iwoca has secured $200 million in new funding to support the record demand for funding that it is seeing from SMEs. The funding line is being provided by Citi and Waterfall Asset Management. The new funding will mean that iwoca has raised £1.5 billion since its launch in 2012. In the last two years alone, it has raised £750 million in debt funding from partners. Including Citi, Barclays, Värde Partners, Pollen Street Capital, and Insight Investment.
The lasting funding also signals an adjustment in approach from Iwoca. It is doubling the amount it lends from its core offering, Flexi-Loan. Flexi-Loan will now offer between £1,000 and £1,000,000 for a term of between 1 day and 2 years. It hopes to access larger firms and will target medium-sized firms in addition to the smaller firms it has traditionally lent to.
The strategic change aligns with recent research from its own SME Expert Index. The amount of loans of between £100,000 and £200,000 has risen from 19% in Q2 2023, to 22% and for loans of over £200,000 from 5% to 8%. In addition, 84% of respondents believe that demand for finance from SMEs is set to rise slightly or significantly over the next six months.
iwoca is fulfilling a need that the high street banks are no longer offering. The SME expert index revealed that 74% of respondents either agree or strongly agree that ‘High street banks are reducing their appetite for funding SMEs’.
iwoca goes from strength to strength
In recent months, iwoca has achieved record commercial growth. iwoca is now in the top 10 UK fintechs by both revenue and profit (source Graffiti). In 2023, it achieved £223 million in revenue. Which, depending on the revenues of other firms, could see it rising from 10th to as high as 5th in the comparison.
It is also only one of two B2B fintechs in the top ten highest-performing fintechs by EBITDA and revenue. Importantly, it is also profitable, which will have helped secure the additional funding. Revenues are also growing, with ARR in Q3 2024 up 62% year over year to £251.
The majority of its funding is currently given to UK businesses. Though iwoca revealed that Germany has seen solid growth in 2024. The new financing will be focused on the UK market. By the end of October 2024, iwoca has lent £730 million across 35,000 business loans, both records for the business, up YoY of 76% and 82%, respectively.
Christoph Rieche, iwoca CEO and Co-Founder, said, “Our vision is to become ever more relevant to more businesses. Medium-sized businesses tell us that – just like smaller businesses – they are finding it difficult to access working capital finance. Therefore we have stepped up our offering to also meet their needs with £1 million loans.
“We’re very happy to expand our cooperation with Citi and look forward to being able to finance many more SMEs in the UK with their support. Like so many SMEs, it’s been a rollercoaster over the last decade. The iwoca team has stuck together to ride through the ups and downs, and we’re humbled to have now grown to a size where we make a material impact on thousands of SMEs and their communities every month.”
Enterprise Times: What does this mean
With the traditional banks proving harder to obtain unsecured loans from. iwoca is filling a gap in the market that is needed as UK firms look to recover from Covid and expand post-Brexit. The British Chambers of Commerce is expecting business investment to increase. In its UK economic outlook, it stated, “Business investment is expected to increase by 0.3% in 2024, a revision down from the previous forecast. Business investment is then expected to grow by 1.4% in 2025 and 2.0% in 2026.”
To achieve that, not only do SMEs need to have the appetite to invest they will also need funds to do so. iwoca, with this funding, has put itself in a strong position to offer this and help the recovery of British businesses.
