UK peer-to-peer lender Funding Circle just added Wall Street heavyweight Bob Steel to its board

Wall Street cred for a lending startup.
Wall Street cred for a lending startup.
Image: Reuters/Jonathan Ernst
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UK-based Funding Circle has added Perella Weinberg CEO Bob Steel to its board of directors. Steel is a former Wachovia CEO, former US Treasury undersecretary, and former New York City deputy mayor who was named Perella’s CEO two months ago. His arrival is meant to deliver additional Wall Street credentials to the online lending platform.

Steel’s joining the board as non-executive director comes as Funding Circle also is announcing the completion of an additional $65 million in funding from existing investors including Index Ventures, Accel Partners, Union Square Ventures, and Ribbit Capital, the company tells Quartz. The new so-called series D (also known as late-stage funding) brings the lending startup’s total funding to $123 million and comes as US rival Lending Club is reported to be starting the process of raising money via a $500 million stock offering (paywall).

Funding Circle and Lending Club are among a thriving group of peer-to-peer lenders, which cut out banks by enabling loans from one person to another or individuals to small businesses. (Funding Circle is focused on the latter.) Some estimate the peer-to-peer lending sector could become a $1 trillion industry in the next decade. Here’s how Funding Circle works:

  • Businesses can apply online to borrow up to $500,000 for three to five years.
  • Loans are funded within two weeks.
  • Interest rates are anywhere from 9.99% to 20.99%.
  • Funding Circle pockets a 1% fee to service each loan it helps originate for investors (those who provide the loans) and collects a 2% to 4% fee from the borrowers.

Other startup lenders have attracted backing from financial bigwigs. Lending Club has ties to former US Treasury secretary Larry Summers, Kleiner Perkins Caufield Byers executive Mary Meeker, and former Morgan Stanley CEO John Mack. Another non-traditional lender focused on the student lending business, CommonBond, also drew ex-Citigroup boss Vikram Pandit as a backer last year. Five-year old Funding Circle, which established a beachhead in the US by merging with Endurance Lending Network, is hoping to accelerate growth. But the company isn’t planning an IPO like Lending Club. “We’re just focused on expansion right now,” Funding Circle co-founder Sam Hodges told Quartz.