Funding Circle

Funding Circle is a peer-to-peer lending marketplace that allows investors to lend money directly to small and medium-sized businesses.[2] Funding Circle was the first website to use the process of peer-to-peer lending for business funding in the UK,[3] and now operates in the UK, US, Germany and the Netherlands. As of May 2019, Funding Circle has facilitated over £7 billion in loans to small and medium-sized firms.[4] The company is listed on the London Stock Exchange.

Funding Circle Limited
Traded asLSE: FCH
IndustryFinancial technology, Peer-to-peer lending
FoundedAugust 2010
FounderSamir Desai
James Meekings
Andrew Mullinger
HeadquartersQueen Victoria Street, London, EC4
Area served
UK, United States, Germany, Netherlands
Key people
Samir Desai, CEO
ProductsBusiness loan
Commercial and industrial loan
Revenue£141.9 million (2018)[1]
£(51.6) million (2018)[1]
£(49.3) million (2018)[1]


Funding Circle was launched in the UK in August 2010.[2] It received £2.5 million in funding from Index Ventures in April 2011.[5] In March 2012 Funding Circle closed a series B round of £10 million led by Index Ventures and Union Square Ventures.[6] By September 2013 Funding Circle had tripled in size and announced it had facilitated over £150 million of loans since it launched.[7] In October 2013 Funding Circle announced that it had raised a $37 million investment and would merge with Endurance Lending Network to serve the US market. Accel Partners led the round of funding along with Ribbit Capital, Union Square Ventures and Index Ventures bringing the company’s total funding to $58 million.[8][9] Since launching more than 81,000 people have registered at Funding Circle. Investors now include local councils, universities and the British government.[10]

In April 2015 Funding Circle raised $150M in new venture funding led by DST Global, a fund managed by BlackRock, Sands Capital Ventures and Temasek Holdings. Valuing the company at over $1 billion, the round brought the total amount raised to $272M to date.[11] In October 2015 Funding Circle expanded operations to Germany and the Netherlands by acquiring Zencap.[12]

In September 2018, global asset management firm Alcentra agreed to purchase up to $1 billion worth of business loans from the Funding Circle US platform, on behalf of its clients. The loans would be financed by Credit Suisse over a period of three years and are expected to be provided to around 8,000 U.S. businesses.[13]

The company was listed on the London Stock Exchange in September 2018 with an initial valuation of £1.5 billion. Shares were priced at 440 pence each.[14] The company raised around £300 million in the initial public offering ('IPO'). The first day of trading ended with shares closing slightly down. The IPO accounted for 29.3% of the company shares.[15] Danish billionaire and owner of Bestseller, Anders Povlsen anchored the float by agreeing to purchase a minimum of 10% of the shares.[16] Despite Funding Circle’s status as a ‘unicorn’ in the startup sphere, the discounted price used in the IPO was reported on as a “reality check” for the fintech company. [17]

Business model

Funding Circle is an online marketplace that enables investors to offer money direct to small companies.[18] Businesses can borrow up to £1 million in the UK, up to $500,000 in the US, and up to €250,000 in Germany and the Netherlands for up to 60 months.[19][20] Initially the loan rate was set through an auction process, but since September 2015, Funding Circle determines the loan rate offered based on risk category and loan term.[21]

Whole or fractional loans are purchased by individual and institutional investors from their respective countries. However, only accredited individuals and institutional investors are allowed to participate on the US marketplace.[22] In addition, loans are purchased by the Funding Circle SME Fund, an investment trust created in November 2015 that trades on the London Stock Exchange.[23] Funding Circle allows accredited investors in the US to invest using a tax-advantaged individual retirement account and they allow UK investors to use an innovative finance individual savings account.[24] Investors make money from the interest charged on purchased loans while Funding Circle makes money by charging borrowers an origination fee on each funded loan and by charging investors an annual servicing fee on the unpaid principal balance of outstanding loans.[22]

