iwoca: how the UK market has underpinned its success

Since its inception a decade ago, iwoca has grown from a small start-up to one of the fastest-growing business lenders in Europe. The company, which has already made funding available to 50,000 small businesses in the UK and Germany, is working towards its goal of providing finance to one million small businesses.

We spoke to Seema Desai, COO at iwoca, about the company's growth ambitions and how the UK market has helped underpin its success.

What does your company do?

iwoca provides finance to small businesses; we were born out of the frustration faced by small businesses when they are trying to access finance through traditional sources like banks where the process is laborious and lengthy. We saw an opportunity to leverage technology to provide finance solutions in a better and faster way to meet the needs of more of these small businesses and to help them to grow.

We’re way faster than the banks. That’s because we use technology to assess and fund our customers really quickly. Our record at the moment from application to funding for a customer is three minutes and twenty-six seconds!

iwoca serves small businesses within the UK and Germany. We help a diverse range of sectors from hairdressers, car mechanics and coffee shops to jewellers and recruitment consultants. We’ve so far made more than £2 billion of finance available to more than 50,000 businesses.

During the pandemic we were accredited by the British Business Bank as a Coronavirus Business Interruption Loan Scheme (CBILS) provider, so we were able to offer government-backed finance to businesses that were affected by coronavirus. We lent nearly £400 million through CBILS and achieved 10% market share of all loans approved through the scheme - including the big banks. We were also accredited for the Recovery Loan Scheme to continue this much needed support for SMEs.

Tell us about your UK and global operations.

iwoca has three offices at the moment. Our biggest hub is in London where we have just over 220 iwocans. We’ve done a lot on enabling flexible working, but we made a decision during the pandemic to still have a physical location. We think it’s important culturally for us to have a home where people can come together.

We've also opened an office in Leeds. At the moment we have about 20 people there and our plans are to have over 100 there by the end of 2023.

We opened in Leeds as we’re growing fast and wanted to be able to access the strong talent pools outside of the capital and be closer to our customers (as 80% of our customers are outside of London). Leeds really stood out for us as it’s still relatively close to London and the city has a strong legacy in financial services.

We also have an office in Frankfurt serving the German market with around 25 to 30 people.

We opened in Leeds as we’re growing fast and wanted to be able to access the strong talent pools outside of the capital and be closer to our customers. Leeds really stood out for us as it’s still relatively close to London and the city has a strong legacy in financial services

What are the main benefits to being based in the UK?

We saw a huge need from underserved small businesses here in the UK.

The UK also has a very strong background in fintech and there’s a vibrant presence and talent pool of tech developers that we could look to recruit. And the UKs regulatory environment meant we were able to set up as a non-bank lender.

In addition, Open Banking in the UK – which lets businesses give verified third parties like us access to their bank data through a secure API – has been really great for us. One of the things that we need to look at to decide whether we can fund a customer is their transaction history. With Open Banking, rather than the customer having to upload bank statements, they can instead – via a couple of clicks – connect via Open Banking and then we've got access to this Incessant form-filling is replaced by a fast and frictionless process where businesses can be approved for finance much more quickly (even instantly).

The UK also has a very strong background in fintech and there’s a vibrant presence and talent pool of tech developers that we could look to recruit.

Tell us about your company's growth ambitions.

We’re only just at the beginning. We’ve made finance available to 50,000 customers. Our ambition is to reach over 1 million small businesses with the finance solutions that they need.

We’re going to achieve this goal largely through embedded finance: we’re working on making finance available to small businesses, whenever they need it and wherever they are.  They don’t even have to go to our own website but can access it through – for example – their accounting software, or any of our other ‘embedded finance’ partners.  Instead of them going to the bank, iwoca comes to them. And we’re calling for more partners for this in the UK. 

We’re also expanding our product range. We’re looking to satisfy other needs of businesses through products such as iwocaPay, which solves late payment problems for small businesses by getting their invoices paid sooner.

There’s so much potential in Germany and the UK at the moment that we’re not currently looking beyond these markets. But in the future, we will look to extend into other geographies.