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Peer2Peer Finance News | May 27, 2017

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Funding Circle announces £82m equity investment after record quarter

Funding Circle announces £82m equity investment after record quarter
Suzie Neuwirth

FUNDING Circle has announced that it has raised $100m (£82m) in equity investment, in a boost for UK fintech amid Brexit uncertainty.

The news was heralded as “further evidence” of the importance of UK fintech by Chancellor Philip Hammond, who had previously indicated his support for the sector in last November’s Autumn Statement.

Read more: Autumn Statement: Fintech front of queue for £2bn innovation investment         

“Funding Circle has become a real success story for British fintech and news that it has attracted £80m of investment is further evidence of the growing importance of this industry,” said Hammond. “This is another vote of confidence in a UK firm that plays an important role in our economy – helping businesses to grow and create jobs.”

The fundraising was led by Accel and saw participation from existing Funding Circle investors, including Baillie Gifford, DST Global, Index Ventures, Ribbit Capital, Rocket Internet, Sands Capital Ventures, Temasek and Union Square Ventures.

Read more: Funding Circle breaks record for third month running          

“Funding Circle is changing the financial landscape for small businesses and investors globally, ensuring a better deal for everyone and helping to create a more sustainable and fairer economy,” said Samir Desai (pictured), chief executive and co-founder of Funding Circle.

“Today’s news is the next step on our journey to create a category-defining company that helps thousands of small businesses access finance and create jobs. Over the next 12 months, lending through the Funding Circle platform will create a further 50,000 new jobs, supporting economic growth in the UK, US and continental Europe.”

The new investment follows a bumper year for Funding Circle. The peer-to-peer business lender also announced that its UK division saw record 90 per cent year-on-year growth in the fourth quarter of 2016 and was cashflow positive.

Read more: P2P will prosper in a downturn, says Funding Circle’s Desai

More than £1.1bn was lent through the platform in 2016, with around £400m lent in the fourth quarter alone, a new record for an SME direct lending platform.

“We’ve been impressed by the Funding Circle team since our early investment in the company,” said Harry Nelis, partner at Accel. “It has achieved significant growth across multiple international markets by delivering an appealing lending option to SMEs and attractive risk-adjusted returns to investors on the platform. This investment makes Funding Circle the largest and best capitalised SME lending platform in the world, and we’re thrilled to continue to support its journey.”

The announcement comes just a week after it emerged that the government-backed British Business Bank (BBB) had pledged to lend a further £40m through Funding Circle, taking BBB’s total investment through the platform to £100m.

Around 10 per cent of Funding Circle’s investor money now comes from government sources, including the British Business Bank, European Investment Bank, German state-backed bank KfW and local councils across the UK.