LendInvest raises £17M for peer-to-peer investing

Ronny Kerr · March 14, 2016 · Short URL: https://vator.tv/n/43f6

Financial technologies still a booming sector after a big 2015, especially in the UK

LendInvest, a platform for peer-to-peer real estate investing, today announced that it has closed a  £17 million (approximately $25 million) Series B funding round from Atomico, a London-based investment firm founded by Skype and Kazaa co-creator Niklas Zennström.

Added to its previous rounds, including a £22 million (approximately $34 million) Series A invested by Chinese firm Beijing Kunlun last year, LendInvest has now received over £200 million (approximately $285 million) in total institutional funding.

For investors, LendInvest offers a low barrier to enter property investing, as the online marketplace permits investments as small as £100 in loans that last up to a year. Investors can select specific loans to support or let "auto-invest" manage their capital based on selected parameters. LendInvest says investors earn an average 7.27 percent return from their lending.

For borrowers, LendInvest also aims to be quicker and easier to use than traditional lenders. The firm offers several different "products" such as a "Development Loan" for those that range between £200K to £7.5 million for property development or ground up builds.

Since its launch in 2013, LendInvest has facilitated the lending of £560 million to finance 2,100 properties in the United Kingdom.

“We have only scratched the surface of how technology will make mortgages a better, faster and more transparent consumer experience for borrowers and investors,” said Christian Faes, co-founder & CEO of LendInvest in a prepared statement.

I asked the company how they make money and received the following response from a spokesperson:

"The profit that the company makes is the difference between the interest we charge borrowers and the interest we give to investors. As an investor the annualised return rate advertised on the platform is the rate that you will receive. So if the rate of return for an investor on any given loan is 7%pa, then you will receive 7% of the investment you make over 12 months. You receive interest on the first of the month pro-rata."

Mattias Ljungman, Partner at Atomico, pointed out in today's announcement that London "is a global leader in fintech, raising almost $1 billion in VC funding" last year.

For context, 2015 was a huge year for financial technologies investments, with the sector bringing in $11.4 billion across 564 deals, according to CB Insights. That means that London fintech investments accounted for nearly one-eleventh of total deals.

With the financial industry ripe for technology disruption, there is no limit to the kinds of startups and services emerging to create new ways of managing money. Just a week ago, another London-based company called Property Partner closed a £15.9 million (approximately $22.4 million) funding round led by Octopus Ventures for its crowdfunding real estate platform. Whereas LendInvest specifically offers investors a chance to invest in property-backed loans, individuals using Property Parter are investing in real estate equity.

The two tech companies, though operating in a similar space, illustrate the wide variety of approaches to financial technology emerging today.

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