Operating a peer-to-peer lending platform that purely focuses on retail investors is too “one dimensional,” according to a prominent fintech investor.
Tim Levene is chief executive of London-listed fintech investment fund Augmentum Fintech, which has a stake in P2P lender Zopa. Levene said Zopa’s recent launch of a digital bank to complement its P2P business gives the firm extra options and is good for retail investors.
“Being a pure marketplace is too one dimensional as we have seen with businesses not attracting the premiums they were three or four years ago,” he told Peer2Peer Finance News.
“Propositions come in and out of fashion both in the US and the UK. “We have had some high-profile businesses list and not perform as investors would have hoped, that casts a shadow across the sector, which is unfair.
“The P2P umbrella was always too generic, the real question is, what is the underlying lending proposition?”
“We are more focused on the tech and risk capabilities.”
Augmentum also invests in alternative lender Iwoca, which is an accredited lender under the coronavirus business interruption loan scheme (CBILS). Levene said the government’s initial financial response to the pandemic was an “opportunity missed” due to how long it took for fintech firms to get approved.
“CBILS and bounce back loans were a great opportunity to leverage fintech,” Levene said. “The government got there in the end but ultimately quite late in the day.
“It has been difficult for existing financial institutions who have not built scalable platforms to sustain demand so hopefully now there will be more collaboration.”
Levene added that the fund is not looking to add any more lenders to its portfolio currently but is interested in digital wealth management, crypto platforms and payment infrastructure.
Augmentum Fintech raised £28m through an oversubscribed share placing in October, which, Levene suggested, was helped by the pandemic.
“The pandemic has put us on the radar of more prospective investors who have been looking at diversification,” he said.