Mar 31, 2021

UK fintech Lendable reaches unicorn status

Joanna England
3 min
The London fintech was valuated at over £1bn following a secondary sale...

Lendable, the London-based personal loans fintech, has achieved unicorn status.

The dynamic startup which launched in 2014 offers competitive, fast loans that are assessed using a soft credit search system so that users requesting a loan quote will not have their credit score affected. 

The platform has proven popular with customers, who, according to the review engine, have given the company a 100% approval rating on services and response times. Lendable’s success is partly due to the fact that it can facilitate loans to those whose credit scores are less than perfect. 

Currently backed by Goldman Sachs, the fintech’s new unicorn status has ensured that it’s early-stage angel investors will have enjoyed a 250-fold return on their investments. As a result, sources say new investors are keen to get involved in the action. 

According to reports, the valuation was an internal transation that saw initial investors and employees cash in an estimated £30m in shares, in conjunction with the company's backers raising their stake.  

Goodbody analyst John Cronin told P2P Finance News that the valuation was a “significant uplift” for Lendable considering the £500m value attached to thecompany when Balderton Capital led a secondary sale in 2018.

He said, “Notably, Lendable has raised just £4m in equity to date and booked £15m in profits on £32m in revenue in 2019. However, the next acid test from a valuation perspective will be when Lendable seeks to raise more institutional capital for expansion purposes.”

Lendable funding

Despite being unusually discreet when it comes to press publicity, Lendable has caught the attention of several world-class investors. The latest public filings show:

  • Glänzer’s stake in Lendable is today worth an estimated £23m.
  • Passion Capital partner Eileen Burbidge partially liquidated her shares in previous sales, leaving a stake worth £355.5k.
  • Lendable’s cofounder Martin Kissinger owns around 15% of the company.

As a result of its success, Lendable has raised just £4m in equity since its launch, and recorded a £15m profit margin on a £32.1m revenue in 2019. This achievement has positioned Lendable ahead of most of its European unicorn competitors such as Klarna, N26, Monzo and Revolut. 

According to reports, Lendable, which uses institutional capital to fund its services, now issues a new loan every 30 seconds. With plans to expand into the US marketplace, it is also rumoured to be launching a new credit card product. The fintech is considered an industry leader due to its swiftly growing sales, its fast-track applications and its highly competitive rates.

Fintech innovation

Lendable is the brainchild of its CEO and founder, Martin Kissinger, who set up the Berlin-based peer-to-peer lending fintech Lendico for Rocket Internet. 

Kissinger utilised the large amounts of data available in the UK at an opportunistic time when customer lending was a changing sector. The result was a service that is more efficient and faster than many of the larger peer-to-peer competitors such as Rateseter and Zopa.

Part of Lendable's success can also be attibuted to the time at which it was launched. The company began operations just prior to the Financial Conduct Authority's tightening of regulations for financial services companies. Kissinger said, "The FCA created a much stricter regime and a larger number of firms dropped out of the market.It was interesting for us because there was a time window during which, if you already existed as a licenced member, you could continue with your business and apply for authorisation afterwards. It became much more difficult to enter this business after that deadline." 

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Jun 10, 2021

FIVE things fintechs must do to keep investors onboard

Brandon Rembe, CPO, Envestnet...
4 min
Fintech innovations drew in first-time investors who reshaped the markets. What new advancements will help them continue their rise?

New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.

Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?

The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.

Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.

Equal access to financial wellness education

Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.

The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.

More personalisation

Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.

For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.

Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.

The rise of AI-Powered Advice

Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?

Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs. 

Focus on financial mental health

New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.

It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.

Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.

Gamification for good

The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.

Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.

Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.

The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.

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