News Briefing - Crowdfunding, SME And Alternative Finance

pied piper followed by children

1. UK – FinTech

AltFi reports:

“HM Treasury has told non-bank lenders dishing out government-backed loans that they won’t have access to cheap finance from the Bank of England, as reported by The Times. 

Following lobbying from industry figures, such as Innovate Finance, the government was consulting on whether or not it would allow incumbent banks to pass on cheap finance to accredited non-bank lenders, a move which it has now rejected. 

Charlotte Crosswell, CEO of Innovate Finance, said: “We have worked tirelessly with industry to highlight to government and regulators the unique capability of non-bank lenders to distribute loans more efficiently to small businesses, using technology to assess, match and distribute applications at high volumes and speeds.” 

“However, once accredited, non-bank lenders then have to secure wholesale funding in order to provide CBILs and BBLs loans, and this can result in challenges for the sector.” 

“As lockdown eases and we embark on a journey towards economic recovery, we urge policy makers to recognise the pivotal role they play in providing the country’s small businesses with the vital financial lifeline they need to get back on their feet.” 

Currently, the 100 per cent government-backed Bounce Back Loan Scheme has a fixed interest rate of 2.5 per cent, but some alternative lenders have struggled to amass enough capital to lend out to SMEs. 

The move means that many SMEs that had been rejected for funding by traditional banks, will have had their hopes for fresh fintech loans dashed as alternative lenders scramble to access more funding.”

2. UK – FinTech

P2P Finance News reports:

“The fintech sector would need to raise £825m to see out the Covid-19 pandemic, KPMG research has found.

The new report, entitled Fintech Focus, estimated that fintech start-ups in the UK face around £1.5bn in annual losses, with six per cent of fintechs breaking even and 84 per cent of businesses reporting increasing losses in their last financial year.

Because of these ongoing losses, and the need for regular fundraising, almost half the sector had less than 18 months of a so-called funding runway at the time the pandemic hit, KPMG said.

For all of the fintechs in the report to achieve that 18 months of runway, the sector would need to raise approximately £825m.

The pandemic will also push out the time at which fintechs might be able to break even, creating more pressure to refine business models and adjust strategies to reduce the need for more financing, KPMG said.

“Covid-19 is sharpening the minds of the entire fintech ecosystem when thinking about what makes a thriving and sustainable sector,” said Anton Ruddenklau, global co-head of KPMG Fintech.”

3. UK – FinTech

US group KuffLink’s CEO comments on the UK direct lending market:

Narinder Khattoare, CEO at Kuflink Group, a platform that connects borrowers with lenders, by providing a steady flow of accessible finance and competitive interest rates, claims that UK-based investors are returning to real estate backed peer to peer (P2P) investments.

Khattoare noted that investment inflows are coming in again, after the UK government started to ease Coronavirus-related lockdown measures.

He added that Kuflink’s experience confirms that investor confidence appears to be returning.”

 

4. UK – FinTech

 

London-based ETF Partners has closed its third Environmental Technologies Fund at £167m, to grow the most innovative companies in the UK and Europe that help deliver long-term and sustainable economic prosperity, according to AltFi.

“The announcement comes as Covid-19 has highlighted the urgent need to address one of society’s greatest challenges – climate change, solutions to which can help power a strong economic recovery.

Since its launch 14 years ago, ETF Partners has invested at the crosshairs of change, identifying and backing high-impact, high-potential companies in digitally-led sustainability.

Investing at Series A and beyond, and with the capital to support companies as they scale through multiple funding rounds, ETF Partners’ third fund has already supported companies in diverse fields such as smart mobility, ethical cybersecurity, microbiome AI and software, and energy efficient data centres.

ETF’s third fund was raised from a combination of existing and new Limited Partners, including British Patient Capital and the European Investment Fund.”

5. US – FinTech

Venture Beat reports:

“Robotic process automation (RPA) startup UiPath has announced it has closed a $225 million funding round, bringing its total raised to over $1.2 billion. While the new round is roughly half the $568 million UiPath raised last April, it catapults the New York-based company’s post-money valuation to $10.2 billion, up from $7 billion in 2019 and $3 billion in 2018.

CEO Daniel Dines says the funding will be used to scale UiPath’s platform and deepen its investments in “AI-powered innovation” as it expands its cloud software-as-a-service (SaaS) offerings. The round will also likely lay the groundwork for future strategic deals, following UiPath’s acquisition of startups StepShot and ProcessGold last October.”