A London fintech startup that offers small businesses fast, online credit has raised £46 million in debt and equity.
iwoca, which employs 120 people in the capital, has raised £21 million of investment from Prime Ventures, as well as existing investors Acton Capital Partners, CommerzVentures, Global Founders Capital, and Redline Capital. The startup, founded in 2011, has also secured a £25 million debt facility with challenger bank Shawbrook.
CEO and cofounder Christoph Rieche told Business Insider: “We’re financing it off our own balance sheet and therefore having debt is quite vital for us to grow our book.”
iwoca lets small businesses get at online credit facility — a bit like a business overdraft. It has lent over £150 million to more than 7,000 businesses since starting up.
Rieche, a former Goldman Sachs banker, says: “The principle is to understand our customers as fast and efficiently as possible. To be able to make a good and fair credit decision but also at a cost point that enables us to lend to businesses that are significantly smaller than the average bank would lend to.”
iwoca’s typical credit facility size is £15,000, Rieche says, compared to around £90,000 at the banks. It takes just a few hours for a business to get a decision from the company.
He says: “We process their cash flow information automatically through integrations that we have with the banks and bank statements they share with us. We have integrations with accountancy platforms, which give us more information about the trading. Information from Companies House, which is also public, and we integrate with payment processing platforms.”
Sake Bosch, a managing partner at Prime Ventures who is joining iwoca’s board as part of the investment, says in an emailed statement:
“iwoca has developed a remarkably sophisticated approach to lending. Its technology platform and strong European reach is redefining small business finance. We invest in growing firms with the objective of making leaders out of them. iwoca has tremendous potential to overtake traditional banking models and scale up to become the European market leader.”
iwoca operates across Germany, Spain, and Poland, as well as the UK, and Reiche says part of the money will go towards growing in these markets.
Does that mean relocating jobs to Europe post-Brexit? Sort of — Rieche sees jobs moving, but not because of Brexit.
“It’s a matter of size that we reach,” he says. “Quite a bit of the funds will go into expanding faster in the other regions we have been in for some time. As these teams grow, it makes sense to have them locally. Once you have 50 to 100 people it makes sense to have them on the ground.”
iwoca does not benefit from passporting rights, which Britain stands to lose if there is a so-called “hard Brexit”, and so is under no pressure to set up a backstop office overseas.
As well as growing its existing market, iwoca is also targeting new European markets. Rieche says: “We are growth minded. We haven’t reached the end of our expansion plans. You can expect further markets as well. It’s going to be within Europe. I’m quite confident we will move beyond Europe at some point but for the time being our objective is to become dominant in Europe.”
The funding round takes iwoca’s total equity investment to £38 million, following a £12.8 million investment from 2 German investors, including the venture capital arm of bank Commerzbank, last July.
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