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Exclusive: Open banking lender Koyo Loans winds down after failing to raise funding

Existing Koyo borrowers will be managed by Capquest as its £50m+ loan book is wound down.

Koyo Loans

Koyo Loans team.

Open banking-powered consumer lender Koyo Loans has wound down its business and is passing its existing customers over to be managed by a third party.

While Koyo was flush with debt funding to ramp up its lending—a chunky £100m raised from Atalaya Capital Management just nine months ago—difficulties securing additional equity funding forced the fintech to appoint advisers and eventually trigger a wind down.

Koyo was founded in 2018 and launched in 2020 with a USP that it would purely use bank transaction data, powered by open banking, to assess near-prime borrowers and underwrite risk rather than using credit agency scores. 

Its team was made up of a number of notable alumni from lenders including RateSetter, Zopa and LendInvest, CEO Thomas Olszewski was an early-stage investor-turned-founder.

Between its seed round in 2021 and Series A in 2022, Koyo had raised over £10m in equity funding, with listed investor Forward Partners taking part in its seed round.

Earlier this month Forward wrote down the full value of its £3m investment in the company.

“AI-powered lending platform Koyo Loans experienced difficulties raising new capital amid the prevailing economic uncertainty and initiated a consultation process,” Forward wrote in an update to shareholders.

“The outcome of this process has led Koyo to transfer its existing loan book to a new service provider and to initiate a wind-down of the company.”

The fintech lender had originated over £50m worth of loans since its launch, racking up near-prime borrowers.

Today those borrowers have been passed over to Capquest, a credit solutions firm which has been managing their accounts as of 14 July, with Koyo’s website redirecting all visitors to Capquest.

Speaking to AltFi last October and referring to Koyo’s Series A Olszewski flagged that it was a “bad environment for fundraising”.

“We have four venture capital funds already invested in Koyo, so it's a lot easier to tap those people for funds, rather than running the whole process and going out,” he said.

“I expect there will be fundraisers in the future, where we bring in kind of new outside investors. But this time around, I think it's great to have a supportive group of investors already invested in the company.”

Other equity investors in Koyo Loans included Force Over Mass, Frontline Venture, Seedcamp and Matt Robinson (the founder of GoCardless and Nested).

AltFi has contacted Thomas Olszewski and Koyo Loans for comment.

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