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Fundingcircle Raises £2.5 Million Funding From Index Ventures

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British Fundingcircle.com has announced the closing of £2.5m of Series A financing from Index Ventures, co-investors and existing shareholders.

Since Funding Circle launched in August 2010, more than 4,000 businesses and savers have signed up, with 11.5 million GBP offered to businesses to date. Currently, lenders have collectively earned 120,000 GBP in interest with average yields of 8.3% with access to their funds through Funding Circle’s secondary market. fee from lenders and 2% fee from borrowers. Yield is calculated before fees, tax deductions and bad debt. To date, no businesses have defaulted on loans and therefore no bad debt has been incurred by any lender.

Samir Desai, co-founder of Funding Circle, said: “We are delighted to welcome such a prominent and well respected investor as Index Ventures as a shareholder in Funding Circle.”

Peer-to-Peer Equity: Crowdcube

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With the introduction of p2p lending some lenders wrote that the concept enabled everyone to feel as banker.

Now, newly launched Crowdcube.com enables any UK resident to feel as venture capitalist for a financial commitment as low as 10 GBP. Investors can browse pitches which usually include business plans and financial projections and sometimes even video pitches.

In return for the investment, investors get shares of the company. For example entrepreneur Daniel Vinson wants to raise 50,000 GBP. He is offering 49% equity in return, meaning investors roughly get 1% shares in return for 1,000 GBP investment. So far 11 investors have pledged 1,200 GBP.

There are 6 entrepreneurs pitching for funding at the moment. Interested investors can answer questions and for some businesses a lively discussion has started.

Crowdcube, founded by Darren Westlake and Luke Lang, launched 2 weeks ago. Crowdcube’s business model is to offer a platform to match entrepreneurs with peer investors and business angels. Costs for entrepreneurs are a success fee of 5% of the funding amount plus legal fees of 1750 GBP for completion of each company investment.  For a limited period they are waiving the 250 GBP listing fee to register as an entrepreneur and add a pitch.

Investors are charged a processing fee by Crowdcube for each transaction equal to the sum of 0.20 GBP plus 4% of the value of the transaction. Continue reading →

New VC round for Smava

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German p2p lending Smava completed another financing round. The new capital raised comes from the VCs that already invested in earlier rounds.

Earlybird increased their investment from previously 39% of shares to now 56% and Neuhaus Partners increased their part from 12.5% of share to now 17%.

The original founders Alexander Artopé, Sebastian Rieschel and Eckart Vierkant now combined hold less than 8%.

Speculation is that the high customer acquisition costs (especially for borrowers) led to the need for another financing round. Estimates put the cost for borrower acquisition as high as 500 Euro. In certain customer acquisition partnerships, Smava pays the partner up to 1.3% of the loan amount (equals 650 Euro for a borrower with the maximum loan amount of 50,000 Euro). While Smava is growing, the growth rate has in the past months stopped to accelerate and is about 2 million Euro funded loan volume per month (chart).

P2P Lending Service Lending Club Raises 24.5 Million US$ Series C Round

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P2P Lending service Lendingclub.com successfully raised further capital. The 24.5 million US$ series C round was led by Foundation Capital and joined by existing investors including Morgenthaler Ventures, Norwest Venture Partners and Canaan Partners.

Lending Club so far raised 52.7 million US$ in total funding.

Lending Club, on which lenders have funded loans to private borrowers for a total volume of over 103 million US$ since inception, is growing fast. Currently about 10,000 loans are originated per month equaling a loan volume of about 8 to 9 million US$ per month.
The monthly volume  is a multiple of that of Prosper Marketplace, the main competitor in the US peer-to-peer lending market.

Renaud Laplanche, CEO of Lending Club says  “This latest investment gives us considerable resources to further develop our platform, launch new products, offer better service to our existing customers and expand our reach to a whole new set of customers.”.

(Sources: press release via TechCrunch, Lending Club Statistics, own data)