Zopa

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Zopa Limited
Ltd.
Industry Peer-to-peer lending
Founded March 2005; 12 years ago (2005-03)[1][2]
Founders Giles Andrews
James Alexander
Richard Duvall
David Nicholson
Tim Parlett
Headquarters Cottons Centre, Tooley Street, London, England, UK
Products P2P lending[3]
Website www.zopa.com

Zopa is a UK online personal finance peer-to-peer lending company founded in 2005.[2] In 2012 the New York Times reported that Zopa was "one of the world’s first Web sites that aims to directly bring together borrowers and savers, cutting out financial institutions from the lending process."[2]

History[edit]

Zopa was founded in Buckinghamshire in 2004 by a team from the internet banking company Egg Banking,[4][5] and originated its first loan in 2005. It was the first peer-to-peer lending company and one of the earliest fintech firms.[6]

The New York Times reported "amid the economic slump" due to the financial crisis of 2007–2008 Zopa "abandoned its own costly push into the United States."[7]

In September 2016, the first portfolio of Zopa loans was securitised on the European markets.[8]

In November 2016, Zopa announced that it would apply for a banking license.[9] Zopa became fully regulated by the FCA in May 2017.[10]

Products and services[edit]

Business Model[edit]

Peer-to-peer lending

Zopa enables investors to lend to UK consumers directly through its peer-to-peer lending platform.

Borrowers can take out loans between £500 and £25,000.[6][11] Typically individuals use these to funds to help buy a car, consolidate debts, cover home improvements or weddings.[2] All applicants are credit-checked by Zopa.

Investors’ money enters a queue to be lent in one of three products, which vary according to the risk, returns and accessibility they offer. Once the money reaches the front of the queue, it is split into micro-loans (typically of £10-20 each) that go to multiple borrowers. Investors then receive monthly repayments of interest and capital, which they can relend to compound the interest.

In 2005 the BBC reported that "customers borrow at the interest rate that suits them, based on their personal credit rating. In addition, they must pay a one-off fee equivalent to 1% of the loan they take out." Further Zopa sells "loan payment protection insurance to borrowers" and Zopa does not charge lenders a fee to use the exchange.[6]

Safeguard[edit]

In May 2013 Zopa introduced its Safeguard Fund, which covers investors’ losses if a borrower defaults. This was because peer-to-peer investors could then not offset their losses against tax.

The Safeguard Fund has paid out all losses to date, but there is no guarantee it will do in the future.[12]

Bank launch[edit]

In November 2016 Zopa announced its intention to apply for a banking license so it could expand the range of financial products it offers to UK consumers[13]

Zopa’s bank is scheduled to launch in 2018 and will sit alongside the peer-to-peer lending business. At launch, Zopa plans to offer FSCS protected deposit accounts to savers and overdraft alternatives to borrowers.[14]

Operations[edit]

Current operations[edit]

Zopa operates only in the United Kingdom.

Registered users[edit]

Total money lent[edit]

Defunct operations[edit]

The New York Times reported in 2006 that then Zopa CEO Richard Duvall announced that Zopa "planned to start a site in the United States to compete with Prosper this year."[15] In 2008 the New York Times reported that Zopa had withdrawn from the United States "citing adverse market conditions, and two San Francisco-area companies, Lending Club and Prosper, have encountered problems with securities regulators and were forced to stop all trading on their sites."[20]

In 2006 it launched in Italy and also Japan.[21] But these operations have since closed.[citation needed]

Finances[edit]

Funding

In 2006 the New York Times reported that Benchmark Capital was backing Zopa.[15]

In 2012 the New York Times reported that RIT Capital Partners in 2012 invested in Zopa though the venture capital vehicle Augmentum Capital.[2]

In 2014 the Financial Times reported that the London-based hedge fund Arrowgrass Capital Partners had invested £15m.[19]

Zopa is backed by Bessemer Venture Partners and Runa Capital.[citation needed]

Partnerships[edit]

Partnerships

It has established partnerships with other challenger businesses, including Pariti (https://pariti.com)[22], Uber,[23] Airbnb[24] and Metro Bank[25]

Peer-to-Peer Finance Association

Zopa is a founding member of the Peer-to-Peer Finance Association, which was established in 2011. Giles Andrews, Zopa’s then CEO was its inaugural chair. Along with the other P2PFA members, Zopa publishes details of its loan book on the P2PFA website each month.[26]

Corporate affairs[edit]

Corporate leadership[edit]

CEOs[edit]

Since founding in 2004

  • Richard Duvall - Co-Founder (2004 – Oct 2006)[15]
  • James Alexander (Oct 2006 - Mar 2007)
  • Doug Dolton (Mar 2007-2008)
  • Giles Andrews - Co-Founder (2008 – Aug 2015)[27]
  • Jaidev Janardana (Aug 2015 - date)

Corporate identity[edit]

Headquarters[edit]

The company is currently based in London Bridge[28]

Brand[edit]

Zopa etymology[edit]

Its name stands for "Zone of possible agreement", a negotiating term identifying the bounds within which agreement can be reached between two parties.

