October, a European marketplace lending platform providing access to capital for SMEs, has received a €35 million commitment from the European Investment Fund (EIF) and Netherlands-based Invest-NL.
The capital is split between the two entities with the EIF providing €20 million and Invest-NL the rest – €15 million.
The EIF is part of the European Investment Bank Group. Its mission is to support Europe’s SMEs by enabling access to capital. The EIF designs and develops venture and growth capital, guarantees, and microfinance instruments targeting this market segment. The EIF buttresses the EU objectives that support of innovation, research, entrepreneurship, and employment.
Invest-NL Capital N.V. is the Netherlands’ central “national promotional institution” (NPI), controlled by the Dutch Ministry of Finance.
October is a pan-European Fintech and the top SME lending platform in continental Europe. October allows private lenders and institutional investors to finance SMEs directly across the continent. In the past eight years, October has lent more than € 965 million to 3,800 European SMEs.
Marjut Falkstedt, Managing Director of the EIF, said this funding is a renewed commitment for October that is a testament to the platforms success that reflects the goals of the EIF.
October CEO Patrick de Nonneville, added:
“With this investment, the EIF continues to support European SMEs via the October platform. Key to this new fund is our data-driven ESG X-Ray module, to integrate ESG criteria in our investment process without burdening SMEs with additional paperwork.”
The EIF’s commitment is backed by the InvestEU program and Invest-NL supports October SME V through the Dutch Alternative Credit Instrument. This is the fourth commitment by the EIF to an SME fund managed by October, after supporting the SME II, III, and IV funds.
Valdis Dombrovskis, EU Executive Vice-President for an Economy that Works for People, commented on the funding:
“InvestEU is playing an important role across Europe in helping small and medium-sized businesses gain access to the finance they need to innovate, expand and create jobs. I am delighted that, thanks to this agreement, many more businesses will receive the support they need to take their next steps and fulfil their full potential.”
The October SME V fund is anticipated to grant more than 3 000 loans to European SMEs, targeting a total of €400 million in lending over the next two years. Loans will range from €10 000 to €2 million, with an expected average size of €130 000.
The fund is described as having a unique risk/return profile while addressing borrowers at the lower end of the market. The fund is said to offer attractive returns to investors, with a short duration, monthly distributions, and pricing reviewed on a monthly basis.
de Nonneville explained that the October SME V fund is labeled SFDR Article 8, stating that the creation of their ESG X-Ray tool, as well as the implementation of SFDR-compliant reporting, enabled them to be classified as a fund that “promotes environmental, social and governance (ESG) initiatives.” ESG X-Ray is a systematic ESG risk and impact analysis embedded in the lending process on October.
As a marketplace lender, October accepts individual investors who can participate in securities offerings alongside institutional money.