The firm, which is billed as the only one of its type headquartered in Scotland, said the proceeds are earmarked for ramping up its sales and marketing activities.
The round was led by angel syndicate Equity Gap in its single largest investment to date, and included various prominent private investors from Scotland’s entrepreneurial and finance scene and the Scottish Investment Bank.
The company, which recently launched its first TV advert, said it is on track to scale “significantly” this year and intends to seek Series A funding over the next 12 months.
LendingCrowd said it is eyeing a “game-changing” 2018 following a year when loan deals amounting to about £16m were agreed with SMEs across the UK.
Chief executive and co-founder Stuart Lunn said: “Having laid solid foundations for the business over the last couple of years, we now have a position in the market that is starting to pay dividends. We have a strong pipeline of both investors and SME demand and with such a strong trajectory, we are now actively speaking to the venture capital and private equity communities about our next phase of growth.”
The fintech firm has previously outlined its aim to more than double loan deals in 2018 to about £40m, while new clients in 2017 included Summerhall Distillery, home to spirits brand Pickering’s Gin, restaurant chain Tony Macaroni, and property lettings agency Umega Lettings.
Additionally, investor funds on the platform have grown rapidly, mainly attributed to the launch of one of the first Innovative Finance ISA (IFISA) products in February last year. LendingCrowd has more than 4,500 investors signed up to its platform and is on track to see a major increase in investor numbers this year.
Jock Millican from Equity Gap said: “We are extremely pleased that our syndicate members once again backed LendingCrowd.” Investors in the firm recognise the potential for it to scale, he added.
Kerry Sharp, director of the Scottish Investment Bank, praised LendingCrowd for having shown “real market traction” with its P2P lending platform in Scotland.
Meanwhile, Crowdcube, which says it is the world’s first and largest equity crowdfunding platform, has today launched a campaign to double equity funding deals in the regions in five years to free up entrepreneurial potential.
The company, which has helped BrewDog and Edinburgh-based online personal financial management service Money Dashboard raise funds, is looking to see the current total from all providers reach 1,500 from 736 currently. It is working with six backers of regional SMEs such as BGF and Virgin StartUp.