Upstart Raises An Additional $32 Million in Funding
Upstart, a lending company that focuses on Millennials, has raised another $32 million in funding, which brings their total funding to $85 million. The company focuses on providing loans to those who may not have a traditional credit history and corresponding score.
The company plans to use this latest investment to expand their marketing to banks, credit unions and retailers so these organizations can extend credit to a larger body of individuals as well. Upstart uses a “machine-learning-based system” so banks can approve more people and offer consumers lower default rates.
Upstart is one of a few companies trying to find new ways to determine whether a loan applicant is a good risk for a bank. Recently, the CFPB has recognized how difficult it is for those with limited or no credit history to get a loan. Millennials are particularly at risk, as they may not have an extensive credit history.
Dave Girouard, CEO of Upstart, told TechCrunch that the company primarily markets to Millennials. “Our average borrower is 28. The most common use of [our loans] is to pay credit card debt, though it’s really a personal loan that you can use for anything.”
While the company charges between 4.96% and 29.99% APR, Girouard said the average borrower pays 12% on a fixed-term loan. The company has loaned more than $650 million in its first three years of business, and hopes to lend $1 billion this year.