Toronto-based Lending Loop, a peer-to-peer lending platform, has raised $2 million in funding from the MaRS Investment Accelerator Fund. The round also saw participation from a group of finance and technology investors.
Lending Loop said the funding will help the company roll out its latest product Auto-Lend, which allows lenders to automatically invest in loans through Lending Loop’s marketplace. The company also plans to invest in machine learning capabilities to assess the risk of borrowers applying for loans.
While the company is focused on the small business market, it also sees opportunities to reach “other” types of borrowers, and will invest in development in this area.
“For far too long, people have assumed the only place to put their hard-earned savings was with a big bank,” said Cato Pastoll, co-founder and CEO of Lending Loop. “The release of Auto-Lend means we now have an incredibly simple way for all Canadians to automatically invest their money in this highly attractive asset class.”
“People have assumed the only place to put their hard-earned savings was with a big bank.”
Lending Loop said that to date, the company has facilitated over $7 million of financing to small businesses across Canada with the help of its community of over 9,500 investors. With a fresh funding round and the launch of Auto-Lend, the company is hoping to scale these numbers in the coming months.
In addition to announcing its funding, Lending Loop has also added industry veteran Mike Kitchen and OPENLANE president Clive Kinross to its board of directors. Lending Loop said Kitchen and Kinross will provide support on verticals like traditional banking, online lending, and online marketplace sectors.
Lending Loop also formed an advisory board to help with the company’s key growth areas including credit risk, technology development, and strategy, and relaunched its website aimed at making lending data publicly accessible.
In March 2016, Lending Loop voluntarily halted new loan requests on its platform after facing questions of compliance with the Ontario Securities Act. The company began accepting new businesses, investors, and loan requests on its platform again in October 2016, when it completed registration with the OSC as an exempt market dealer.
When asked what he’s learned growing a FinTech startup, Pastoll says that while the “normal” saying is that FinTech businesses take twice as long and cost twice as much, FinTech businesses should think four times as long and ten times as much.
“That’s the reality of the industry you are dealing with. Above all else, you have to find a way to keep things as lean as possible otherwise it will be impossible to survive, said Pastoll. “While banks look big and scary, people underestimate just how painfully slow they are so don’t be afraid to take a road less traveled and go after them directly.”