Increasing corporate awareness and profile while also demonstrating transparency and governance, were all important factors behind the IPO of SME loans platform Funding Circle, says its CEO and co-founder Samir Desai


A milestone in Funding Circle’s evolution

The IPO of Funding Circle is a milestone in its evolution, and it is the first of Britain’s fintech “unicorns” to come to the public markets. It is a milestone for Europe’s fintech sector, demonstrating the growing maturity of ambitious companies in this emerging sector.

For its CEO and co-founder Samir Desai, Funding Circle’s IPO is also an important step in further “engendering trust” in the company’s business with investors, borrowers and regulators.

“We always said that we wanted to be a public company,” he explains. “This is a trust-based business, so being a public company fits with our values of transparency and openness.” “We have always believed Funding Circle would be well-suited to the public markets and our listing is recognition of the strength and global impact of our model.”

Samir Desai

Funding Circle
raised by Funding Circle in 2019 IPO

From small business to world’s biggest

The SME loans platform, which connects small businesses who want to borrow with investors who want to lend in the UK, USA, Germany and the Netherlands, launched in 2010 in a tiny office above a waffle shop in London. Its aim was to provide borrowers with fast, competitively priced access to finance, and investors with attractive returns. It is now the world’s largest small business loans platform.

Since then, more than 80,000 investors have lent more than £5bn to more than 50,000 businesses - including more than £1bn in the first half of 2018. Those investors range from private individuals to government-backed entities such as the British Business Bank and European Investment Fund, from banks to asset managers and insurance companies.

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The value of a greater public profile

Desai is also clear that the increased public profile from being a public business “will help to raise awareness of our brand.” The fresh capital that Funding Circle has raised will be used to ramp up its marketing activities.

Huge potential remains untapped in its existing geographic markets. “The markets we are in today cover about 34% of global GDP and include three of the top ten economies in the world, so these opportunities are still pretty big,” says Desai. Overall, its market share in the four geographies is less than 0.5 per cent and it is estimated that the addressable SME lending opportunity in these four markets comprises £470bn.

And for a company which has had international ambitions from its early stages, the IPO will also provide Funding Circle with the springboard for expansion into additional geographic markets: “we have a pretty clear idea of which ones we will enter next,” says Desai. It will remain singularly focused on small business lending; the strategy is to keep doing the same thing in more places, and at bigger scale.

Releasing value, enabling growth

Prior to its IPO, Funding Circle had already raised more than £250m over its eight year lifetime from a swathe of investors including private individuals, VC firms such as Index Ventures, and latterly from institutions such as BlackRock, Baillie Gifford, Temasek and Sands Capital.

Now, as the company continues to pursue growth and to scale at pace, its flotation means that it can now tap deeper into international pools of long-term capital from a sophisticated investor base - and now can use its stock as a currency to make acquisitions. It’s “the start of the next stage in our exciting and transformational journey,” says Desai.

Finance for Fintech

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