Leading UK peer-to-peer (P2P) business lender, Funding Circle has announced a new round of funding worth $150 million led by venture capital firms DST Capital, a fund managed by BlackRock, Sands Capital Ventures and Temasek also participated in the round.
Launched in 2010, Funding Circle offers a platform for small businesses to access finance and investors to make loans and now represents the largest lender outside of the traditional lenders and financial institutions. With around £600 million lent to British businesses and a further few million dollars lent in the United States, the company expects to reach $1 billion in total global lending within the next year.
Commenting on the funding round, Samir Desai, CEO, Funding Circle said,
“Today’s news is the next step on our journey to creating a sustainable, category-defining business in a multi-billion dollar global market, where businesses will come to the marketplace to borrow from all types of investors. This investment, alongside prudent risk management, will ensure Funding Circle’s long term future.”
The global economic and financial crisis and ongoing instability of the eurozone have greatly limited the willingness of traditional lenders to provide financing to SMEs. P2P lenders like Funding Circle have been able to capitalize on this opening in the market as a result. While economic conditions are bound to improve in the years ahead, the accomplishments that Funding Circle has been able to achieve during this period should provide the foundation needed to maintain the organization’s success in the years ahead as the economic conditions rebound and traditional lenders begin to lend more freely.
While traditional lenders’ eventual loosening of lending policy could slow Funding Circle’s growth, the clear opportunity and benefits to both individual investors and businesses utilizing the company’s peer-to-peer lending platform means that the company should continue to see robust increases in the number of investors and businesses using Funding Circle as an investment marketplace, especially as the company expands into new markets around the world.
Overview by Tiristan Hugo-Webb, Associate Director, Global Payments Advisory Service at
Mercator Advisory Group
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