$20m Raise for SME Lender Iwoca

On a day that has seen the equity sector of the alternative finance attract £16m, the debt side wasn’t to be outdone.

Credit facilities specialist Iwoca has raised $20m in a Series B funding round. The fundraise was led by the German VC firm Acton Capital Partners. Acton was joined by CommerzVentures, the corporate VC subsidiary of Commerzbank. A number of existing investors, including Redline Capital, also participated. Redhill was involved in Iwoca’s £5m Series A in January 2014.

Christoph Rieche, Co-Founder and CEO of the platform, weighed in:

“We're aiming to offer a flexible finance option to all of Europe's twenty million small businesses. Raising investment from Acton, CommerzVentures and our existing investors is a vote of confidence in iwoca and a sign of the growing interest not only of financial investors but also of leading banks in alternative fintech lenders. This will be crucial to increasing access to credit and supporting growth amongst European SMEs.”

Iwoca is a cross border SME financing solution, operating in the UK, Germany, Poland and Spain. We’re told that the new $20m of equity firepower will allow the platform to issue an additional $150m of loans across these core markets.

More specifically, the money will be used to entrench Iwoca’s place within the crowded UK market, to ramp up activity across Europe and to further the development of the technology-driven platform itself.

Iwoca lends off its own balance sheet, as opposed to following the P2P model of funding businesses. We’re not told quite how much has been lent through the platform to date, but reports indicate that Iwoca achieved 250% year-on-year growth in terms of cumulative lending over the course of the 12 months preceding June 2015.

The Iwoca platform revolves around technology and machine learning. Its proprietary risk models are fed by data obtained through integrations with a broad range of established service providers, from banks, to Amazon, eBay, PayPal, Sage Pay and so on. The platform’s effective use of big data allows it to extend credit facilities of up to $150k to time-poor small businesses within hours of application. So innovative is the model that Mr. Rieche is currently accompanying the Prime Minister on a trade mission in South East Asia, which intends to inspire higher levels of trade between the UK and the Orient.

Frank Seehaus, who is a Managing Partner at Acton and who will be joining the Iwoca board as a Non-Executive Director as part of the $20m deal, offered his take:

“We are impressed by iwoca's technology platform which has the power to fundamentally disrupt the SME finance market. With their European reach and strong execution capabilities, iwoca are set to become the European market leader.”