160411 lendit presentation for sam v8 - amazon s3...feb 2016 $150m raised from blue chip investors...

Funding CircleMarketplace Lending: How to Get to the Golden Age

Sam Hodges, Co-Founder and US Managing Director

April 2016

Funding Circle is the global leader in marketplace lending to small businesses

Funding Circle Origination Volume ($M)

October 2015Launch in Germany, Spain & Netherlands

October 2013Launch in the US

August 2010Launch in the

UK

2010 2011 2012 2013 2014 2015

1098.3992

482.183

197.18474.844226.44423.3413

We are achieving global scale

15,000business borrowers

+$2 Billion in SME loans

$273 MRaised in equity capital

+600Employees in 5 offices

+45,000Investors globally

5Operating countries

UK, US, Spain, Germany, Netherlands

$200M+ raised by SME Income Fund

Jörg Asmussen joins board

Feb 2016

$150M raised from blue

chip investors

SME Income Fund

Launched in Continental

Europe

We have taken great strides in the past 12 months

Nov 2015

Oct 2015

Apr 2015

“The marketplace model will eventually become the institutional framework of the global financial system – and this will happen within 20 years.”

We believe we are on track for a Golden Age

SOURCE: Bank of America Merrill Lynch

US High Yield Spread(BofA ML, option-adjusted)

3%

9%

2013-12-022014-02-212014-05-142014-07-312014-10-17 2015-01-072015-03-262015-06-162015-09-03 2015-11-202016-02-10

We’re in an increasingly uncertain economic climate

Credit Performance

Stability of Funding Sources

Operational Quality & Controls

And scrutiny on the industry is increasing

Technology trigger

Peak of inflated expectations

Trough of disillusionment

Slope of enlightenment Sustainable

growth

Time

Visibility

SOURCE: Gartner

These questions are normal for any emerging industry

Marketplace lending is extremely well positioned in a period of uncertainty

Compressed yields in traditional asset classes

Low interest rate environment

Continuing instability of the banking sector

Reaching scale in a cost-effective way

Predictable credit outcomes with transparent performance

Diversified funding sources without systemic risk

Thoughtful levels of borrower and investor protection coupled with great customer service

Operational discipline

Controlled risk

Stable lending capital

Infrastructure & transparency

But only if we perfect the marketplace model

A diversified capital base creates stability

Whole loan marketplaceFunding Circle SME Income Fund

Institutional investors

Fractional marketplaceIndividual investors1

Private funds

Investors

1) In US: Accredited Investors

We launched a $200M+ SME income fund

Permanent capital vehicle

Purchasing loans in5 countries

Traded publiclyOn the LSE

SME Income Fund

There are significant benefits to using investment capital instead of deposits

No maturity transformation No risk of a bank run

No deposits Investment capital

Do not hold inventory Lower capital requirements

Rahul PakrashiChief Risk Officer (UK)

Manpreet DhotChief Risk Officer (US)

Jerome Le LuelGlobal Chief Risk Officer

Torsten NahmChief Risk Officer (CE)

We have a world-class risk team focused on consistent credit performance

15

Strong risk performance generates consistent investor returns

Governance structure

As we grow, we continue to collect more data – and that means our level of risk assessment is getting stronger everyday.

360 view of small businesses Global learnings and experience

More loans/ data

Better marketing & acquisition costs

Higher acceptance rates

Better models & underwriting

processes

The marketplace lending model generates tremendous efficiencies

Which allows us to build a truly global platform

We will never lose sight of our customers or our mission

“Funding Circle’s process was fast. It felt like they had compassion for me as a new business owner, and an understanding of my financial needs.”

Dr. Celina HattFounder/CEO120M

Americans – half the private sector workforce1

63%Small business creates

of net new private sector jobs1

55%of SMBs with revenue $100K to $1M cannot

get full financing2

Small business employ

SOURCE: 1) Harvard Business School; 2) Federal Reserve Bank of New York

US net promoter score

FC Banks FC Banks

UK net promoter score

-1190 86 10

We are proud to provide a best in class experience for borrowers

Financials Loan by loan detail Investor net returns

$$

In addition to transparency for our investors

We have played a leadership role in promoting the responsible growth of our industry

Operational discipline

Controlled risk

Stable lending capital

Infrastructure & transparency

Funding Circle in 2025:

$100BOrigination

p.a.

3MNew jobs

p.a.

750,000SMBs p.a.

2MInvestors

Our vision is to originate $100 billion a year by 2025