By Dow Jones Business News, April 23, 2015, 06:57:00 PM EDT
By Lora Kolodny and Anna Irrera
LONDON–Venture investors injected $ 150 million into online lender Funding Circle Ltd. in a financing round which is said to value the company at more than $ 1 billion.
DST Global led the Series E round joined by Baillie Gifford, a fund managed by BlackRock Inc., Sands Capital Ventures and Temasek Holdings. The deal brings Funding Circle’s total capital raised to $ 273 million.
Based in London with a strong U.S. presence, Funding Circle’s online marketplace provides loans to small and midsize businesses that wouldn’t typically be able to obtain them–or at least not quickly–from traditional banks.
Capital for the loans comes from high-net-worth individuals and from institutions which want to fund and collect interest on loans without having to spend the hours or money to vet and manage loans for smaller businesses.
Executives say Funding Circle will probably lend at least $ 1 billion to small and midsize businesses over the next year in the U.S. and the U.K. alone.
According to Funding Circle co-founder and U.S. Managing Director Sam Hodges, the company plans to use its newly raised capital for hiring and product development, and to add offices in the U.S. and internationally in the next 18 months.
He declined to confirm the valuation, which was disclosed by a person familiar with the company.
The company currently does business in two currencies, U.K. pounds and U.S. dollars, and in the U.S. and U.K. It is evaluating new markets and new currencies to add to its platform, especially in Western Europe and parts of Asia, specifically Pacific Rim nations and India, Mr. Hodges said.
Funding Circle has already originated over $ 1 billion in loans to small businesses. A typical borrower via Funding Circle runs a “well-established small businesses that is north of seven years old with revenue, cash flow and between 10 and 20 employees,” Mr. Hodges said.
The growth and acceptance of peer-to-peer lending by investors and borrowers alike has fueled many venture capital deals for companies in the industry recently.
Other competitors to Funding Circle globally include OnDeck Capital Inc.; Prosper; Kabbage; and, in China, Jimubox.
Jimubox on Thursday announced it received $ 84 million in Series C venture funding. Mobile phone maker Xiaomi Inc. was among its investors.
A strong IPO performance by other online lenders has stoked venture investors’ appetite for deals in this industry, too. For example, LendingClub Corp., which focuses on personal rather than business loans, is currently trading above $ 18 a share after debuting at $ 15 on the New York Stock Exchange in December 2014.
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