UK

Crowdcube Raises 1.2M from the Crowd and 3.8M from Balderton Capital

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Today British crowdinvestment platform Crowdcube started pitching the crowd to raise 1.2 million GBP. This was on the same terms as the 3.8 million GBP it raises from Balderton Capital in this series B funding. The total raised is for 25.64% equity. This puts the valuation at about 19.5 million GBP. The pitch was funded  in a record 16 minutes by 142 investors. There was a minimum investment threshold of 1,000 GBP (and a maximum of 25K GBP) in this round.

Crowdcube launched in 2011 and has raised over 30 million GBP for more than 130 start-up, early stage and growth businesses. More than half of this finance has been secured in the first half of 2014. Crowdcube also succeeded to sign up international partners and now has a presence in seven countries: Brazil, Sweden, Dubai, Poland, Italy, Spain and New Zealand. I feel that Crowdcube has done tremendously well in terms of product development and building its market position.

Darren Westlake, CEO of Crowdcube commented: ‘We’re delighted to secure growth finance from such a renowned VC who will undoubtedly add tremendous value both strategically and operationally. We’ve built a pioneering and award-winning service over the last few years. This investment, alongside the crowd, puts us in an even stronger position to provide essential growth finance for businesses and inspire a new generation of investors.’

This round follows earlier rounds, where Crowdcube raised 320K GBP in Dec. 2011 (I invested a small amount during that round) and 1.5M GBP last year prompting Techcrunch to rightly state ‘Let no one accuse Crowdcube of not eating its own dog food‘. However I would expect a crowdinvestment platform to be a stellar role model in communication with its own investors and I feel there is lots of room for improvement there (especially when compared to some other equity crowdfunding pitches I invested in) as frequence and content of information provided has been sparse and I found the answers to my direct email queries to Crowdcube directors unsatisfying.

Funding Circle Raises 65M US$ Series D

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British p2p lending service Funding Circle raised 65 million US$ series D in a round led by Index Ventures with participation from existing investors, Accel Partners, Union Square Ventures and Ribbit Capital. The new funding will be used to continue to fuel the company’s rapid global growth, expand product ranges and explore new international markets.

Today’s news follows Funding Circle’s record growth in both the US and UK markets over the past twelve months. The p2p lending marketplace is on track to lend 600 million US$ in 2014.

Samir Desai, CEO and co-founder of Funding Circle said: “We are thrilled to welcome Bob to our board. His expertise and experience is unparalleled. This latest round of funding will fuel our global ambitions and power the next phase of our evolution – catering for the increase in demand we expect to see over the next 12 months. Our vision is to build a better financial world, helping more small businesses access finance and offering attractive returns to investors.”

This news comes less than a year after the previous 37 million US$ round. In total, Funding Circle has now raised $123 million in equity funding.

(Source: press release)

International P2P Lending Services – Loan Volumes June 2014

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June was another strong month for p2p lending services. Especially Prosper, Assetz Capital, Folk2Folk and Wellesley did grow their volume substantially. My estimate for the Lending Club number for June may be too high (I took the known figure of 1,006 million US$ loans issued in Q2 and subtracted my approximated numbers for April and May. But these April and May approximations may have been too low).  I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.

Table: P2P Lending Volumes in June 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

Main UK P2P Lending Services Agree on Standard for Calculating Defaults

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A long time downside of p2p lending was that each company used its own definition for defaults making it hard to impossible for all but experts to compare figures for different p2p lending companies. The Peer-to-Peer Finance Association (P2PFA), a trade organisation of British p2p lending companies, now addressed this issue with a new standard: ‘In future, all P2PFA members will calculate defaults on their loans in a standard way, helping consumers compare between platforms and to strengthen standards of industry disclosure. The new default rate calculation is currently being implemented and will be published on each individual P2PFA member’s website.’

P2PFA definitions of Non-Performing Loans and Defaults:

Definition of Non-Performing Loan:
A loan should be considered to be a ’Non-Performing Loan’, ‘Impaired’ or in ‘Arrears’, where the relevant borrower of the loan is:
(a) more than 45 days overdue in an interest payment; or
(b) more than 45 days
overdue with a principal repayment; or
(c) legal action for enforcement of the loan has commenced; or
(d) the loan is being or has been renegotiated with a borrower, or
(e) the loan has not otherwise been in full compliance.
The amount of arrears is the amount overdue for payment in a) and b) above. Continue reading →

Zopa Changes Matching Algorithm

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Zopa has announced changes to the sequence in which investor funds are matched in lending.

Over the next few weeks we will be making a number of changes we believe that will improve the overall lending experience.

Phase 1 – Maximum exposure change

Starting this week, we will be adjusting the maximum exposure for lenders. This will mean that the maximum you lend to any individual borrower will rise from 0.5% to 2% of your total funds. This means that you will lend in £10 chunks when lending up to £1000, £20 chunks when lending above £1000, £40 chunks above £2000 etc. This change will enable us to allocate more of a lender’s money to each loan and allow funds to be lent out more quickly. From a risk point of view, 2% provides a good level of initial diversification and over the course of time it will steadily increase so that lenders will have hundreds or even thousands of individual loans.

Phase 2 – First in first out lending (FIFO)

The second update which will also take place in the coming weeks will see us prioritise repayment money to allow existing funds to be matched more efficiently. We are calling this “First In First Out” (FIFO) and will separate out new funds from repayment funds, with repayments being matched first. New funds, or manual top ups are then placed in a FIFO queue and then dropped into the matching engine in a controlled way. This prevents spikes in new funding from slowing down lending of repayment money and allows us to give an accurate prediction of when new funds will be matched. It also allows us to lend as much repayment money on offer before allocating new funds for loans, therefore working your existing money harder.

Phase 3 – End of day matching

In the following weeks we will begin matching loans in one process at the end of each day. By allowing loans to be accumulated over the course of the day and including rapid returns, we can optimise the matching process to make it even more efficient. This will mean that all our lenders will receive a more consistent blended rate, regardless of lending size in any given day.

At Zopa our goal is to provide the best rates to our lenders and borrowers and ensure that we are as efficient as we can be in our lending. We believe that lenders will see an immediate effect on their money being matched. Meaning increased efficiency and more consistent rates from the changes detailed above.

A discussion around this change can be found in this thread.

Zopa is also changing the layout of the site. One change is that the visibility of the link to the Zopa community features, especially the discussion forum is reduced. Continue reading →

International P2P Lending Services – Loan Volumes May 2014

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Developments in May were mixed when compared to p2p lending volumes in April. I added one new service to the table. I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.

Table: P2P Lending Volumes in May 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.