capability to enlarge the invoice factoring market and thereby increase its share of the market. Populous can do this by approaching those who already uses invoice factoring and also potential customers who do not even know yet that they will require some form of additional credit in the future.

As the new kid on the block, Populous will need to demonstrate that they are capable of generating consistent returns to attract investors. This will allow them to offer more factoring services as well as expand into more countries.

This is NOT Financial Advice

In my humble opinion, the risks to the downside are small compared to the potential upside rewards. This should not be construed as financial advice but an opinion only. As usual do not invest more than you can afford to lose as these investments can go to zero and always do your own due diligence.

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I wrote this article myself and it expresses my own opinions. Computer literacy is crucial in this day and age. Just because someone tells you it is good does not mean that it is good for you.