Finnish platform gains EIF support for first fund

Like an increasing number of other lending platforms, Finland’s Vauraus has opted to grow by attracting institutional capital through funds.

Vauraus, a Finnish crowdlending platform, has become the first business of its type to attract investment from the European Investment Fund.

The EIF has committed €27.5 million as a cornerstone investor in the firm’s debut SME Loan Fund, which is aiming to raise at least €60 million in total and may, Private Debt Investor understands, raise as much as €75 million. The investment has been made through the EFSI Private Credit Tailored for SME programme.

Founded in 2011, Vauraus has so far intermediated €193 million in financing for around 1,000 borrowers and 6,000 investors in Finland. About €150 million of loans have been issued since 2016. A spokesperson for the firm told PDI that raising institutional money was seen as the best way for it to scale up.

Vauraus expects to support at least 150 Finnish SMEs from its fund, targeting enterprises that it believes are not served by microfinance providers and underserved by banks given the small ticket sizes and lack of collateral.

Given the impact of covid-19, access to finance is proving tough for small Finnish companies. The firm added that the fund would allow it to offer slightly larger loans compared with its current average financing size. It typically targets companies with less than €20 million in turnover.

“The EIF has been a key partner in financing SMEs for quite some years now,” said Alain Godard, chief executive of the EIF. “In the ongoing situation, we reaffirm our commitment to these businesses and our financial intermediaries by making sure they can count on our support to weather the crisis.”