December 14, 2015
Zopa, a pioneer P2P lender and one of the Britain's most successful financial technology startups, plans to enter a fundraising race, which could value the company at more than £500 million.
The last time the company had raised substantial funds was at the beginning of 2014, when Arrowgrass Capital Partners, a Europe-focused alternative asset manager, invested £15 million in Zopa. The company didn’t disclose the valuation at which the funds were raised. However, Zopa has grown significantly since that time, which will boost its value in the coming round. The company may become one of the UK's most valuable FinTech startups with the new round.
According to Sky News, Zopa is working with JP Morgan to raise roughly £70M from the sale of new shares in the company. Existing (Arrowgrass Capital, Orange Growth Capital, Bessemer Venture Partners and Forward Partners) and new potential investors may participate in the round. The funds raised will fuel Zopa's expansion. The company demonstrated a rapid growth in last years with doubled revenues reaching £11.5 million and Zopa expects to maintain the pace in 2016.
Zopa has lent over £1.2 billion, including £500 million lent in 2015 and expects to double the amount next year. Earlier this year, Zopa also announced that it would work with Metro Bank to provide some of the loans to the bank's clients through Zopa.
More than 57,000 people use this service to lend between £10 and £1 million to creditworthy borrowers. The name of the company, Zopa, stands for zone of possible agreement as it brings together borrowers looking for low rate loans with savers looking for higher interest on their savings. Zopa has also launched a reserve fund to handle cases of defaults.
As Zopa's spokesperson commented in the news, "I believe we have an immense opportunity to create a positive impact on consumers’ lives through offering them a radically better alternative to the incumbent financial services organizations. By aligning our interests with those of our customers, providing simple and transparent products with best in class user experience, we can ensure Zopa becomes the first choice to an ever-growing number of customers.
Zopa along with other P2P lending platforms expects to benefit regulatory reforms in the pensions system. The company also plans to enable savers to invest ISA allowances in P2P products.
The FinTech industry has been of a particular interest for investors. Lending and payments are the hottest sectors where the highest valued companies are. Funding Circle, Zopa's competitors, recently became of the top three small business lenders in the UK. Lending FinTechs owe their success to the exclusion of middlemen, which are banks, that usually boost the fees for borrowers.