Allica Bank bags £100m cash injection after swing into profit
Digital lender Allica said it had bagged a £100m cash injection today as it bucks a slowdown in venture capital investment and looks to guzzle up more of the UK’s small business banking market.
Allica, which was founded in 2020 and provides savings, lending and payments services for small businesses, revealed that growth technology investor TCV had led the equity round into the firm, alongside backing from existing investors Warwick Capital Partners and Atalaya Capital Management.
The cash injection for Allica comes amid a slowdown in the investment landscape this year as sharp interest rate hikes make cash harder to come by and cause investors to place a premium on profitability rather than rapid growth.
Allica boss Richard Davies told City PM the fundraise was eased by the firm’s swing into the black in June and it was now angling to take more market share from the UK’s traditional lenders.
“Our timing was certainly good, because there had been this massive shift [toward profits] on the back of the higher inflation, higher interest rate environment kicking in early summer,” Davies said.
“That clearly is seen in the fact stocks that were pure growth became very unpopular. What we are trying to do is combine high growth and profits.”
Davies said the approach had paid off in 743 per cent year-on-year growth, putting the firm in a position to double down on investment into its product and expansion of its loan book, after it swelled past the £1bn mark earlier this year.
He added that Allica was braced for a rise in defaults, however, as the firm’s client base of firms with 10-250 employees are buffeted by a looming recession.
“Energy [prices] and the labour market are the two most common things I get from from clients right now and I think that will go through to next year,” he said.
Allica’s buffers were well placed to withstand the slide in economic conditions however, he said.
Backing from TCV today will now see Allica join a portfolio of firms including Revolut – where Davies was a former executive – Nubank and Zepz.
Michael Kalfayan, Partner at TCV said Allica had built a “truly impressive platform” that is looking to solve a “great need” for SMEs.
“Allica is a prime example of this and we’re incredibly excited to collaborate with this strong team as they work to be the country’s leading digitally-native SME bank,” Kalfayan said.