ONLINE small- and medium-sized enterprise (SME) finance aggregator Funding Options is looking to raise £5m from fresh equity investment to support its expansion plans in 2017.
The firm has seen strong revenue growth in recent years, in part due to the UK government’s bank referral scheme.
“Our last fundraising round was in 2015, when we secured £2m,” founder and chief executive Conrad Ford told Peer2Peer Finance News.
“Since then, our revenues have grown 13 times larger, while our costs have grown a mere three times larger. This is an exciting period for us, not just in terms of revenue growth.”
Funding Options does not disclose its financials, but Ford said that revenue in the first quarter of 2017 grew fourfold year-on-year. He expects the company to break even by the end of the year, exclusive of the equity investment.
“The cost of acquisition is killer for some fintechs,” said Ford. “We’ve experienced staggering growth from organic lead generation. The bank referral scheme has given us a boost, as half of our lead generation is now free.”
The bank referral scheme, which launched last November, mandates nine of the UK’s biggest high street banks to pass on the details of small businesses they have rejected for finance to three aggregator platforms, one of which is Funding Options.
These platforms will then share the details of the businesses seeking loans with alternative finance providers, including peer-to-peer lenders, who can provide quotes if they wish.
Ford plans to use the £5m to develop the platform’s technology, grow lead generation acquisitions and expand Funding Options’ physical presence across the country, which could include strengthening its network of relationship managers.
The chief executive said he had “a relatively open mind” in terms of the type of investors he was hoping to attract. “We’re not just thinking of traditional venture capitalists but other people with an interest in the alternative finance market,” he said.