Niche business lender Capitalflow is to become part of Dutch fintech bunq with Pollen Street Capital staying involved.

Capitalflow CEO Ronan Horgan, who established the venture in 2015, said the lender had interest from a number of potential suitors and over the past six months.

Bunq bank was established in 2012 by Ali Niknam and has grown its deposit base to over €1 billion. Unlike other digital banks, bunq charges its customers for the use of its services.

“Bunq believes that the Capitalflow brand and position in the market would be a great addition to its business and it will accelerate the bank’s route to profitability quicker,” Horgan added.

“By selling Capitalflow to bunq and committing further equity, Pollen Street Capital becomes a shareholder in the bank. From Capitalflow’s perspective, we become a wholly owned subsidiary of bunq and we can avail of its competitive funding through its deposit base.

In Association with

“Our intention is to scale our business over the coming years and be a credible alternative business lender to the pillar banks. We have invested heavily in a digital platform over the past 18 months that will allow us to scale, and we hope in time to add further products in time.”

Horgan (pictured) believes Capitalflow can become the go-to digital business lender in Ireland in the next few years.

“Many of the team in Capitalflow worked with me in Bank of Scotland Ireland, and it was a very sad day when the bank announced its exit in 2010,” Horgan added.

“We had a burning desire to re-establish ourselves again and to learn the many lessons from the financial crisis. We now have a huge opportunity to do just that, and to make sure we have the right governance structures in place with the right culture to make sure we are successful for many years to come.”

The Capitalflow deal coincides with an announcement by bunq, which had its first ever profitable month recently, that it has raised €193m in new capital. Pollen Street Capital and Ali Niknam both invested, according to the company.

According to Niknam (pictured above): “bunq was founded to challenge what banking is and can do. By putting our users first, we have created a bank that is super focussed on making life easy in a sustainable way. We’re extremely excited to join forces with Pollen Street Capital to further expand the bank of The Free throughout Europe.”

James Scott, partner at Pollen Street Capital, added: “Combining the SME lending expertise of Capitalflow and the digital execution capability of bunq creates a platform with a pan-European reach that will mark a new standard in European digital banking.”