Funding Circle is an online credit marketplace that connects individuals looking to invest capital, with SMEs seeking to borrow funds. While it represents an “exemplar” matchmaking business model, the business also operates an additional product business model to cater to its borrower-customers – in turn enabling a highly interconnected platform of products and services that create greater value. These services help manage and guide both investing and borrowing decisions – through credit scoring, risk assessment and account management.

Funding Circle facilitates both secured and unsecured loans and assigns risk accordingly. The risk assessment of the loan is displayed alongside the company’s profile on the online marketplace. Investors can then bid for the loan, offering from £20 to the full loan amount. Once the loan is funded borrowers accept the terms and can access the funds. SMEs can apply for loans from £5,000 to a maximum of £1million, with the exception of property development, which has an upper limit of £3million due to the reduced risk associated with this type of loan.

Investor-customers also enjoy the benefits of the marketplace’s complementary products, such as automated investing, and tracking and monitoring tools. They can choose to be an ‘active’ – selecting the loans they prefer – or ‘passive’ – selecting the risk profile they desire, allowing Funding Circle to automatically bid for loans on their behalf.

In offering valuation and risk-band credit rating services for SMEs, Funding Circle also employs a product business model. The risk band provides and independent view on how creditworthy a company is, which can be helpful for companies looking to improve their ability to access credit. Small businesses can then work to improve their risk band rating through not defaulting on repayments.

Founded in 2010 by Samir Desai, Christian Grobe, Sam Hodges, Matthias Knecht, James Meekings, and Andrew Mullinger, Funding Circle is UK based peer-to-peer lender (P2P) focused on lending to SMEs. The company has grown rapidly and reached a valuation of $1 billion in April 2015. The company has facilitated over £1.3 billion worth of loans in the UK and has raised over $272 million in funding, the most recent a Series E funding round raising $150 million in April 2015. The company operates in the UK, US, Germany, Spain and the Netherlands.


Funding Circle caters to two main customer groups: investors and borrowers. Its customer base accounts for 15,000 small businesses borrowing from over 50,000 investors.

Investors include individuals, local councils, the UK government and institutional investors, while borrowers encompass all SMEs.

Learn more about the Matchmaking Business Model

You identify two or more customer groups and brings them together in your marketplace.

Engagement  — Value Creation Proposition


Value is created through return on investment (ROI). Funding Circle is able to typically offer a higher ROI than traditional financial products.

Investors also gain value from Funding Circle’s credit scoring indicating the credit worthiness of potential borrowers, reducing the risk for lenders.

The ability to build a large portfolio of loans – reducing the overall risk – is also a benefit provided by the Funding Circle platform, while some lenders also appreciate the societal value of lending to local businesses.

Funding Circle also provides increased flexibility, compared to more traditional investments products, as it is possible to sell loans on a secondary market for a small 0.25% fee.


This group benefits from lower fees compared to traditional sources of funding and can access credit quickly and easily.

Delivery — Value Chain

Funding Circle’s online platform is maintained by data scientists and provides an integrated service for both customer groups. Algorithms manage all borrower and investor applications to assess credit worthiness and suitability. In addition to the automated system, borrowers have the option to engage with an account manager for advice on their loan application.

The application process takes less than 7 days. The loan is then available for investors to bid on. Once sufficient lenders have committed funds, the borrower chooses to accept the terms and confirms the loan.

Monetisation — Value Capture
Revenue is generated from both customer groups. Borrowers are charged an origination fee of between 1.49% and 4.99% of the funded loan. Investors are charged a 1% annual servicing fee. Additional fees can also be charged for fast track services and late payments. Funding Circle does not publish detailed financial reports but the company has facilitated over £1.4 billion in loans and industry sources reported revenues to be approximately $50 million for 2015.




Disclaimer — Written by Thomas Murray & Halima Begum under the direction of Prof Charles Baden-Fuller, Cass Business School, in September 2016. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016