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INTERVIEW Christoph Rieche of Iwoca

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Iwoca, which specialises in short-term loans to marketplace sellers, has lent its first million and won investment of £2m, less than a year after it opened for business. Internet Retailing talked to Iwoca co-founder and chief executive Christoph Rieche to catch up on how the company has developed so far – and where it goes from here.

Shortly before Christmas, Iwoca celebrated a milestone when its total lending hit £1m.

The finance company, which started lending only in March last year, had reached the milestone ahead of time. “It went a bit faster than we expected,” said Christoph Rieche, co-founder and chief executive of the company, whose name stands for Instant Working Capital. “We had a tremendous demand for our product that was accelerated by the upstocking for Christmas. It’s been really an exciting and joyful ride since we started.”

It was a combination of the “very, very interesting [ecommerce] market,” the lack of financing to small business and the emergence of the big data analysis tools that enable the company to make informed credit decisions that inspired co-founders and former investment bankers Rieche and James Dear (pictured above, l-r) to start the company. “We felt there was a very compelling case to set up a venture to combine these three and provide financing to a fast-growing industry,” said Rieche.

The technology and finance company started out providing small business loans to eBay sellers, later expanding to those selling on Amazon Marketplace. As of this year the company plans to expand to financing those who trade through their own web stores.

Iwoca lends primarily to customers who have been trading for at least a year, and turn over upwards of £10,000 a year. Credit decisions are reached through the analysis of data including sales and feedback scores. The company charges an average 5% on the capital that’s outstanding each month. Initially Iwoca lent for three months, a term that was more recently extended to six months. The company currently lends only in the UK but plans to expand overseas in time.

Speaking to Internet Retailing, Rieche says the company is too young to set definite targets for growth, but says he expects it to grow along with the ecommerce market. If the UK ecommerce market doubles in value from £70bn in 2011 over the next five years, there will be £70bn of additional sales, he says.

“Somehow this needs to be financed,” said Rieche. “A lot of our customers do contribute to this enormous growth of the entire ecommerce space and they can’t get to the same growth rates in the next five years if they don’t have access to additional financing. They want to be able to finance it from their entire operation, the cash flow they’re generating.

“The amount of financing that may be required is quite significant. How much of that we’ll be getting is difficult to say but there should be enough out there to have a relatively substantial book.”

And he also forecasts that this growth will come across a wide variety of sales channels, all of which will grow “quite massively”. “I think the consumer will decide where he wants to shop. You will have consumers who prefer to shop on eBay, Amazon or on a webstore or at the bricks-and-mortar store. As a seller you need to be with your product on all the different platforms so you can maximize the different customers buying your product.”

At a time when channels such as eBay and Amazon are enjoying double digit growth, that seems to bode well for the future.

Certainly Talis Capital thought so when it advised Beyond Digital on investing £2m in the company. At the time of the announcement, Matus Maar, director and co-founder of Talis Capital, said: “The market opportunity in next generation lending, using different and new data sources, combined with an experienced and talented management team, is an exciting proposition.”

The company has also won recognition more widely, winning a Smarta100 Award for 2012, and named a top 20 start up for the year by

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