A fintech firm launched by one of the founders of digital pioneer Atom Bank has secured a £1.3m seed investment round.
Banker and entrepreneur Craig Iley - who has already co-founded two challenger banks in the UK - has launched Business Finance Market (BFM) to streamline the lending process which brings lenders and SMEs together, in a bid to help them secure the right finance for their business.
The new technology gives SMEs access to quicker finance decisions, while giving lenders a fintech platform that will help to manage the end-to-end application process, improve information and increase deal flow, to deliver faster credit decisions.
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The platform aims to disrupt a sector in which almost 90% of SME loan applications that do not complete due to poor processes, the lending market has become fragmented and in need of innovation.
The project targeted a raise of £1m to drive the development of the technology and boost the team, which is based in Newton Aycliffe. The investment round was oversubscribed, with pledges in excess of £1.3m. It also comes on top of an oversubscribed seed round of £225,000 earlier this year.
It marks the latest EIS-eligible (Enterprise Investment Scheme) opportunity led by Newton Aycliffe based Growth Capital Ventures, an FCA authorised investment firm specialising in impact driven co-investment opportunities across alternative asset classes.
Growth Capital Ventures has supported Craig Iley and his teams on past successful projects, including the Aykley Heads digital bank Atom Bank and more recently Bank North, which aims to transform lending to SMEs.
Craig Peterson, co-founder and chief operating officer of Growth Capital Ventures, said: “When we issued this latest investment opportunity in BFM to our investor network, it attracted a considerable amount of interest. Such is the belief in the strong executive team and the aims behind the new technology platform.
“Banking for the SME lending market is notoriously complex, outdated and unsupportive of the needs of the organisations that account for three fifths of employment and 50% of revenue in the private sector.
“Once developed, this platform will make it easier for SMEs and their trusted advisors to access finance quicker and easier. It will allow businesses to deal with multiple providers at the click of a button. This is an attractive proposition not just for SMEs but banks, commercial brokers, UK plc and the Bank of England.”
In response to the Van Steenis report, the Bank of England has said it is keen to champion technology platforms to help SMEs make better use of their data to access services and to apply for and obtain credit using a digital portable credit file.
Mr Iley said BFM’s plan to use databases and machine-learning algorithms and customer journeys will differ from the slower, labour-intensive application processes and legacy systems in use today.
The platform will have a competitive advantage, leading to the potential of higher profit margins and continued growth opportunities. The team behind BFM includes banking specialists, commercial brokers and SME business experts.
Mr Iley said: “SMEs are the backbone of the UK economy but are gradually being excluded from mainstream banking. In 1988 around 40% of all bank lending went to SMEs. Today that is closer to 4% with an estimated £22bn funding gap to around six million UK SMEs.
“Expectations among SMEs are increasing with a demand for more focused lending products, faster credit decisions, improved funding chances and flexible options regarding collateral requirements.
“We are reengineering the entire journey, to reduce friction for all stakeholder groups and ensure better customer outcomes along with benefits to investors.”
