Everything that happened in fintech this week in the U.K. is just plain wrong.
Funding Circle raised $100 million for its peer-to-peer lending platform AND notched record lending activity in the final quarter of 2016 — AND pushed its U.K. operation into profitability.
Oh, the indignity of it. P2P lending should be in the doghouse post-Lending Club implosion.
Funding Circle didn’t get the memo. In a news release issued late Wednesday, the small business lending platform announced the mega round, led by Accel Partners. Also participating were Baillie Gifford, DST Global, Index Ventures, Ribbit Capital, Rocket Internet, Sands Capital Ventures, Temasek and Union Square Ventures.
The company practically gloats:
Globally, investors on the Funding Circle platform have lent more than $1.4 billion to small businesses in 2016, with approximately $485 million lent in Q4 alone, a record amount for any SME direct lending platform. Additionally, in Q4 Funding Circle UK recorded 90 percent year-on-year growth and reached profitability.
The joy of these accomplishments rang through the corridors of the U.K. Treasury. “This is another vote of confidence in a U.K. firm that plays an important role in our economy — helping businesses to grow and create jobs,” said Chancellor of the Exchequer Philip Hammond. Back in June, fintech watchers were already plotting where the industry would re-settle its jobs and intellectual property post-Brexit.
The robust performance is particularly stunning given challenges in P2P lending and concern about the economy in the U.K. Bloomberg writes:
Retail investors and borrowers have flocked to their platforms since the Brexit vote. The industry’s cumulative loan volume has surged by 28 percent, to 8.7 billion pounds ($10.6 billion), according to AltFi Data, a London-based research firm. Funding Circle’s lending has jumped by a third since the June 23 referendum.
Some speculated that the continued easing of monetary policy in the U.K. basically forced investors seeking higher interest rates into the arms of Funding Circle.
This new round brings total funding to $373 million.
Funding Circle didn’t announce the valuation; at its previous round it attained unicorn status. Meanwhile, its lending to small businesses through the platform has passed $3 billion globally. Harry Nelis, Partner at Accel, said: “We’ve been impressed by the Funding Circle team since our early investment in the company. It has achieved significant growth across multiple international markets by delivering an appealing lending option to SMEs and attractive risk-adjusted returns to investors on the platform. This investment makes Funding Circle the largest and best capitalized SME lending platform in the world, and we’re thrilled to continue to support its journey.”
Might that journey next include an IPO? Not at the moment. TechCrunch reports that Funding Circle CEO Samir Desai said he doesn’t have plans at the moment to do an IPO, but that it is a long-term goal.
Separately, Sweden’s mobile payments fintech iZettle raised $63 million this week at a $500 million valuation, unchanged from its previous round. The round is a mix of equity from existing investors in a Series D extension as well as debt funding from U.S.-based Victory Park Capital via its credit fund, VPC Speciality Lending PLC. In a statement, the company — a European answer to North America’s Square — said: “The funds will be used to further grow iZettle’s offering to ensure it continuously innovates and keeps supporting the needs of small businesses in Europe and Latin America.”
The company also announced that it has appointed Maria Hedengren as CFO.
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