Alibaba gets 2 UK startups to offer funding
Print Edition
ALIBABA Group Holding Ltd has enlisted two UK startups to provide financing for small British businesses looking to buy from Chinese suppliers, aiming to help cash-strapped firms access the world’s second-largest economy.
The partnerships with iwoca Ltd and ezbob announced by Alibaba yesterday are a first for the Chinese company in Europe, and are intended to provide short-term working capital to businesses that otherwise would have trouble securing funds from banks.
Its British arrangement is similar to its recently announced tie-up with LendingClub Corp in the United States.
British firms looking to source cheap components or goods from Chinese suppliers apply for credit online; the startups review their business track records, tax returns and other data; then provide a swift decision.
“We want to make financing as easy as possible for the millions of British companies that do business through Alibaba.com,” said Wei Duan, Alibaba.com’s European marketing and business development director.
Unlike LendingClub, a peer-to-peer loans matching service, ezbob and iwoca would provide the financing themselves. They already lend to Amazon.com and eBay merchants.
Ezbob gets its name from the British colloquialism for a shilling and is the trading name for Orange Money Ltd. The four-year-old company is backed by the British government’s Angel CoFund and its loans are guaranteed by the European Union.
Iwoca, or “instant working capital,” has secured financing from investors including Global Founders Capital and Redline Capital.
Iwoca will provide micro-loans of up to 50,000 pounds (US$75,315) for qualified firms, at anticipated interest rates of 1.5 percent to 2 percent monthly. Ezbob will provide micro-loans of between 50,000 pounds and 120,000 pounds at an interest rate of 0.75 percent per month.
Iwoca CEO Christoph Rieche said in a statement that he expects to fund 100 million pounds of deals over the next 12 months. Funds are sent directly to Chinese suppliers.
Britain is one of Alibaba’s major markets, primarily for business-to-business goods sourcing on Alibaba.com. The Chinese company derives the lion’s share of its revenue from retail platforms Taobao and Tmall, but it got its start supporting small businesses with Alibaba.com.
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