Paris-based October, an online marketplace that assists investors in lending money directly to SMEs, revealed that it had raised €35 million for its most recent debt fund, October SME V.
The fund’s liquidation, according to a statement, makes it the first item recognized as an Article 8 SFDR – Sustainable Finance Disclosure Regulation for October (fund promoting Environmental, Social, and Governance, ESG, characteristics).
The European Investment Fund (EIF) and Dutch impact investor Invest-NL invested.
The EIF is committing the remaining €20 million through the InvestEU program, and Invest-NL is contributing €15 million under the Dutch Alternative Credit Instrument (DACI) mandate.
The EIF’s participation allowed the October SME V fund, which was launched in September 2022, to reach its goal of €100M. With the EIF’s support, October will be able to attract more public and private investors. Small firms in France, the Netherlands, Italy, Germany, and Spain will be the focus of the fund.
The EIF’s past investments in the October SME II, III, and IV funds are being continued with this money. Additionally, October benefited from an earlier EIF investment that was backed by the “Private Credit Tailored for SMEs” initiative of the Investment Plan for Europe, which was InvestEU’s precursor program.
According to Marjut Falkstedt, the EIF’s CEO, “Overall, the funding we make accessible to SMEs protects and generates many jobs, making the EIF’s contribution to the European economy significant. I’m pleased that October and the EIF can work together once more to promote SMEs through alternative finance.
The October SME V fund, with a lending target of €400M, is expected to offer more than 3000 loans to small businesses across Europe over the following two years.
Investors will have access to a comprehensive and varied portfolio that spans more than 15 different industries and several European Union nations, including France, Spain, Italy, the Netherlands, and Germany. Loan sizes ranging from €10K to €2M are anticipated, with an average loan size of €130K.
The business asserts that it has a “unique” risk/return profile that targets borrowers at the lower end of the market and offers investors favorable returns. With short-term, monthly payouts, and monthly price evaluations, every effort has been made to protect investors and their earnings from inflation.
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“With this investment, the EIF continues to support European SMEs through the October platform,” says CEO Patrick de Nonneville. Our data-driven ESG X-Ray module, which allows us to incorporate ESG criteria into our investment process without adding more paperwork for SMEs, is essential to this new fund.
The investment strategy for October encourages the development and preservation of jobs as well as favorable social and environmental consequences. According to the business, “Our ESG X-Ray reporting enables SME managers to learn more about sustainable development and to take practical steps that are taken into consideration when determining this score.
This can involve attempts to improve governance, create jobs, diversify the hiring pool, and lessen the impact on the environment.
Olivier Goy and Patrick de Nonneville established October in 2014 intending to improve business financing. Direct financing of SMEs across the continent is made possible by it for private lenders and institutional investors. Since its founding in 2008, October has financed more than €965M to 3,800 European SMEs.
Financial service providers have a choice of an end-to-end solution or a module with October Connect’s neo-lending business platform, depending on their needs.
The company claims, “We have a solution for you whether you are trying to speed your risk analysis and management, minimize your fraud exposure, or offer lending as a new product.”
Image Credit: October