Within the UK, until September 2017, Funding Circle permitted lenders to either use an auto-bidding feature or to manually choose who to lend money to. In September 2017, Funding Circle withdrew the manual choice functionality.[25]


Unlike a savings account, investments with Funding Circle are not guaranteed and may lose money if the underlying loan goes into default. Funding Circle assesses the credit of every business and those that qualify are given a risk band to guide investors on their relative strength.[26] For loans in the UK, the total estimated lifetime bad debt across all risk bands was 2.5-3.5% as of June 2018.[4]


As of June 2018 Funding Circle advertise an average annual return of 6-7% after fees and bad debt for loans originated in the UK for their "Balanced" portfolio, and an average annual return of 5-5.5% after fees and bad debt for loans originated in the UK for their "Conservative" portfolio.[27]


  1. "Annual Results 2018" (PDF). Funding Circle. Retrieved 17 March 2019.
  2. Dan Hyde (18 September 2010). "How savers get 9% rates and easy access". This is Money. Retrieved 2011-03-11.
  3. Patrick Collinson (18 September 2010). "Peer-to-peer lending and saving: Making everyone happy". The Guardian. Retrieved 2011-03-11.
  4. "Our statistics | Funding Circle". Retrieved 8 May 2018.
  5. Richard Tyler (12 April 2011). "Funding Circle expands its small business reach". The Telegraph. Retrieved 2011-03-11.
  6. "Funding Circle Closes £10 million Series B Round". 2 April 2012.
  7. "Funding Circle pass £150million in loans". P2P Money. 23 September 2013. Retrieved 2013-11-04.
  8. Rebecca Grant (23 October 2013). "UK-based Funding Circle raises $37M to fund American small businesses". Venture Beat. Retrieved 2013-11-04.
  9. Kylie MacLellan (24 October 2013). "UK peer-to-peer lender Funding Circle expands with U.S. deal". Reuters. Retrieved 2013-11-04.
  10. "About Us | Funding Circle". Retrieved 2018-08-08.
  11. Ingrid Lunden (22 April 2015). "P2P Lending Site Funding Circle Raises $150M Led By DST At A $1B+ Valuation". Tech Crunch. Retrieved 2016-04-27.
  12. JD Alois (20 October 2015). "Funding Circle Goes Global with Acquisition of Zencap". Crowdfund Insider. Retrieved 2016-04-27.
  13. "Bloomberg - Are you a robot?". Retrieved 2018-10-08.
  14. Archer, Joseph (2018-09-28). "Funding Circle joins London Stock Exchange with valuation of £1.5bn". The Telegraph. ISSN 0307-1235. Retrieved 2018-10-08.
  15. "P2P lender Funding Circle closes flat in London after pricing IPO at the lower end of range and raising £300M". TechCrunch. Retrieved 2018-10-08.
  16. "Danish billionaire Povlsen to anchor £2bn Funding Circle float". Sky News. Retrieved 2018-10-08.
  17. "Bloomberg - Are you a robot?". Retrieved 2018-10-08.
  18. "Barclays criticises small business lending targets". BBC News. 13 August 2010. Retrieved 2011-03-11.
  19. "Loan Types and Criteria". Funding Circle. Retrieved 2016-04-28.
  20. "Small Business Loans". Funding Circle. Retrieved 2016-04-28.
  21. Jaime Toplin (9 September 2015). "Why Funding Circle is shifting its lending model". Business Insider. Retrieved 2016-04-28.
  22. "Frequently Asked Questions". Funding Circle. Retrieved 2016-04-28.
  23. "Funding Circle launches first P2P investment trust". Financial Times. 30 November 2015. Retrieved 2016-04-28.
  24. "Funding Circle ISA Survey Results". Funding Circle. Retrieved 2016-04-28.
  25. "Funding Circle simplifies its investment protocol".
  26. "Funding Circle Investor Guide". AltFi. 4 September 2015. Retrieved 2016-04-28.
  27. "Investor Returns". Funding Circle. Retrieved 2018-07-03.
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