Funding Circle, the world’s leading online marketplace for business lending, today announces it has raised $150 million (~£100 million) in equity capital, in a round led by DST Global, with participation from Baillie Gifford, a fund managed by BlackRock, Sands Capital Ventures and Temasek. Goldman Sachs acted as exclusive placement agent for the oversubscribed round. The new funding will be used to consolidate the UK and US markets and fuel further growth.
The investment comes as lending to small businesses via the marketplace surges past the $1 billion mark globally, following sustained growth in both the UK and US markets. Investors at Funding Circle are on track to lend $1 billion over the next year, showcasing the huge potential of marketplace lending on the global economy.
Launched in 2010, Funding Circle is sparking a revolution in the way small businesses access finance, disrupting the traditional model of banking. Through the Funding Circle marketplace in the US, qualified individual investors and institutions can invest in successful small businesses looking for growth capital. In the UK, the Funding Circle marketplace is currently the fifth largest net lender to small businesses*, while in the US, lending in the first quarter of this year was seven times larger than lending in the first quarter of 2014.
Samir Desai, CEO and co-founder of Funding Circle said: “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. 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.”
Sam Hodges, US Managing Director and co-founder said: “Today’s capital injection will allow us to accelerate efforts in the United States and help us better serve the 28 million Main Street small businesses many banks have left behind. This year, we’ll continue to invest heavily in technology and talent as we build a transparent, sustainable and diverse marketplace that helps American small businesses get access to the $40 billion per month they need to expand and grow.”
“We are delighted to support Samir and the team at Funding Circle as they continue to grow and deliver value to both sides of their marketplace,” said Yuri Milner, founder of DST Global.
In addition, Funding Circle has bolstered its leadership team with the appointments of Chitra Nayak as US Chief Operating Officer and David Yu as Global Chief Product Officer.
Nayak, the former COO of Platform at Salesforce, has extensive experience building global businesses. She grew Salesforce’s pipeline from $350 million to $2 billion during her time leading the company’s global sales development. The former CEO and CTO of Betfair, Yu has extensive experience driving forward successful technology companies. As Betfair’s CEO, he grew revenues to over $600 million by emphasizing the development of new products and spearheading the company’s geographic expansion.
In total, Funding Circle has now raised $273 million in equity funding, and existing investors include Index Ventures, Accel Partners, Union Square Ventures and Ribbit Capital. In July last year, Funding Circle announced its Series D round for $65 million, and welcomed Robert K. Steel, CEO of Perella Weinberg Partners, to the board.
Michael Rubin, Managing Partner of Sands Capital Ventures said: “We look forward to supporting Funding Circle as it continues to transform small business lending with efficiency, transparency and industry leading customer service.”
By bringing together industry leading risk management and cutting edge technology, Funding Circle’s proven marketplace model enables businesses to access finance in days compared to months with a bank. Independent research has found that three in four businesses would come to Funding Circle first in the future, ahead of a bank.**
*Based on Q4 net lending figures included in February’s Funding for Lending data, and Q4 Funding Circle lending (£98.5m) minus repayments (£26.7m).
** Nesta, Banking on Each Other, 2013 – Funding Circle UK data only.