The U.K.’s MarketInvoice, which plays in the peer-to-peer lending space by enabling businesses to raise money from institutional investors and high net worth individuals by ‘selling’ outstanding invoices, has raised a further £6 million (~$10m) from existing investors Northzone, and the family offices of Paul Forster. It adds to a £5 million round the London-based company closed in December 2014.
MarketInvoice says the funds will be used to fuel growth — its platform is currently providing company financing at a rate of around £30m ($48m) per month and is close to reaching £500m in total — and to roll out new products.
These include allowing businesses to access funds against licences, contracts, and subscriptions, as well as supplier finance “where businesses can get finance to pay suppliers to complete large projects”.
Its existing invoice finance offering works as follows: invoice buyers — such as hedge funds, asset managers, family Offices, and high net worth individuals — bid in a real-time auction to determine how much of an invoice’s value they will provide as capital, minus their cut. MarketInvoice itself then makes money by taking a small cut too.
The overall premise of MarketInvoice’s new and existing products remains the same: riding the coattails of the U.K.’s not-too-distant banking crisis, which continues to see a reluctance to lend to small-to-medium sized businesses.
In August 2013 the British government stepped in via its British Business Bank initiative to invest £5 million through MarketInvoice’s platform (in addition to other P2P lenders), as part of a wider bid to pump liquidity into an otherwise stagnant credit market for SMEs — a theme from which all of the U.K.’s alternative lenders are benefiting.
And to MarketInvoice’s delight, the U.K. Chancellor recently confirmed plans for an ‘Innovative Finance ISA’ to allow tax-free investing in peer-to-peer finance from April 2016 — something that the fintech startup aims to benefit from by enabling retail investors to access the MarketInvoice platform.