Online Lenders Kabbage and Funding Circle Head to Europe

 Credit / Attribution - Print © Can Stock Photo Inc. / sborisovFunding Circle and Kabbage, both alternative lenders for small businesses, are heading across the pond.

Marketplace lender Funding Circle, which began in the U.K. in 2010 before moving to the U.S. in 2013, is expanding to continental Europe with the acquisition of Berlin-based Zencap, announced Oct. 20. This fits Funding Circle’s growth strategy — its move to the U.S. was an acquisition as well. In October of 2013 new funding allowed Funding Circle to acquire San Francisco-based Endurance Lending Network, whose co-founder Sam Hodges stayed on as CEO of the U.S. operation.

Continental Europe is a massive opportunity for marketplace lenders, and still largely underserved, Hodges told Bank Innovation. “Funding Circle’s technology and credit data will give a scale advantage to the European operation,” Hodges said. Taken as a whole, Europe represents a larger opportunity than the U.S. and U.K. combined, according to Hodges, but Funding Circle will initially operate in Zencap’s footprint of Germany, Spain, and the Netherlands.

Kabbage, meanwhile, announced on Oct. 21 that it had partnered with ING in Spain to serve small businesses with loans of up to €100,000. Just one week earlier, Kabbage announced the raise of $135 million at a $1 billion valuation. Its credit facility grew from $235 million to $900 million with the funding, led by ING, Santander InnoVentures, and ScotiaBank. If the Spanish pilot turns out as expected, Kabbage will move to other international markets, according to ING CEO Ralph Hammers.

Funding Circle has originated around $1.5 billion in loans, while Zencap has originated around $40 million. Zencap has 70 employees.

Kabbage CEO Rob Frohwein told TechCrunch the lender sources some $7 million a day.

Learn more about the latest in lending at Bank Innovation Israel, Nov. 10-11 in Tel Aviv. Request your invitation here.

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