UK consumer lender Koyo has raised $50m (£36.1m) in debt and equity funding to support its growth plans, as it eyes the ‘near-prime’ consumer credit market.
The open banking-powered lender, which counts RateSetter and Zopa alumni among its team, said it has closed a Series A funding round led by Force Over Mass with participation from existing investors Forward Partners, Frontline Ventures and Seedcamp.
It did not disclose the split of debt and equity raised, but said that it has also secured debt funding from Atalaya Capital Management, a New York-based alternative investment advisory firm.
Koyo launched its consumer loans business in January 2020, using open banking rather than credit agency scores to underwrite risk for lending to consumers.
The firm says that the data-sharing technology enables it to offer far more competitive rates and cheaper borrowing, to a market currently underserved or treated unfairly by extremely expensive payday lenders.
The lender launched with a view to targeting ‘thin-file’ customers – those with short or no credit history – but has now widened its target market to include the larger ‘near-prime’ UK risk segment.
Chief executive and founder Thomas Olszewski is from a venture capitalist background, having previously worked at Frontline Ventures in London and Cavalry Ventures in Berlin. He also worked as a hedge fund trader analyst at Verition Fund Management.
“Koyo launched at the start of the global pandemic and has proven that innovative use of open banking data results in better risk decisioning and ultimately has enabled us to grow the business during one of the toughest economic times the UK has faced,” said Olszewski.
“I’m proud to have continued to give many people in the UK access to competitively priced credit, during a time where most traditional lenders were quick to scale back their lending.”
Filip Coen, Force Over Mass partner, added: “We invest in companies that combine transformational technology with strong business models, and Koyo indexed strongly in both of those departments.
“Koyo has built a first-class foundation over the last 18 months of operation, and we’re excited to be part of its future.”
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Koyo has a number of experienced alternative lending professionals among its team.
Koyo’s head of credit risk, Paul Martin, was previously credit risk director at P2P consumer lending giant Zopa, where he oversaw the loanbook’s growth from £100m to £1bn. He also held senior credit risk management roles at American Express, Santander Cards, NewDay and Neyber.
Peter Kent, head of marketing at Koyo, was previously a marketing acquisition specialist at former P2P platform RateSetter and worked as an adviser and consultant to P2P consumer lenders Lending Works and The Money Platform.
And chief technology officer Guy Evans previously held the same role at specialist online mortgage lender LendInvest.