The London-based business platform said the cash would increase the “speed and quality” of its decision-making.
Growth Street said it has raised £10m, which the small business lending platform said will boost the “decision speed and quality” of its technology.
The London-based fintech said the funding round was led by existing investor Merian Chrysalis Investment Company, a Guernsey-based investment company traded in London. The lead investor was advised by asset management firm Merian Global Investors, and investment business Arts Alliance.
Growth Street, founded by chief executive Greg Carter (pictured) and serial investor Thomas Hoegh in 2014, said the new cash valued the platform at £47.5m. This is a jump from a valuation of £27.5m in January, when Merian Chrysalis invested £7.5m in the business.
The fintech said it would use the cash to improve the “speed and quality” of its “unique credit decision systems”. It added it would boost its UK sales team, “with a focus on the most underserved small and medium sized enterprise (SME) populations in the Midlands and North of England”.
SMEs lack growth capital
Growth Street also said it would diversify its debt funding base by adding institutional investors.
The business said it had attracted more than 2,500 investors in May, and has originated £100m borrowing for small firms since it was launched.
Peer-to-peer lenders moved into small business lending following the financial crisis in 2008, as banks cut back on loans to smaller firms, fearing defaults.
Most of these platforms are loss-making, but attract investors who believe they will eventually emulate the success of Big Tech giants such as Facebook and Google.
Growth Street’s Carter said: “There’s no two ways about it – the banks are failing businesses: they have failed to innovate, failed to integrate and, fundamentally, failed to provide SMEs with sufficient capital to grow.”
He added: “Since the financial crash in 2008, the banks have dialled back their overdraft volumes by over 40 per cent. In that same time, the number of UK SMEs has risen 30 per cent. The UK has to find a way to plug this gap.”
Merian Chrysalis co-fund manager Richard Watts added that the platform’s “innovative financial solution” provided “important support for Britain’s thriving entrepreneurial sector”.