Private Capital Powers Knockout Valuations

Private capital, rather than public markets, is increasingly powering sky high valuations of high growth companies on both sides of the pond.

Private capital has been at work for some years in the United States, underwriting heady valuations for such as unlisted technology companies, Dropbox and Uber. Now the fashion for raising private money, rather than floating on the public markets, has spread to Europe: witness luxury online fashion retailer, Farfetch, money transfer group, TransferWise, and music discovery app, Shazam, all of which achieved $1bn valuations from private fundraising rounds.

In a more recent development, Sky News reported that Temasek, Singapore’s state investment company, is interested in buying a stake in high growth, London-based peer-to-peer lending platform, Funding Circle. Funding Circle is said to be planning to raise more than £50m in new capital, in which leading asset manager BlackRock is also said to be participating, and which could value the company at $1bn.

P2P lending platforms use online technology to connect borrowers with lenders, often providing cheaper finance than high street banks without assuming the credit risk of holding loans on their balance sheets. Funding Circle is backed by Index Ventures, Union Square Ventures, Accel Partners and Ribbit Capital. Private backers include Charles Dunstone, co-founder of The Carphone Warehouse, Ed Wray, co-founder of Betfair and Jon Moulton, founder of PE firm Better Capital.

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