Online business lenders typically cater to small commercial borrowers, a niche that some U.S. banks have shunned in recent years.

Now one San Francisco-based startup is eyeing loans to larger businesses, the latest move in Silicon Valley’s quest to disrupt traditional finance.

Neptune Financial, founded by two former executives of the online small-business lender Funding Circle, is set to make its public launch on Tuesday. The firm, nicknamed NepFin, has raised $13 million in equity funding, including $10 million in its most recent financing round.

Albert Periu
Albert Periu is NepFin's CEO and co-founder. The online lender is set to make its public launch Tuesday.

NepFin plans to target middle-market companies that often turn to banks for credit. The company will make loans of $5 million to $60 million to firms that generate $10 million to $100 million in annual revenue.

CEO Albert Periu maintains that businesses at the smaller end of middle-market commercial lending are underserved by banks and other existing financing sources, such as business development companies.

He says that banking industry consolidation and regulatory changes, including tougher capital requirements, have imposed new hurdles for middle-market businesses that need credit.

“They are as underserved as small businesses, I would argue even more underserved at this point,” said Periu, formerly the global co-head of capital markets at Funding Circle.

NepFin is betting that technologies such as artificial intelligence can speed up decision-making and generally make middle-market commercial lending more efficient than it is today.

Periu said that human beings will play a significant role in NepFin’s processes. “But AI can do a lot in terms of the first draft,” he added.

In addition to offering loans, NepFin also plans to provide business software tools to middle-market businesses.

The startup''s $10 million Series A funding round was led by Sands Capital Ventures.

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