Nov 16, 2017 Arttu Närhi
Chances are, if you’re in a small business looking for funding, you have heard of Funding Circle. With a broad background in their network of investors, Funding Circle caters to a diverse bunch of businesses too. In fact, when asked which sectors send in the most loan applications, Samir simply says all of them.
The greatest advantage for Funding Circle’s applicants is how they take advantage of technology to do risk model assessments. They can now submit an application and have an initial decision in minutes, as opposed to months with traditional channels. I wanted to find out more about the origins of this amazing idea, so I hit up Samir and Neil to hear the story first hand.
Samir Desai, thank you for letting me pick your brain! You are in a relatively new industry that has emerged as technology has become available. What made you take the plunge back in 2010?
We looked at the UK market first and found that approximately 90% of all small business lending was conducted by the 5 major high street banks, but lending to small businesses had declined significantly since 2008. We felt there was a better way to connect businesses directly with a diverse range of investors and secure a better deal for both sides.
What was the hardest part of getting started and how did you overcome the challenge?
Raising awareness and getting people to forgo a cultural norm of thinking ‘bank first’ was always the main challenge. However, this is changing and small businesses now tell us they prefer this approach to access finance. Independent research has found 94% of our borrowers would come back to us first in the future.
You founded Funding Circle in the aftermath of the last global financial crisis. You succeeded and now, even Brexit is not hurting you. Is there any future scenario you fear?
We’re frequently asked what would happen to investor returns in a future economic downturn. We run regular stress tests which are independently verified and the results show that investor returns will continue to remain attractive in a recessionary scenario.
What are the next milestones for you?
Right now, we’re focused on becoming the first choice for small businesses across the world. It’s clear that a problem still exists in the small business lending ecosystem globally, so the opportunity for us to change the game is huge. In the future, our aim is to facilitate $100 billion per year to hundreds of thousands of businesses globally, creating up to three million new jobs.
Neil Rimer, you are a partner at Index Ventures and board member of Funding Circle. Samir has had a magnificent journey to becoming the world’s largest small business lending platform. Any thoughts on the quest so far?
I met Samir with his co-founders James and Andrew in 2011, when they presented their original vision for their company. My partners and I enthusiastically decided to back the trio and made the first significant, institutional investment in Funding Circle. In only five years, they became one of the most successful global fintech businesses. I have thoroughly enjoyed serving on the board, supporting Samir and his team. He is an exceptional entrepreneur and it gives me great pleasure to be the one interviewing him at his first Slush event.
Getting back to you Samir. This truly will be your first time at Slush. What are you looking forward to the most?
It’s always exciting being in an environment that brings together entrepreneurs who have the potential to positively impact our world. I’m looking forward to sharing the story of Funding Circle’s growth and how we’ve gone from supporting millions of dollars of lending to billions of dollars.
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