July Continental European Volume Roundup - Funding Circle Hits the Pause Button

The Continental European alternative finance industry posted €46.0m in origination volume for the month of July with the Liberum AltFi Volume Index CE ending the month on €1.54bn. Despite it being the slowest month in terms of origination since January 2016, the sector still grew 41% on July 2015.

Figure 1: Liberum AltFi Volume Index Continental Europe Monthly origination totals

In contrast to previous months, only one platform set a new monthly origination record – Twino with €4.9m in origination, comfortably beating last month’s high of €4.6m.

Figure 2: Funding Circle CE monthly volume since launch.

Standing out at the other end of the spectrum is Funding Circle CE. The platform only managed to originate €215,000 over the month, its second lowest monthly origination total since launch.

So what is going on? Having spoken to Funding Circle, they tell us that the business is taking stock after the departure of one of its co-founders, Matthias Knecht. Several senior individuals from Funding Circle’s London office have joined the Berlin team and we are told that normal service, with monthly origination back to the c.€5m level seen in early 2016, will resume in early Autumn. This is typical of the approach that we have seen from Funding Circle in other geographies and flies in the face of any misplaced perceptions that the platform would ever chase origination volume at the expense of underwriting discipline. Additionally, Funding Circle has the luxury of being very well capitalised as a result of successive large equity raises. It therefore does not need to keep writing new business until it is 100% comfortable with its processes.  If, as we are told, Funding Circle origination does pick up by early autumn it should help industry wide Continental European origination reclaim recent highs.