Funding Circle – The Future of Business Loans?

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Funding Circle was founded in 2010 and has grown to become one of the UK’s leading peer to peer credit provider. In their mission statement, they say

“We connect creditworthy businesses looking for finance with people and organisations with money to lend. Our platform is more efficient and transparent than traditional lending, and we believe it’s a better system for everyone.”

A truly 21st-century company, here are 10 interesting facts and statistics about Funding Circle.

1) When were they founded?

Funding Circle was set up in the wake of the 2008 financial crisis. With confidence in the financial sector low, bank lending dried up. Funding circle was born, with the aim of connecting small businesses with the people willing to finance them.

2) Who founded it?

It was founded by Samir Desai, James Meekings and Andrew Mullinger. Desai has continued as the company CEO with Meekings the MD of UK operations. Mullinger took a step back from the company in 2016 but continues as an advisor to the board.

3) Is it public or private?

The company was floated in September 2018 with an initial share price of 440p, the lower end of the target range, resulting in an estimated value of £1.5b

4) How has it performed since its floatation?

Funding circles share price struggled following reports of a disappointing outlook, with Citi group changed their recommendation to sell and slashed their target price days after the IPO, seeing the price fall to 247.65p before recovering to the 325p value it stands at now.

5) What is their revenue?

Over 2018 Funding Circle saw revenue growth of 55% to over £150 million however they continue to post a loss and will have to work hard to achieve profitability with some analysts predicting losses beyond 2021. In 2018 their UK arm broke even for the first time, although the company as a whole still made significant losses due to their overseas expansion.

6) Who are their customers?

It is estimated that 40% of funding circles borrowers and lenders and repeat users whilst just 5% of businesses said they would choose Funding Circle over their existing bank. They have recently launched wide-scale advertising campaigns including TV adverts in the hope to expand their customer base and continue their growth.

7) How did they start?

Funding circle are backed by over $123m worth of equity funding. It began in 2010 when they raised $1.1 million through family and friends investing before their series A funding in April 2011 saw them raise $4.1 million. The most recent round of series D funding saw the company raise $65million in July 2014 – heavily backed by private equity firm Index Ventures.

8) Who is the average Funding Circle borrower?

According to their research, the average Funding Circle Borrower has been in business for 9 years and has an average of 5 employees. It also showed the Annual turnover to be £800,00 with an average loan value of £70,000, far below the £500,000 maximum.

9) What have they achieved so far?

Since they were founded, Funding Circle has lent to over 62,000 UK businesses, lending a total of over £4.5 billion in the process. Globally they have lent over £6.3 Billion to 88,000 businesses and continue to have $2 billion loans under management.

10) What does the future hold?

The future is unknown for Funding Circle. As they are yet to experience a full economic cycle the true impact of a potential increase in default risk surrounding a recession will be unknown. Hopefully, they continue to grow and eventually turn this growing FinTech giant into a sustainable and profitable firm.

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Overall Funding Circle has managed to make a sizeable dent and change to the UK borrowing markets. It will be interesting to see if they can continue to do so as economic conditions develop.