For those who don’t know, Funding Circle is a UK based website that is an online portal between lenders and savers.
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Lenders go on the website and browse through multiple Funding Circle approved businesses from an online list. If the lender is interested they proceed to make a bid of the size of their loan in addition to their interest rate.
In order to prevent problematic issues from arising, Funding Circle staff do different background checks on these small businesses. They also do credit checks, similar to the method used by banking institutions, to prevent lenders from losing money. In addition, they recommend that lenders loan money to numerous small businesses rather than just a single one.
The company has announced that it has received a generous investment of $37 million by a venture capital group called Accel Partners. This is a sign of the prospects of the startup that have already experience success.
Funding Circle raised an additional total of $21 million from other investors such as Union Square Investors, who are also funders of a similar website called Kickstarter, Index Ventures and Ribbit Capital. This has left the company with a grand total of $58 million in funding.
Going to San Francisco
All this funding has enabled the Funding Circle to merge with another similar company called Endurance Lending Network that has served a similar market in the United States. The company will be rebranded as Funding Circle USA and will be based in San Francisco, California.
This is the first time the company has entered the US market and with the knowledge of the newly acquired company, Funding Circle’s CEO believes that there will be huge growth.
He says, “Like Funding Circle, Endurance Lending Network was created to help the millions of small businesses being starved of the money they need to grow and we think it’s three to four times as much in the U.S”, he continues, “Like Funding Circle, Endurance Lending Network was created to help the millions of small businesses being starved of the money they need to grow. As small business owners ourselves, we know how acute the need is for a viable alternative to bank loans.”
Although Funding Circle is providing the platform and structure of the company, the regulations will have to be different. For example, lending will only be an option for investors who have been previously accredited and those who are not will not be able to as of yet.
While this does, somewhat, narrow down the market there is still an abundance of accredited investors and reports indicate that there are approximately 10 million accredited investors in the USA.
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