CircleUp is adding a new way to invest in consumer packaged goods (CPG) brands.
The crowdfunding platform — which originally launched to link businesses with accredited investors — will now begin lending directly to companies seeking funding, the firm said this week. This will be accomplished by the rollout of the new CircleUp Credit Advisors offering.
According to news reports in TechCrunch on Wednesday (July 25), the company will begin supplementing its existing equity investment platform by focusing on smaller CPG businesses in need of working capital. To aid in this endeavor, CircleUp has developed Helio, an algorithm to assess the creditworthiness of borrowers based on financial performance of businesses and their competitors. Brand strength, retail and online distribution data, as well as other factors, are also at play, reports said.
Using this technology, CircleUp said it has so far facilitated $365 million in equity financing to its business users. For some companies seeking financing in smaller dollar amounts, though, CircleUp is using its algorithm to link those companies to matching lines of credit. Today, those credit lines can range from $25,000 to $600,000.
The launch of CircleUp Credit Advisors makes use of a partnership with Community Investment Manager (CIM), which provided a $20 million credit facility for CircleUp to finance the lines of credit, according to reports.
"Most banks are uninterested ... in lending to small businesses," said Jacon Haar, managing director at CIM, in an interview. Haar added that those banks that do loan to small businesses typically lack transparency.
CircleUp raised $30 million in venture capital in 2015 led by Collaborative Fund. At the time, the company said it would use those funds to develop new products and services, with a particular focus on machine learning algorithm development.
Also in 2015, Lending Club COO Scott Sanborn revealed news he had joined CircleUp's board of directors.