Funding Circle buys LeapPay to get increased loan approval times – TechCrunch
Fundraising circle, the UK-based peer-to-peer lending platform that Recently raised $ 65 million for a platform that bypasses banks and allows small businesses to connect with individuals for financing, uses some of that financing. He acquired a semi-stealthy startup called LeapPay to speed up the turnaround time it offers on loans, and also to continue to expand its business in the United States
Sam Hodges, co-founder of Funding Circle and U.S. chief executive, said financial terms of the deal were not being disclosed, but other details are. As part of the deal, Funding Circle purchases technology from LeapPay – both the underwriting technology that will help Funding Circle monitor and ultimately approve companies and potential funders; and technology that can be used to provide loans with bills as collateral.
Funding Circle will immediately use only the first part of this technology, which integrates with products such as Quickbooks, Freshbooks and Xero. This last product, intended to offer loans, will remain inactive, which can be used at some point in the future. For now, LeapPay’s technology can only be used in the United States.
But the three co-founders and only full-time employees of LeapPay, David Golden, Allan Fisch and Alex Kress – people with backgrounds in fields such as hedge funds and other financial start-up exits – are not joining Funding Circle in as part of the acquisition. Instead, they will go for new ventures that have yet to go public.
Golden, CEO of LeapPay, says the business was started but with a “long list of advisers.” They don’t disclose any names, but Golden noted that Funding Circle was among other interested and high-profile potential acquirers, and that another option the startup had considered was to raise a round of funding. In the end, selling to Funding Circle seemed like “the right option”.
In general, while LeapPay was live, it operated “under the radar,” Golden noted.
The key piece of technology at Funding Circle speaks a lot about what is most crucial to being competitive in the online lending market. While Funding Circle already has very competitive interest rates on the products it offers – 8.9% currently on a two-year loan, compared to cash advance players whose products whose APR can reach 50% – where it wants to grow now Does it offer a more varied list of loans and to close the deal on them much faster – which is all the more likely to help distinguish Funding Circle from the many other online platforms that compete for the same small business segment. They include Kabbage, Loan Club, and Fundera, among others.
Prior to the acquisition, Samir Desai, CEO of Funding Circle, told me that funding approval could take about a week. The acquisition of LeapPay could reduce that number by about 30%.
“We see a lot of borrowers looking for short term loans with different structures,” Hodges says. “We intend to offer short term and longer term loans, secured and unsecured, and more. This will see Funding Circle, which typically sees companies choosing 2.5-year repayment options, getting shorter and longer terms. There are also other areas. In the United Kingdom, Funding Circle has a commercial real estate lending business, but this is not the case in the United States. “We think there is an opportunity there,” Hodges adds.