South: Shoosmiths advises on Funding Xchange investment round

Funding Xchange (FXE), a FinTech that has built digital decisioning technology to enable partners like MoneySuperMarket, Monzo and Experian to offer their customers instant access to personalised quotes for business funding, announced the closing of an £8 million funding round, led by Downing Ventures and Gresham House Ventures along with legal advice from Shoosmiths’ corporate team.

Funding Xchange has created the world’s first intelligent decisioning platform that transforms efficiency in SME lending by holding lenders’ underwriting models. Through its mediation platform, businesses can access personalised funding quotes in less than four minutes and receive funds within 10 minutes - rather than days or weeks as is usually the case. The company has also integrated access to finance into payment solutions and cloud accounting software to offer a seamless experience for small businesses.

The new round of investment will enable Funding Xchange to harness the technology behind its marketplace service to accelerate the rollout of its white label ‘lending in a box solution’, which digitises key steps in the underwriting process so that banks and lenders can instantly and cost effectively serve business customers, while also ensuring the best products from across the market are easily available to their customers.

The company is led by co-founder and CEO Katrin Herrling, one of FinTech’s most respected female entrepreneurs. Herrling set up Funding Xchange after seven years with Bain & Co’s Financial Services practice where Herrling worked with UK and European banks to build viable lending propositions that address the gap in SME lending.

Funding Xchange’s focus on digital decisioning that harnesses access to new, transactional data has attracted attention from industry leaders. Max Firth, former MD of Experian’s Business Information, and Paul Henry, MD of Experian pH, joined the business over the last year. Firth is spearheading Funding Xchange’s push into providing decisioning solutions to banks and lenders while Henry is leading the delivery of data analytics, including the recent launch of Funding Xchange’s SME Lending Monitor that is providing unique insights in the rapidly changing market dynamics in SME lending.

Commenting on the investment round, Herrling said: “We are delighted that Downing and Gresham House have joined us on our exciting journey to help reshape a sector that is rapidly adopting digital solutions using new data sources to enable the delivery of seamless, instant access to finance. This is creating the opportunity to provide small businesses with the same transparency and ease of access to finance that consumers have become accustomed to.

"The funding round will enable us to accelerate the delivery of the next generation of our data and decisioning platform that enables banks and lenders to instantly transform their customer proposition by digitising their customer interfaces and decisioning to deliver personalised and transparent access to their own lending products or refer customers to selected third party lenders.”

Daniel Cheung at Downing Ventures said: “Funding Xchange is delivering digital solutions that respond to some of the biggest challenges that banks and SME lenders face as the market is undergoing unprecedented change – driven by new lenders and solutions changing the market dynamics, availability of new data and increasing regulatory scrutiny. We were impressed by the advocacy Katrin and her team have built for their data-driven approach. Partners like MoneySuperMarket can instantly give small businesses transparency of funding solutions and ensure that customers are always treated fairly.”

The next phase of Funding Xchange’s growth is now seeing lenders leverage Funding Xchange’s digital technology to provide their customers with instant, personalised quotes while reducing their own costs to serve customers by 70%. As a technology and data analytics business, Funding Xchange’s market insights are already helping banks and lenders build and test funding propositions that respond to customer needs and address the funding gap. This is game changing in a market that has been notoriously opaque.”

Henry Alty of Gresham House Ventures said: “Under the leadership of Katrin, Max and Paul, Funding Xchange has created a peerless technology that is making the SME lending eco-system more efficient while helping SMEs across the UK compare funding solutions from a wide range of finance providers – giving businesses control over their finance choices. By delivering an end-to-end digital solution, Funding Xchange ensures that customers have access to the best solutions and never pay more than going direct to a lender. This proposition is a direct challenge to the opaque commercial broker market, which is increasingly under scrutiny by regulators. Funding Xchange’s data infrastructure, decisioning technology and digital journeys are a critical part of the infrastructure that is transforming the eco-system. We look forward to supporting Funding Xchange through its high growth phase as the company continues to deliver intelligent lending solutions to businesses and lenders.”

Sanjeev Sharma, corporate partner at Shoosmiths, said: “The Shoosmiths team recently acted for Downing and Gresham House on this investment into Funding Xchange who make life simpler for small businesses to find funding. I led our team comprising corporate partner Claire Checketts, corporate associate Adam Leszczynski, tax partner Tom Wilde and tax manager Chris Moakes. We wish Funding Xchange all the very best for the next exciting chapter of their journey.”

Led by corporate finance director, Ross Wiggins, Menzies LLP advised Downing and Gresham House on the financial due diligence aspects of the deal. Ross Wiggins, corporate finance director at Menzies LLP, commented: “Funding Xchange is an extremely innovative platform, which provides a much-needed solution to the challenges modern banks and lenders face. It was an honour to be involved in the project and I look forward to seeing the company achieve great things in the years to come.”

Since its inception, Funding Xchange has helped over 100,000 UK businesses navigate their finance options, while also providing its technology to Price Comparison Websites like MoneySuperMarket and Money.co.uk. It is designated by HM Treasury as a Finance Referral Platform and works with nine UK banks to help their customers access finance solutions if they are not ready for bank finance.

IMAS Corporate Finance acted as the exclusive financial adviser to Funding Xchange on this investment round.