Alt Lending: Starling Bank, Climate Projects, Fund Raising during Pandemic

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Here is our pick of the 3 most important Alt Lending news stories during the week:

1. Here are the biggest fintech funding rounds in Europe of 2020 so far

Despite the economic downturn over £1.3bn has been invested in the top five European fundraises alone.

Why this matters: Interesting article in AltFi which details the fund raises for alt lending outfits during the COVID crisis. The gist seems to suggest that money is pouring into this sector in an unprecedented fashion. I am not sure that this is the case. One of the biggest raises US$ 820 million which, for the sake of mislabelling has been left out of the sectors numbers is Atomico which is in fact a venture capital fund with a huge interest in the Fintech sector although its interests appear to me in moving money about rather than risking it. Nevertheless there does appear to be an appetite but the numbers themselves are certainly not that impressive. Certainly the Fintech lending sector has some legs but it is difficult to see how they are really going to make a lot of money out of it. The market is fragmented and the principal USP would appear to be remarkably similar in a large number of players.

2. Starling Bank Looking to raise £ 35million by using BCR grants

If successful, the grants could take Starling’s total funding raised this year to up to £135m.

Why this matters: There has been a flurry of articles in the last week or so concerning the digital banking sector. I have just picked one of them but there are plenty of others. The indications are that government funding schemes are being chased by a number of players in order to boost their lending activities. Starling is just one of them but it has stated that even if it receives the £ 35 million it will meet its lending targets for the year at an ambitious £ 900 million plus.  At the same time an SME credit supplier Tide was shutting up shop on its Bounce Back Loan Scheme (BBLS) programme as wholesale funding had dried up. Tide was essentially saying that the only way this programme could operate profitable was with dirt cheap government funding? As far as demand for credit is concerned that is there in spades. Not every player is a fan of Bank Competiton Remedies and have decided not to embrace it. I cannot help thing though that my old bête noir credit quality might be compromised by ambitious start ups pumping out credit as fast as they can. At a time like this there are a lot of desperados around.

3. Funding the Future: The Role of Private Parties in Internationally Financed Climate Projects

Private companies and nonprofit entities in many sectors are finding a role to play in projects aimed at providing the infrastructure needed to curtail and adapt to climate change.

Why this matters: A group of lawyers discuss the opportunities available to companies and individuals which might be available through internationally sponsored lending schemes mostly focuses on things like green energy. They make the point that they can really add value to the process. I am compelled to ask why. If the process is so complex that you need lawyers to talk you through the tender then something is wrong? In my own view this is probably the most important individual component of the post COVID outcome. The origins here are however embedded in the QE programmes that Western Governments have so readily employed when the going got a little bit too tough. Since QE started up the concentration of cash in the hands of already very rich people has carried  on relentlessly. At the same time the regulatory authorities have made middle market risk taking an unprofitable business. If you want to finance a major infrastructure project $1billion upward no problem. Goldman Sachs knows the family office distribution conduit. Want to leverage a goldmine in the Phillipines with proven reserves at $ 30 million forget about it. Someone needs to get a grip of this sector. It shouldn’t be down to governments alone and it shouldn’t always mean that only the big eye catching projects that get the money. Just ask the relatives of those who drove off an unsafe Italian Bridge.

Howard Tolman is a well-known banker, technologist and entrepreneur in London,

We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.

For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives. 

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