Consumer Lender Koyo Raises $50M to Help ‘Near-Prime’ UK Borrowers

Open banking-powered lender Koyo has raised $50m (£36.1m) in a Series A funding round to support its growth plans, Peer2Peer Finance News reported on Thursday (Sept. 9).

The round was led by Force Over Mass with participation from existing investors Forward Partners, Frontline Ventures and Seedcamp. The company also secured debt funding from New York-based alternative investment advisory firm, Atalaya Capital Management.

Speaking on the round, Koyo’s Founder and CEO Thomas Olszewski said the three-year-old company has given many people access to competitively priced credit, proving that “innovative use of open banking data results in better risk decisioning” and ultimately enabling the firm to grow “during one of the toughest economic times the U.K. has faced.”

“We invest in companies that combine transformational technology with strong business models, and Koyo indexed strongly in both of those departments,” said Filip Coen, Force Over Mass partner, adding that “Koyo has built a first-class foundation over the last 18 months of operation, and we’re excited to be part of its future.”

In January 2020, the U.K.-based lender launched its consumer loans business, offering borrowers competitively priced credit based on their spending habits, rather than using data from credit scoring agencies.

According to the company, making lending decisions based on transactions in customers’ accounts enables them to offer competitive rates to customers who might have little or no information in credit files held by costly mainstream lenders. 

Read more: Koyo FinTech Raises $4.9M to Assist Underbanked UK Borrowers

Since its launch, Koyo has widened its target market from “thin-file” customers to include near-prime U.K. borrowers who have a reduced chance of securing loans from payday lenders.

This is the second round of funding for the FinTech startup, which doesn’t charge late fees, early repayment fees, loan origination fees or any fees other than interest. The company previously raised $4.9 million in debt and equity funding in 2019 led by Forward Partners, with participation from Seedcamp, Christian Faes (founder and CEO of LendInvest) and Charles Delingpole (founder and CEO of ComplyAdvantage).