When Samir Desai, James Meekings and Andrew Mullinger founded peer-to-peer lending site Funding Circle in London back in 2010, they were on a mission: to get small businesses a fairer deal on finance. While it may have seemed like a brave time to start up – what with the world in the midst of global recession – the entrepreneurial trio firmly believed they had created something that would revolutionise funding for businesses, and strike fear into the banks in the process.
Five years on, the company has landed a further $150m (£100m) in equity investment to fund future growth at home and abroad, and comes as lending through the site passes the magic $1bn mark. It’s both a ringing endorsement of London’s tech scene and a clear-cut sign of how the world’s lending landscape has transformed irrevocably.
For those not familiar with Funding Circle, it serves as an online marketplace, connecting investors with small businesses in need of a loan. An online auction process sees investors select the type of business they want to lend to, bid a certain amount of money and state the interest rate they would like to earn. Loan repayments from businesses are then collected by Funding Circle and distributed to investors, with Funding Circle making its money by charging the lenders and borrowers a small percentage of the total loan amount. The best part? This all happens in a matter of days. In other words, faster than a bank will do it.
This latest investment round for Funding Circle takes the total amount it has raised in equity capital to $273m (£182m), all from investors that have also backed the likes of Facebook, Twitter, Airbnb and Alibaba. How’s that for esteemed company?
And if that’s not enough, Funding Circle has also bolstered its leadership team with the appointments of David Yu, former CEO and CTO of Betfair, as global chief product officer and Chitra Nayak, former COO of Platform at Salesforce as US chief operating officer.
“We believe Funding Circle is the future of small business finance globally, and it’s a vision we share with some of the largest and most respected investors in the world,” said Samir Desai, CEO and co-founder of Funding Circle.
“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 question on everyone’s lip now: will Funding Circle become the UK’s latest $1bn business, following in the footsteps of Farfetch, TransferWise and Shazam? We wouldn’t bet against it.