Logo design[edit]

Industry[edit]

By 2014 the Financial Times reported that the largest peer-to-peer loan platform was Lending Club and within Europe it was Zopa.[19]

Market Composition[edit]

In 2008 the New York Times reported that "Prosper, Zopa, Lending Club and others bring together would-be lenders with small-business borrowers."[29]

See also[edit]

References[edit]

  1. ^ Akst, Daniel (5 February 2006). "Where Lender Meets Borrower, Directly" (Business Day). New York, N.Y., United States: New York Times. The New York Times Company. Retrieved 9 March 2017. 
  2. ^ a b c d e f Werdigier, Julia (10 December 2012). "RIT Capital to Take Stake in British Financial Start-Up" (DealBook). New York, N.Y., United States: New York Times. The New York Times Company. Retrieved 9 March 2017. 
  3. ^ Scott, Mark (9 June 2014). "A Lift for One of London’s Financial Tech Start-Ups" (DealBook). New York, N.Y., United States: New York Times. The New York Times Company. p. B3. Retrieved 9 March 2017. 
  4. ^ Evans, Judith (14 August 2015). "My Money — Giles Andrews, Zopa chief". Financial Times. Nikkei. Retrieved 8 March 2017. 
  5. ^ "Zopa opera". computing.co.uk. Retrieved 2015-10-03. 
  6. ^ a b c "Q&A: Online lending exchange". United Kingdom: BBC. BBC. 7 March 2005. Retrieved 4 July 2016. 
  7. ^ Smith, Randall (7 August 2013). "Not Banks, but Still Lending Money and Drawing Investors" (DealBook). New York, N.Y., United States: New York Times. The New York Times Company. p. B5. Retrieved 9 March 2017. 
  8. ^ Hale, Thomas (26 September 2016). "Debut securitisation for Zopa loans". United Kingdom: Financial Times. Nikkei. Retrieved 10 November 2016. 
  9. ^ Hurley, James (17 November 2016). "Peer-to-peer lender Zopa to launch bank" (Business). United Kingdom: The Times. Times Newspapers Limited. Retrieved 8 March 2017. 
  10. ^ Williams, Aime. "Zopa gets FCA approval as peer-to-peer lender". Financial Times. Retrieved 15 May 2017. 
  11. ^ Tedeschi, Bob (15 June 2008). "Person-to-Person Loans" (Real Estate). New York, N.Y., United States: New York Times. The New York Times Company. p. RE6. Retrieved 9 March 2017. 
  12. ^ Duggan, Kate (3 June 2015). "Innovations in ethical investment". United Kingdom: Co-operative News. Co-operative Press Ltd. Retrieved 8 March 2017. 
  13. ^ Butcher, Mike (30 January 2014). "P2P Lending Pioneer Zopa Closes $25m From Hedge Fund For UK Expansion". TechCrunch. AOL Inc. Retrieved 3 October 2015. 
  14. ^ Suter, Laura (16 November 2016). "Peer-to-peer giant Zopa to launch digital bank" (Money). United Kingdom: The Telegraph. Telegraph Media Group Limited. Retrieved 8 March 2017. 
  15. ^ a b c d Tedeschi, Bob (13 February 2006). "It's Like Lending to a Friend, Except You'll Get Interest" (Technology). New York, N.Y., United States: New York Times. The New York Times Company. Retrieved 9 March 2017. 
  16. ^ Williams-Grut, Oscar (30 January 2017). "Peer-to-peer lender Zopa passes £2 billion loans milestone" (Finance). United Kingdom: Business Insider. Business Insider Inc. Retrieved 8 March 2017. 
  17. ^ Haslett, Emma (18 August 2015). "Zopa becomes the first UK peer-to-peer lender to crash through £1bn of loans" (Money). United Kingdom: City A.M. City A.M. Limited. Retrieved 8 March 2017. 
  18. ^ Williams-Grut, Oscar (17 August 2015). "Peer-to-peer lender Zopa is growing like crazy and will do £1 billion next year" (Finance). United Kingdom: Business Insider. Business Insider Inc. Retrieved 26 November 2015. 
  19. ^ a b c Moore, Elaine (29 January 2014). "P2P group Zopa secures £15m investment from Arrowgrass Capital". United Kingdom: Financial Times. Nikkei. Retrieved 9 March 2017. 
  20. ^ Stone, Brad (16 October 2008). "Is Peer-to-Peer Lending Working for You?" (Bits). New York, N.Y., United States: New York Times. The New York Times Company. Retrieved 9 March 2017. 
  21. ^ "Lending Alternative Hits Hurdle" (DealBook). New York, N.Y., United States: New York Times. The New York Times Company. 16 October 2008. Retrieved 9 March 2017. 
  22. ^ Finextra (2016-09-07). "Pariti taps into Zopa API to help millennials pay off card debt". Finextra Research. Retrieved 2017-08-02. 
  23. ^ Hall, Joe (6 May 2015). "Uber teams up with peer-to-peer lender Zopa to help drivers buy their own cars". United Kingdom: City A.M. City A.M. Limited. Retrieved 8 March 2017. 
  24. ^ Hurst, Samantha (7 October 2016). "Zopa Announces New Partnership With Airbnb to Help Customers Pay Back Home Loans". Crowdfund Insider. Crowded Media Group. Retrieved 8 March 2017. 
  25. ^ Dunkley, Emma (18 May 2015). "Metro Bank strikes deal to lend through P2P site" (Banks). United Kingdom: Financial Times. Nikkei. Retrieved 8 March 2017. 
  26. ^ "Peer-to-peer Finance Association". 
  27. ^ Cortese, Amy (3 May 2014). "Loans That Avoid Banks? Maybe Not" (Business Day). New York, N.Y., United States: New York Times. The New York Times Company. p. BU1. Retrieved 9 March 2017. 
  28. ^ Hurst, Samantha (4 August 2016). "Zopa Relocates: Moves Into New London Bridge Digs". Crowdfund Insider. Crowded Media Group. 
  29. ^ Fost, Dan (30 September 2008). "Likes Taking Risks, Profitable Returns" (Small Business). New York, N.Y., United States: New York Times. The New York Times Company. p. SPG5. Retrieved 9 March 2017. 

External links[edit]