Zopa attracts Augmentum and Forward Venture as equity backers to boost crowd lending

A peer-to-peer lending company which pairs borrowers and savers has been invested in by Augmentum Capital.

Social capital: Peer-to-peer lending works in both a debt and equity capacity

Social capital: Peer-to-peer lending works in both a debt and equity capacity

A multi-million pound fundraising deal for lending business Zopa means that the business can now count Augmentum Capital as an investor.

The technology VC fund, which is itself backed by RIT Capital, is leading the funding round, with contributions also coming from fellow new supporter Forward Venture Partners as well as existing firms Bessemer Venture Partners and Wellington Partners.

Seven-year old business Zopa operates in the peer-to-peer lending and borrowing marketplace. Its site pairs borrowers and saver and has so far lent £250 million through its platform.

The new funding amount, which is undisclosed, comes on top of the $33.9 million (£22.2 million) it has already raised. Following a Series A round worth £1 million in January 2005, it then went on to raise two Series B closes of $15 million and $5 million in March and July of 2006 and a $12.9 million Series C in March 2007.

The round will be used to fund Zopa’s growth in the UK as it looks to compete with other peer-to-peer lenders including Funding Circle, MarketInvoice and RateSetter.

Zopa's investment comes in the same year that the government announced that £100 million of its Business Finance Partnership fund will be spent, in part, through alternative finance platforms. It also comes a week after David Cameron's government revealed that HM Treasury will now lead a consultation aiming to implement regulation for peer-to-peer lenders.

Giles Andrews, Zopa CEO and co-founder, comments, 'We are delighted that Augmentum Capital and Forward Venture Partners have joined our existing investors in backing this business.'  

'The company has grown by 55 per cent in the past year and our members have now lent over £250 million to each other. This investment will help us grow even quicker and consolidate our position as the real alternative to the banks.'

Augmentum Capital is a mid-stage VC fund targeting what it calls 'disruptive technology businesses'. Established in 2009 by entrepreneur Tim Levene and former commercial director at Betfair Richard Matthews, the fund is backed by RIT Capital Partners, an London-listed investment trust.

Levene, managing partner at Augmentum Capital, adds, 'Zopa has a long track record in the alternative finance space and is ideally positioned to capitalise on the explosion of interest in this market. 

'The current economic conditions and failure of traditional banks to sustain lending mean that there is a huge growth opportunity open to the company.'

Augmentum's investment in Zopa marks the latest in a line of alternative finance commitments which the firm has made.

'As a fund we’ve already made a number of investments in alternative finance businesses such as Borro and BullionVault. Zopa further strengthens our portfolio in this market and marks us out as the go-to fund for online alternative finance players,' Levene explains.