US-based online lending marketplace SoFi raised $1bn yesterday in a series E round led by telecommunications firm SoftBank that stands as the largest round ever closed by a fintech company.
The round also included China-based social network Renren, Wellington Management Company, Institutional Venture Partners (IVP), Baseline Ventures, DCM Ventures and affiliates of investment adviser Third Point, which also participated through its Third Point Ventures unit.
Founded in 2011, SoFi operates an online credit marketplace that offers mortgages, mortgage refinancing and personal loans, though it is perhaps best known for its student loan refinancing. It has issued more than $4bn in loans so far and is on track to break the $6bn mark by the end of 2015.
SoFi did not reveal the valuation at which it raised the series E funding, which follows the $200m it secured in February this year at a $1bn valuation. The Wall Street Journal reported in August that the forthcoming round could value it at $4bn.
The funding will be used to expand SoFi’s product offering while also simplifying delivery, particularly on mobile. In addition, the company plans to expand its member services and increasing its headcount by about 100 to 500 by the end of this year.
Reports in May suggested the company, which claims it is already profitable, could look to go public this year at a $3.5bn valuation, but these plans appear to have been postponed.
SoFi has now raised $1.42bn in total, with backers of its February round including Renren, Third Point, IVP and Wellington Management.
Renren, DCM and Baseline all took part in a $77m series B round in 2012, before being joined by Peter Thiel and Wicklow Capital for a $80m round in April 2014.
Mike Cagney, SoFi’s co-founder and CEO, said: “This funding will dramatically advance expansion of our disruptive products and experiences, and in turn, meaningfully benefit financially responsible individuals. Our trajectory is clear: we are well on our way to becoming the most trusted financial services partner in the US.”
The round also represents the latest significant investment to be made by SoftBank in the online services space. Companies it has backed with considerable investments in the past year include Snapdeal, Coupang, GrabTaxi and Didi Chuxing.
Nikesh Arora, president and chief operating officer of SoftBank Group, explained: “SoftBank seeks to invest in large industries or geographies that are ripe for change.
“This investment gives SoftBank exposure to the financial services sector, which is one of the largest and most important industries in the world. SoFi is clearly a game changer in the fintech space.”