Funding Circle
LendIt Spring 2014
Small business expertise,
global opportunity
This document provides general and preliminary information about Funding Circle’s (FC) commercial
lending platform and is ...
We know small business
STRICTLY CONFIDENTIAL
Funding Circle by the numbers
•  Largest small business P2P lender in the world
•  Exclusive focus on small business
•  On...
Banks have largely pulled out
of <$1m loans to small businesses
1 Source: SBA “Small Business Lending in the United States...
We’re solving this problem through a
marketplace-based approach
Institutional and
Individual
Investors
Small
Business
Borr...
“The whole process is
efficient, fast and user
friendly – unlike my
experience with the
banks!”
FC Customer
1
“Applying fo...
Borrowers get access to fast, fairly-priced finance
At 89%, our borrower
Net Promoter Score is
consistently high,
especial...
Funding Circle originations trebling each year
1 Reflects aggregate origination volume in US and UK. FC USA began originat...
Our three-stage credit process delivers superior credit performance
STRICTLY CONFIDENTIAL
We’re leveraging lessons from the UK
in building out the US
STRICTLY CONFIDENTIAL
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
 5
 10
 15
...
Investors have made an average of 6.4% in the UK;
returns expected to be higher at ~10-12% in the US
Note: Average net ret...
A range of investment opportunities on US marketplace
STRICTLY CONFIDENTIAL
•  Purchase loans directly
•  “Pick and choose...
Our goal is to become the global equivalent
of a small business bond market
•  Access to credit remains a problem for smal...
Five Circulars
STRICTLY CONFIDENTIAL
Commerci
al property
in the UK
$500M
mark this
month
Whole
loans in th
e UK
“C” risk ...
Thank you
Sam Hodges
Managing Director
Funding Circle USA
sam.hodges@fundingcircle.com
Funding Circle
1 Union Street, Suit...
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Funding Circle Presentation LendIt 2014

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Funding Circle Presentation LendIt 2014

