Online Lender AvantCredit raises $225 Million in Series D Funding

2014-12-04
Published : Dec-2014

AvantCredit announced that it had raised $225 million in financing which was led by an existing investor, Tiger Global Management. New investors in the financing round included PayPal co-founder and venture capitalist, Peter Thiel and Kohlberg Kravis Roberts, which is a private equity firm.

Recently, AvantCredit announced that it has secured a $300 million credit facility from Victory Park Capital, which is an investment firm. Earlier the firm had provided debt financing. The new deals together bring AvantCredit’s total equity and debt raised to over $1 billion.

Investors are betting on the success of lending model of AvantCredit, which seems old-fashioned as compared to other lending start-ups. Unlike peer-to-peer lending platforms, which help borrowers, connect with lenders online, AvantCredit is a direct lender which makes personal loans from its own capital. AvantCredit says its competitive advantage stems in part from its technology for analyzing borrowers.

The company’s Interest rates on loans can be quite high. According to AvantCredit that the average annual rate of interest is 36 percent and those loans can have duration of several years. However, the company says the loans have no hidden fees.

AvantCredit appears to be catching on among consumers. Recently, the total value of the loans it has made reached $500 million, and according to the company, its number of customers has surpassed 100,000.

In 2014, AvantCredit raised two credit facilities totaling $400 million and a $75 million round of equity financing.

A managing director at DFJ Growth, Randy Glein said that AvantCredit is benefiting from shifts in the banking landscape since the financial crisis. Banks are moving away from personal loans, particularly to borrowers with tarnished credit scores.

Mr. Glein added that they saw AvantCredit as emerging as one of the clear leaders in this market.

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