Post on 18-Jan-2016
Opening up global pools of capitalSamir Desai, CEO & co-founder
>$1.5 billion has been lent to thousands of small businesses globally through Funding Circle
Q3 2010
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Q1 2013
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1 3 4 4 6 12 14 1421
2733
4355
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12 14 14 21 27 33 43 55 6480 83
111
150167 170
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0.774
5.92744316.701954
11.343063
24.779591
31.84163256.000971
81.340363
UK US Series3Source: Funding Circle; Used GBP/USD FX of 1.52
FC Q
uart
erly
New
Len
ding
($m
) 150% growth
per annum
Exciting news: Funding Circle enters 3 new countries
Global leader in marketplace lending to small businesses
+
• Leading small business lending marketplace in 5 countries
• UK, US, Germany, Spain & the Netherlands…
• ~450 employees
• ~ $120m lending / month
• ~$300m equity capital raised
The eco-system continues to grow
What is so special about marketplaces?
Marketplace lending platforms do not hold inventory, so are significantly more capital efficient
0
2
4
6
8
10
12Capital needed to lend $100 billion per annum
1
$bn
Bank Marketplace
-20%
0%
20%
40%
60%
80%
100%
Marketplaces are delivering better customer service
US net promoter score
0%
20%
40%
60%
80%
100%
Funding Circle UK
UK banks Funding Circle US
US banks
UK net promoter score
Our model means eventually we can accept more businesses at lower cost
More loans/ data
Better marketing & acquisition costs
Higher acceptance rates
Better models & underwriting processes
Marketplaces are Faster, Better, Cheaper
Marketplace lending has arrived – true validation is being embraced by other internet marketplaces
Marketplace lending is transparent2
Financials
Loan by loan detail
Investor net returns
Marketplace lending keeps it simple – repeat, repeat, repeat
3
Manpreet DhotChief Risk Officer, Funding Circle US
Jerome Le Luel
Rahul PakrashiChief Risk Officer, Funding Circle UK
Global Chief Risk Officer, Funding Circle• 20 yrs experience in credit risk management• Global Head of Risk Analytics, Barclays
Investment, Corporate and Retail Bank.• CRO, Barclaycard (£40bn global portfolio)• Capital One, Risk & Analytics
• 14 yrs experience in credit risk management
• Prior: HSBC, American Express, Morgan Stanley, Discover Financial Services, and Oliver Wyman
• 15 yrs experience in credit risk management
• Chief Credit Officer, Amex PR & IDC
• Director, Small Business Modelling, Amex
• Director, Collections Modelling & Analytics, Amex
Small business specialist credit assessment team• Team of 37 dedicated SME underwriters
globally• 313 years combined experience
Global credit risk, analytics & underwriting team
Risk & analytics team• Team of 10 dedicated SME risk specialists
globally• 102 yrs combined experience
Torsten NahmChief Risk Officer, Funding Circle CE• 9 yrs experience in credit risk
management• Prior: Commerzbank, Allianz,
KPMG, Oliver Wyman
Leads to superior credit performance
Cumulative loss rates by year - UK portfolio
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7.2
12.2
1.0
1.0
2.1
2.6
Projected returns H2 2015
Attractive and stable returns now available to investors, where previously held on bank balance sheets
$247m Lending to Date
$1,347m Lending to Date
UK US
Fee
Annual Losses
ActualNet Return
15.8% gross
10.3% gross
Marketplace lending is democratic - any investor small or big can access the same loans
INVESTORS
Funding Circle SME Income Fund
Institutional Investors
Government
Retail Investors
FC Credit Process
Random Selector
Approved loans
Rejected loans
Continued tracking and
analysis of rejected loans
Loan Applications
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Individual investors can lend directly to businesses through Funding Circle in 5 countries
Government can directly support small business
Funding Circle SME Income Fund allows access to global small business lending
Small business loans
The global Exchange Traded Fund of small business lending
Will be listed on London Stock Exchange
Exclusive focus on small business loans
Simple, transparent, low cost
Banks themselves are also turning to marketplace lending
Borrowers receive fast access to finance
Banks lend through marketplaces
Banks also referring leads
Banks of the future?
Retail deposit funded bank?
1.5x
Up to 1.5x leverage
33x
Marketplace lending platforms do not do maturity transformation
5
What really happened at Northern Rock?
Composition of Northern Rock Liabilities
Short term retail and wholesale deposits fled – “bank run” – matched duration ABS and Covered Bonds did not
Marketplace lending platforms that follow these principles do not pose systemic risk
>$ 5 trillion of assets
NOT a SIFI – Systemically Important Financial Institution
>$ 2.5 trillion of assets
SIFI – Systemically Important Financial Institution
Recap - principles of marketplace lending
1. Do not hold inventory – only by not holding inventory can we be truly aligned with investors and be faster, better, cheaper
2. Transparent – loan book data on every loan originated
3. Simple – repeat, repeat, repeat
4. Democratic – any investor, large or small, can buy the same loans
5. No maturity transformation – do not create systemic risk by taking short duration money and matching to longer term loans
THANK YOU FOR LISTENING