Fintech News

Goldman Sachs Invests £100 Million in Fintech Startup Neyber.

Fintech Startup

Goldman Sachs has invested £100 Million in Neyber, a UK based fintech startup founded by two of its former employees. Established in 2014, Neyber partners with employers to let their employees take loans which are then recovered through salary deductions. This leads to a win-win situation for both the borrowers who have the opportunity to access credit at attractive interest rates and the lender, as the risk of default is very low.

Goldman’s £100 million investment in the startup is partly debt and partly equity. Concurrently, existing investors led by Gael de Boissard, the former co-head of Credit Suisse’s investment bank and the former Deutsche Bank COO Henry Ritchotte have pumped £15 million into the startup.

Martin Ijaha, a former banker at Goldman Sachs where he worked until 2012 is now the CEO of Neyber, a company that he co-founded with two others who also had a background in investment banking. Ijaha explains how he came up with the idea when thinking about his family’s experiences as a child.

Talking to Business Insider, Martin says that he had been looking at fintech for a long time even when he worked at Goldman Sachs; which was then dominated by peer-to-peer lending. He had found P2P leading interesting but with some fundamental flaws. In his view, peer-to-peer lending did not provide any real value proposition for borrowers because it was mainly targeting people who could obtain loans from banks.

The idea behind Neyber was greatly influenced by Osusu, a Western African savings club tradition in which Ijaha’s mother had actively participated during his childhood. Each member of the club would put £50 into a pot every time they received their salaries. One of the members would then be given the contributions for that month to keep for the group. Members would be able to borrow money from the pot whenever they were in need of it and pay without interests.

The idea behind Neyber is to avail credit at affordable interest rates, by applying a collective saving model borrowed from Osusu. Ijaha, first approached his former headmaster at St. Charles in West London, who was enthusiastic about the idea because his employees had been asking him for salary advances. After running a pilot with the school, he realized that the demand was even higher than he had anticipated.

Ijaha then went on to convince the Police Mutual, the mutual insurance for the UK police, to sign up. In addition to agreeing to pilot with Neyber, Police mutual invested £50 million which the fintech would use to lend to police officers. While the police officers were borrowing from banks at the rate of 30 percent, Neyber was lending at only 7 percent.

To date, Neyber has given loans in excess of £70 million and is currently working with more than 80 employers including DHL, Anglian Water and 10 NHS trusts.

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