UK small business lending bank Allica has just picked up £100 million for its series C raise. The round is being led by US/London investment firm TCV, with further participation from Warwick Capital Partners, a "special situations" investor, as well as New York-HQed Atalaya Capital Partners.
Michael Kalfayan, partner at TCV, commented: " Richard and team have built a truly impressive platform that is looking to solve a great need for UK established SMEs, a highly complex segment to serve."
Allica Bank has a full UK banking permit and its also authorised to lend out money to SMEs. Its regulatory position has allowed the challenger bank to carve out a market with SMEs, though a host of digitally-native services like fixed-rate and competitive AER saving accounts, taking on high street bank offerings.
Word of mouth has done wonders for some of the high-growth UK fintechs, challenger banks especially, and Allica Bank is making steady progress in this area supported by SME businesses thought to make up around half of the UK's private sector turnover.
Among the plaudits, the UK newspaper The Times named Allica as one of its Top 20 fintech picks from the national ecosystem last year, and the company also picked up "best business finance provider" at Britain's banking awards.
What is promising about Allica's pitch is that unlike some consumer-driven UK challengers like Monzo (still racking up losses, sadly, though its CEO thinks 2023 will be the year), it already makes the claim of being profitable. Allica's cash flow officially entered the black in June.
In 2022, Allica said its third quarter revenue rose 743% on the year and its loan book has now generated north of £1 billion in SME loans.
The business is also expanding through M&A activity. Following an acquisition deal last year to buy AIB's British SME lending portfolio, the company has absorbed an additional 2,000 or so SME customers.
Armed with the series C funding, Allica Bank is looking to drum up further growth to reach "more of Britain's established and growth companies", according to the CEO Richard Davies.
The round brings Allica Bank's total funding to around £321 million in equity and debt since it was founded in 2017, according to deals database Crunchbase.
The company took on £110 million of series B capital in November 2021 from investors co-led by Atalaya Capital and Warwick Capital Partners, following a £26 million early growth round in 2020 led by Warwick Capital Partners, which at that time was investing as Allica's majority shareholder.
Richard Davies, CEO of Allica Bank and a former fintech pioneer with Revolut, added: "From the moment we sat down with TCV it was clear we shared the same vision to transform SME banking in the UK, by taking on the mainstream ‘high street’ banking market.
"It’s a massive vote of confidence in the team we’ve built at Allica to attract backing from such a world-class technology investor under the toughest of market conditions, and this £100 million funding round will enable us to support far more of Britain’s established and growth companies, who have been underserved for too long.”