Student-Loan Startup Raises Money from Prosper’s Suber, Others
By Dakin Campbell (bloomberg.com)
– Credible says second round of financing draws $10 million
– CEO Dash says company still hold most funds from first round
Credible, which offers an online exchange for student and personal loans, raised $10 million from investors including Ron Suber, the president of Prosper Marketplace Inc., and Regal Funds Management to expand its business of matching borrowers with lenders.
The Series B funding round was led by Regal, and included existing investor Carthona Capital, Credible founder and Chief Executive Officer Stephen Dash said this week in an interview. The firm’s Series A round was for $10 million and much of it is still in the bank, Dash said.
San Francisco-based Credible works with student loans much like Kayak.com does for airline fares, acting as a marketplace for borrowers to compare available interest rates. The closely held firm works with credit bureaus and lenders such as financial-technology startups or banks to provide a personalized rate, Dash said.
“We have effectively created a pricing system that is accurate, because we are getting the data from the lenders,” Dash said. “We are really focused on helping millennials make these decisions about student or personal loans in a really simple way.”
The lender gets involved only when the borrower decides to accept the quote. Credible doesn’t initially provide data to lenders or hit a person’s credit report. It uses proprietary technology to quote an interest rate that will match the rate offered by a lender 95 times out of 100, Dash said.
Credible is tapping into the craze for online loans, pioneered by so-called peer-to-peer lenders like LendingClub Corp. and Prosper, and student-loan firms like Social Finance Inc. Dash’s firm, founded more than four years ago, participates in just under $1 billion in lending a year, including new student loans, refinancings and personal loans, he said.
The fast-growing online-loan industry ran into trouble last year after LendingClub and others struggled with loan quality and due-diligence concerns. LendingClub’s market value has slumped to $2.15 billion from as high as $10 billion after a December 2014 public offering. Social Finance, which specializes in refinancing student loans, pushed back its plans to go public, CEO Mike Cagney said last month.
Credible closed its Series A in 2015 in a fundraising led by Soul Htite, founder and CEO of Dianrong.com and co-founder of LendingClub, according to TechCrunch. Suber also participated in that round.Original Article