Funding Circle, the UK peer-to-peer lending site for small businesses, has raised £10 million in a second funding round led by Index Ventures.
The investment - which also introduced US-based Union Square venture - follows on from an initial £2.5 million investment by Index Ventures last year. The company says it intends to double its number of employers over the next 12 months.
Launched in August 2010, Funding Circle currently facilitates £1 million per week of loans to small businesses. The process sidesteps the high street banks with businesses receiving finance in a matter of days compared to up to four months for a traditional bank loan.
Since launching, Funding Circle has seen yearly growth of more than 400%, with £28 million lent to more than 670 businesses. The model has also won Government approval, with acknowledgement in the Budget that peer-to-peer lending will be looked at as part of Government-backed initiatives to ease the flow of credit to small businesses.
Neil Rimer, co-founder and partner at Index Ventures says: "The financial services industry has been crying out for greater competition and diversity in the small business lending market for some time and this is exactly what Funding Circle delivers. We strongly believe Funding Circle has the potential to leave a lasting impact on this industry."
Angel investors, such as Jon Moulton (founder of Better Capital), Edward Wray (co-founder of Betfair) and Charles Dunstone (founder of The Carphone Warehouse) have also increased their investment.