Chancellor hails 'vote of confidence' in UK economy as Funding Circle raises £82 million
The company announced its sixth funding round on Thursday, which takes its total equity funding to over $370 million (£300 million).
The Chancellor said in a statement: "Funding Circle has become a real success story for British Fintech and news that it has attracted £80 million of investment is further evidence of the growing importance of this industry.
"This is another vote of confidence in a UK firm that plays an important role in our economy - helping businesses to grow and create jobs."
It's the second time the Chancellor has praised a funding announcement in the fintech - financial technology - sector. Hammond said online wealth manager Nutmeg's £30 million funding round in November "confirms the UK's position as the global FinTech capital."
Funding Circle, founded in 2010, is a peer-to-peer lending platform that connects small businesses looking to borrow money with investors willing to lend to them at attractive rates. Over £2.5 billion has be lent to over 25,000 businesses across Funding Circle's platform.
The latest funding round was led by existing investor Accel Partners, with participation from other existing backers including Baillie Gifford, DST Global, Index Ventures, Rocket Internet, Temasek, and Union Square Ventures.
UK MD and co-founder James Meekings told Business Insider that the money will go towards building out Funding Circle's technology platform and hiring more staff. The company employs 600 people globally, 330 of them in the UK.
Meekings said: "We need to invest in our technology infrastructure and build something that can handle millions of transactions every day and deliver best in class experience for both investors and borrowers."
Funding Circle also operates in the US and Europe, and Meekings confirmed that the businesses there are not yet profitable, adding: "Ultimately profitability is a choice about how we choose to invest in the business. By raising this extra funding we are going to invest more money into our technology and as a result, during that period of investment profitability will be pushed off further into the future."
He added: "We are focused on building out technology and helping more customers, helping more small businesses, and helping create more jobs rather than delivering more profit at the moment."
Funding Circle's overseas operations have hit some snags over the past year. US loan volume was dialled down after performance began to err and investor Victory Park Capital recently sold its portfolio of US Funding Circle loans citing too much volatility. In Europe, the co-founder of the business Funding Circle acquired to enter Germany, Spain, and the Netherlands left, allegedly after a disagreement with management.
Meekings put all this down to natural teething problems in new markets. He said: "Whenever a company goes to other countries there are things they know and things they don't know. We're very happy with how things are going in both the US and in Europe.
"Clearly in any early stage business things can happen and you learn. That was the case in the UK business - if you look at 2011, returns were lower than expectations and as we got more data we were able to deliver higher returns at a more stable level. That will be the case in the US and Europe on a go-forward basis."
Meekings said Funding Circle has "no immediate plans to IPO," adding: "We're focused on delivering the business, on the £2.5 billion of lending we're doing globally, the 25,000 small businesses, the 60,000 investors, and the tens of thousands of jobs that come from what we do. We think if we focus on that, then the IPO becomes a byproduct of what we do but there are no immediate plans to do that at the moment."