SAN CARLOS, Calif.–Upstart, a five-year-old online lending company that has built its model on quickly identifying people who are less likely to default on loans, has raised $32.5 million in fresh funding and believes it has a strong opportunity to license its technology to banks and credit unions.
The company, which has raised $85 million to date, is expected to move into the black in 2017.
CEO Dave Girouard told TechCrunch that Upstart’s value proposition lies in the “whole of people saying, ‘We’re not going to try to build something ourselves.’ We’re strongly on the tech and data science end of the spectrum. We don’t come from financial services, as do a lot of other [lending] companies. We apply very modern data science to the question of who gets a loan and at what price; that’s the heart of what we’re known for.
Girouard said the company’s SaaS model will charge a monthly fee, in addition to a smaller fee per loan that captures the cost of originating a particular loan, according to TechCrunch.
The company’s current average borrower is 28 and uses the loan to primarily pay credit card debt. He said it has had “very low” default rates of a couple of percentage points, TechCrunch reported.
Girouard said borrowers pay Upstart 12% on average for a fixed-term loan, with no prepayment penalty. Its goal is to do $1 billion in loans this year.