Funding Circle Raises $100M In VC Despite Brexit

The biggest online lender for small businesses in the U.K., Funding Circle, announced that it secured $100 million in equity funding.

The news comes at a time when many British peer-to-peer lenders have been concerned about the future of their businesses since the U.K.’s decision to exit the European Union was made last year.

Despite the looming uncertainty of Brexit, the Funding Circle funding serves as a ray of light for the industry.

In a statement on Thursday (Jan. 12), the company said California-based venture capital firm Accel Partners led the funding round, with participation from Index Ventures, Union Square Ventures, and Temasek Holdings.

“It’s probably a combination of things,” Cormac Leech, a principal at private-equity firm Victory Park Capital Advisors, told Bloomberg. “Growth has been stronger than expected, investors are hunting for yield, and there’s a bounce-back from earlier in the year.”

Many in the industry believe that the Bank of England’s decision to lower interest rates last August helped to urge retail investors to seek out profits from peer-to-peer loans. Others believe that investors stopped making moves in the months leading up to the Brexit vote last year, but have since ramped up investments because the British economy is doing much better than economists expected.

Either way, Bloomberg noted that Funding Circle’s lending has grown by one-third since the referendum last June.

Earlier this month, the online lending platform received an investment of £40 million from British Business Bank, the state-owned bank, to be used solely for lending to SMBs.

“Peer-to-peer lending is becoming an increasingly important source of finance for smaller businesses, with AltFi data showing an 85 percent increase in lending via the sector from 2014 to 2015,” Catherine Lewis La Torre, CEO of British Business Bank Investments, said in an email statement to Business Insider. “A key part of our remit is to support the development and growth of such finance markets, while earning an attractive, commercial return for the taxpayer. We look forward to seeing our latest commitment to Funding Circle enabling the growth and success of many more businesses across the U.K.”