Upstart Nabs $35M to Advance Its Data-Based P2P Lending Platform

With over $120 million in total loans issued on its P2P lending platform since May 2014, Upstart announced that they have closed $35 million in a Series C Funding Round Funding Round Startups look to raise capital can participate in a funding round. These refers to the various rounds of funding that occur upon proof of concept, customer base growth, and the probability of success. While they are various types of funding rounds, the most commonly seen in startups include the following funding rounds: Seed, Series A Fundraising, Series B Fundraising, and Series C Fundraising. In order for a funding round to take place, a valuation must be performed by analysts for the business Startups look to raise capital can participate in a funding round. These refers to the various rounds of funding that occur upon proof of concept, customer base growth, and the probability of success. While they are various types of funding rounds, the most commonly seen in startups include the following funding rounds: Seed, Series A Fundraising, Series B Fundraising, and Series C Fundraising. In order for a funding round to take place, a valuation must be performed by analysts for the business Read this Term. Led by Third Point Ventures, the deal includes participation from Khosla Ventures, First Round Capital and Collaborative Fund.

Founded by Dave Girouard a former President at Google Enterprise, the firm comprises other former Googlers, and is using that experience in creating a data-driven platform for lending. In that regard, Upstart’s unique selling point is its proprietary rating system that they state goes beyond FICO scores to “finance people based on signals of their potential, including schools attended, area of study, academic performance, and work history."

Collecting borrower data, Upstart then calculates a rating, using traditional loan grades of AAA, AA, A, B, C and D. With the grades, lenders can then filter for loan types that fit their investment goals and risk tolerance on the P2P platform.

Among P2P lending platforms, Upstart is one of a growing list of firms incorporating non-credit score data to grade their borrowers. While credit scores are able to rank the historical financial worthiness of borrowers, P2P lenders who are sourcing alternative data try to discover other important patterns of their users. Specifically, they aim to calculate whether borrowers are considered responsible, which would equal lower default rates.

According to statistics being provided by Upstart, the platform's 97.9% of loans have been repaid on time, with only 0.5% being charged off. So far in 2015, the platform has processed around $90 million in loans after $34.6 million were issued in 2014.