Shares in Funding Circle, the financial technology firm, have tumbled in the first day of full trading on the London Stock Exchange.
They fell as much as 24% from the float price of 440p before recovering slightly to trade at about 364p.
Analysts say the flotation may have overpriced the firm.
Funding Circle draws on a pool of funds collected from individuals and firms, which is then lent to small businesses vetted by the company.
Because it cuts out banks, Funding Circle was billed as a disruptive force in lending.
It offers loans to small businesses in the UK, the US, Germany and the Netherlands.
Helal Miah, an investment research analyst at the Share Centre, said shares have fallen because the initial valuation of £1.5bn, was too high.
He also pointed out that marketing spending is equal to 40% of revenues – a high ratio.
That, coupled with sparse financial data about the firm, would be likely to make investors wary, he added.
Funding Circle is the first such lender to float on the London stock market.
It said the stock market listing would help “engender trust” with investors, borrowers and regulators.
The venture, which was founded in London in August 2010, plans to use the money raised on the stock market to expand into new markets.