SoFi, a US-based peer-to-peer lender focusing on the student loan market, has raised $80m in series C funding from investors including Renren, a China-based internet company that is one of SoFi’s existing backers.
Venture capital firm Discovery Capital Management led the round, which also included venture capitalist Peter Thiel, Wicklow Capital and existing investors including Baseline Ventures.
SoFi operates an affinity-based marketplace that connects ex-student borrowers with investors, bypassing banks in the process, and has funded more than $450m in loans since it was founded in 2011. With student loan repayment conditions becoming increasingly onerous, the service allows people to access better rates through which they can repay their loans more easily.
“A generation of Americans has deferred their dreams, because they have to service more than a trillion dollars of student loan debt instead,” said Thiel. “Until college administrators realise how much their tuition hikes hurt students, we need to find innovative ways to make debt more manageable. SoFi helps borrowers get out from under the crushing burden of debt and begin pursuing their own goals immediately, instead of waiting for a time that never comes.”
SoFi announced in October 2013 that it had secured a community fund with student loan guarantor ECMC that had brought it over the $500m mark for debt and equity raised. At that point it had raised $151m in warehouse credit lines, $200m in bank participations and $90m in equity from Renren, Discovery, Baseline and VC fund Innovation Endeavors.
“SoFi is creating a better financial marketplace,” said SoFi chief executive Mike Cagney. “By bypassing the banks and directly connecting highly qualified borrowers and investors, we’ve been able to reduce their costs, improve returns and provide a much better experience than traditional financial services. The Discovery led financing allows us to aggressively build out our marketplace and significantly expand our products and services to members.”