London FinTech startup iwoca (short for “instant working capital”) has recently raised $20 million in its Series B round of financing. The investment was led by the German bank’s venture capital arm, CommerzVentures, alongside a great group of investors.
“Digital disruption is transforming the banking landscape. We respond to these changes by investing in players who offer visionary and game-changing solutions,” CommerzVentures’ Managing Director, Patrick Meisberger, said in a news article. “iwoca’s cutting-edge technology provides a scalable way to understand and lend to small businesses, and is, therefore, a very attractive business model. With its impressive track record, we are convinced the company is set to show extraordinary growth.”
The company is Europe’s fastest-growing online short-term lender for self-employed and small businesses. The company’s innovation lies in the loan providing process which starts from the online application process, allowing for same-day loan approval and disbursement. The company is four years old and operates in the UK, Germany, Spain and Poland.
The company’s point of difference is its online-based loan application and management process. The company accesses businesses based on real-time performance data gathered from high-street banks, online business platforms and a range of other sources. On the basis of this real-time data, iwoka can judge a person’s credit risk appetite more accurately compared to traditional platforms.
“We're aiming to offer a flexible finance option to all of Europe's 20 million small businesses," iwoca Co-founder and Chief Executive, Christophe Rieche, said in the news article. "Raising investment from Acton, CommerzVentures and our existing investors is a vote of confidence in Iwoca and a sign of the growing interest not only of financial investors but also of leading banks in alternative FinTech lenders. This will be crucial to increasing access to credit and supporting growth among European small and medium enterprises.”
Addressing the problem:
The underserved population in Europe by traditional banks forms a huge chunk, i.e., 20 million small businesses and 30 million self-employed. The traditional banks are reluctant to serve them because of their cost structure which leads them to losses since these borrowers require small loans for a small duration. iwoka is, therefore, trying to grab this opportunity by providing SMB financing service.