  1. 1. Funding Circle LendIt Spring 2014 Small business expertise, global opportunity
  2. 2. This document provides general and preliminary information about Funding Circle’s (FC) commercial lending platform and is intended for initial reference purposes only. It is not a summary or a compilation of all applicable information and is not complete. This document does not constitute an offer to sell or the solicitation of an offer to buy securities by FC. There shall be no offer or sale of any securities by FC without the delivery of confidential offering materials (the “Offering Materials”) and related documents. The information contained herein is qualified by and subject to more detailed information in the Offering Materials, including the risk factors applicable to an investment in FC or the loan pools. The materials and information contained and described herein are proprietary of FC and may not be reproduced or distributed in any fashion without FC’s written consent. Disclaimer STRICTLY CONFIDENTIAL
  3. 3. We know small business STRICTLY CONFIDENTIAL
  4. 4. Funding Circle by the numbers •  Largest small business P2P lender in the world •  Exclusive focus on small business •  Only international small business P2P lender STRICTLY CONFIDENTIAL •  $60M in backing from Accel, Index, Union Square Ventures, and Ribbit Capital •  160 employees globally
  5. 5. Banks have largely pulled out of <$1m loans to small businesses 1 Source: SBA “Small Business Lending in the United States 2012”, published July 2013 2 SBA annual data is delayed; 2013 data is expected to be available in mid-2014 STRICTLY CONFIDENTIAL
  6. 6. We’re solving this problem through a marketplace-based approach Institutional and Individual Investors Small Business Borrowers STRICTLY CONFIDENTIAL
  7. 7. “The whole process is efficient, fast and user friendly – unlike my experience with the banks!” FC Customer 1 “Applying for a Funding Circle loan is straightforward and transparent – just like the company itself.” FC Customer 2 “I found the process quick and easy compared to banks.“ FC Customer 3 Fast and transparent process We win borrowers based on experience STRICTLY CONFIDENTIAL
  8. 8. Borrowers get access to fast, fairly-priced finance At 89%, our borrower Net Promoter Score is consistently high, especially vs. other lenders STRICTLY CONFIDENTIAL FC NPS includes UK borrowers who drew down a loan; n = 160; High St Bank NPS takes all customers of High St Banks Source: Funding Circle NPS survey 2013; Bain 2012 NPS study
  9. 9. Funding Circle originations trebling each year 1 Reflects aggregate origination volume in US and UK. FC USA began originating loans in 2013. 2 Reflects four months in 2010, which represents $9.9M in annualized volume. Assumes an exchange rate of £1 = $1.5 STRICTLY CONFIDENTIAL $3 $26 $74 $206 $600 $0 $100 $200 $300 $400 $500 $600 2010 2011 2012 2013 2014E Loan Originations 1 2 $Millions $100M In US $500M In UK
  10. 10. Our three-stage credit process delivers superior credit performance STRICTLY CONFIDENTIAL
  11. 11. We’re leveraging lessons from the UK in building out the US STRICTLY CONFIDENTIAL 0% 1% 2% 3% 4% 5% 6% 7% 8% 0 5 10 15 20 25 30 35 lossrate months Loss Rate Expectation Jan ‘11 – Jun ‘11 Origination: £4.9m Weighted Average Age: 33 mos Weighted Average Time to maturity: 1.1 mos 0% 1% 2% 3% 4% 5% 6% 7% 8% 0 5 10 15 20 25 30 35 lossrate months Loss Rate Expectation July ‘11 – Dec ‘11 Origination: £12.5m Weighted Average Age: 27.4 mos Weighted Average Time to maturity: 6.5 mos 0% 1% 2% 3% 4% 5% 6% 7% 8% 0 5 10 15 20 25 30 35 lossrate months Loss Rate Expectation Jan ‘12 – Jun ‘12 Origination: £18.1m Weighted Average Age: 22.4 mos Weighted Average Time to maturity: 16.2 mos 0% 1% 2% 3% 4% 5% 6% 7% 8% 0 5 10 15 20 25 30 35 lossrate months Loss Rate Expectation Aug ‘10 – Dec ‘10 Origination: £2.2m Weighted Average Age: 32.6 mos Weighted Average Time to maturity: 0 mos
  12. 12. Investors have made an average of 6.4% in the UK; returns expected to be higher at ~10-12% in the US Note: Average net return shows expected return after fees and bad debt but before tax In the UK, 100% of investors with a maximum of 1% exposure to any single business have earned positive returns; 70% earn over 6% STRICTLY CONFIDENTIAL
  13. 13. A range of investment opportunities on US marketplace STRICTLY CONFIDENTIAL •  Purchase loans directly •  “Pick and choose” loans, take a random distribution, or set auto- allocation •  Secondary market expected in 2014 •  Active in the US and UK Whole Loan Marketplace •  Open-ended Fund purchases whole loans and fractional interests •  No management or performance fee •  Principal & interest distributions to LPs made monthly •  Purchases loans across all sizes, terms and risk bands FC Partners Fund I •  To be launched summer 2014 •  Purchase fractional interests in loans through online marketplace •  “Pick and choose,” random distribution, or auto-allocation •  Secondary market Fractional Marketplace
  14. 14. Our goal is to become the global equivalent of a small business bond market •  Access to credit remains a problem for small businesses internationally; they are underserved by banks in almost every market •  US regional banking market = inefficient and price of credit is high for small businesses •  Banking system in Europe = broken •  Lending to small businesses in developing markets = low sophistication •  Governments are approaching us asking how Funding Circle can be applied to their markets •  Institutional liquidity pools will lend across geographies STRICTLY CONFIDENTIAL
  15. 15. Five Circulars STRICTLY CONFIDENTIAL Commerci al property in the UK $500M mark this month Whole loans in th e UK “C” risk tie r in the US $70M run rate in the US
  16. 16. Thank you Sam Hodges Managing Director Funding Circle USA sam.hodges@fundingcircle.com Funding Circle 1 Union Street, Suite 210 San Francisco, CA 94111 www.fundingcircle.com Small business expertise, global opportunity

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