P2P lender Zopa has raised £44m in its largest funding round and will use it to launch a broader range of financial products.
Through this capital injection, the company will look to fund the ‘next generation bank it has been building.’ The UK-based company is hoping to launch new services which will help consumers ‘feel good about their money’, and will have no catches on rates or charges, are easy to understand and cater to changing demands in the market.
Founded in 2005, Zopa offers consumers loans and investment opportunities. Borrowers can access a digital loan of up to £25,000, on a repayment term of as long as five years and an APR ranging between 3.1 per cent and 34.9 percent.
Investors on the app help to fund the loans, with a lender able to choose two investment methods differentiated by the level of risk involved. A user simply creates an account, picks a risk level and the funds will then automatically be invested to matched borrowers. The monthly repayments received can either be withdrawn or a user can attempt to sell the outstanding loan to other investors on Zopa.
This new funding comes after Zopa has seen strong growth, with the company reaching full year probability in 2017, the first time it has since 2012. Since the company was founded, it has lend £3.5bn to UK consumers, helping nearly half a million people.
Zopa CEO Jaidev Janardana said, “We aim to be the best place for money in the UK and we believe that launching our bank is a key next step. It allows us to offer a wider choice of products and to help our customers make smarter choices with their money. This further injection of capital takes us a step closer to that vision and we are delighted that our investors have supported us on this journey.”
Earlier in the week, Zopa’s CEO Jaidev Janardana stated he believes the FCA’s proposed changes to P2P lending platforms is a positive step for the market.
The Financial Conduct Authority recently outlined a number of changes for loan-based crowdfunding platforms due to ‘growing complexity and poor practices’ since it first authorised trading in the market 18 months ago.
Last year, the lender raised £32m in a funding round which was co-led by Wadhawan Global Capital and Northzone.
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