Online lending facility Funding Circle has secured £10 million in growth capital from Index Ventures as the business looks to capitalise on the government’s plans to lend £100 million through non-bank channels.
Established in August 2010, Funding Circle currently provides £1 million of small business loans per week by allowing individuals to lend directly to prospective companies. In George Osborne’s Budget 2012 announcement, the chancellor indicated that the government would invest £100 million in small businesses via non-traditional funding sources such as peer-to-peer lending.
The money raised through Index will be used by Funding Circle to increase its marketing presence and to drive recruitment, with its employee numbers projected to double in the next 12 months. The new fundraising takes its total amount raised to £13.2 million.
Angel investors including Jon Moulton from Better Capital and Charles Dunstone from Carphone Warehouse have also increased their investment.
During its 18 months of existence, Funding Circle has facilitated the loaning of £28 million to 670 UK businesses.
Samir Desai, co-founder of Funding Circle, comments, ‘This deal represents the next step in the growth of Funding Circle and will help us to create a lasting alternative to banks for small business loans.
‘Index has been a prominent supporter and advocate of what the business is trying to achieve, and we are delighted to continue our partnership together.’
Desai, formerly of Olivant and the Boston Consulting Group, set up Funding Circle alongside James Meekings (formerly of OC&C Strategy Consultants and Andrew Mullinger (formerly of Citigroup, Ernst & Young and Nomura).
The deal also sees Union Square Ventures join as co-investors, a move which Desai says brings a ‘wealth of expertise and experience’ following Union’s work with companies such as Twitter, Zynga and Foursquare.
Neil Rimer, co founder and partner at Index Ventures, adds, ‘Since we first invested in Funding Circle 12 months ago, we have been hugely impressed by the immediate impact the business has had, and the appetite among ordinary people to invest in the growth of UK small businesses.
‘The financial services industry has been crying out for greater competition and diversity in the small business lending market for some time and this is exactly what Funding Circle delivers.’