Plend, a peer-to-peer (P2P) lending startup, said Monday it has secured £700k in pre-seed funding. While P2P lending is more common in the US, the fintech is the first to introduce the concept of a social lending platform — a marketplace where users can back each other with credit — to the UK.
The company aims to tackle financial exclusion in the world’s fifth-largest economy. According to the Financial Inclusion Commission, over 13m people in the UK — close to 20% of the population — don’t have access to affordable credit.
Plend uses Open Banking to access a person’s transaction history to offer a loan rather than basing lending rates on credit scores. Currently, in the UK, access to financial products is based on one’s credit score — determined by factors such as whether you have a mortgage, how many times you’ve changed address, and even if your electoral roll matches your current address.
Plend is championing its own alternative: the Plend Score, that it hopes long-term will be a less biased and exclusionary system than the UK’s current credit scoring system.
Pasco says that they’re not looking to tackle the prime market or the buy now, pay later (BNPL) sphere — “Klarna has that covered”.
The consumer credit market is massive, it’s worth about £220bn at the moment.
Cofounder Rob Pasco said he felt the limits of the UK’s current credit system when he moved from New Zealand about nine years ago.
“I had a good career job in London but I couldn’t actually borrow for the first couple of years,” explains Pasco. “When I could borrow it was a credit card… and as my career progressed, my credit score never really did — it was always quite bad.”
Pasco underwent debt management that helped him restructure his debts. He has since been debt-free for the past three years, but cannot access credit for the next six years.
“A big part of Plend is trying to solve those problems before you get to that stage,” he says.
Plend sees itself as competing primarily with Lendable, a London-based digital lender backed by Goldman Sachs. In March 2021, the startup became a unicorn following a secondary sale.
Pasco says that they’re not looking to tackle the prime market or the BNPL sphere — “Klarna has that covered”.
Instead, Plend will tackle longer-term, goal-oriented lending.
The goals could include holiday, debt consolidation, home improvement — things which need a bit more capital.
“So the goals could include holiday, debt consolidation, home improvement — things which need a bit more capital than just a couple of 100 quid to get through the month,” explains Pasco.
The round was led by Tomahawk VC and is a departure from the Swiss VC’s usual affair. Previously, the VC has dipped its toes into DeFi and fintech startups based on the continent. Plend is its first UK-based venture — and its first in a more traditional sector such as lending.
Other investors include Nationwide Building Society’s incubator NBS Ventures, Ascension and Haatch.
Luke Lang, cofounder of Crowdcube, also joined as chairperson earlier this year and has invested in the company.
Lang says, “I instantly became excited by the vision [of the cofounders]. Their energy, passion and determination to change lending for the better using open banking is infectious.”
Whilst the lending startup is focusing on the UK market at the moment, — ”the consumer credit market is massive, it’s worth about £220bn at the moment” — Lang says that a lot of these problems persist around Europe too.
The platform is due to launch early next year in the UK after procuring FCA regulation.