US-based online lending platform developer Upstart Holdings filed yesterday to raise $100m in an initial public offering that would enable corporate investors Progressive, Alphabet and Rakuten to exit.
Upstart as built an online lending platform that uses artificial intelligence to assess loan applications and match them to services offered by its banking partners.
More than 620,000 loans have been issued through the platform and about 70% of its loans this year have been conducted through an entirely automated mechanism. The company has increased its revenue 45% to $147m in the first nine months of 2020 while making a profit of nearly $5m.
The offering comes after more than $160m in funding for Upstart, including $50m from Progressive Investment Company, a subsidiary of insurance firm Progressive, as well as financial services firm First National Bank of Omaha and pension manager Healthcare of Ontario Pension Plan, in April 2019.
E-commerce firm Rakuten’s Fintech Fund had co-led a $32.5m series D round for the company in 2017 with an undisclosed US-based asset manager, investing together with Third Point Ventures, Khosla Ventures and First Round Capital.
Third Point Ventures, Khosla Ventures, First Round and Collaborative Fund had supplied $35m for Upstart two years earlier, the last three having joined Founders Fund, Eric Schmidt, Marc Benioff and Scott Banister in a $5.9m series A round in 2013.
Upstart had raised $1.75m in seed capital from GV, the subsidiary of internet and technology group Alphabet then known as Google Ventures, as well as First Round, Kleiner Perkins Caufield & Byers, New Enterprise Associates, Tuesday Capital (then Crunchfund) and Mark Cuban in 2012.
Third Point Ventures is the company’s largest investor, with a 19.5% stake, followed by Stone Ridge Asset Management (9.1%), Khosla Ventures (8.4%), Rakuten (5.3%) and First Round (5.2%).
Goldman Sachs, BofA Securities and Citigroup are lead book-running managers for the IPO, which is slated to take place on the Nasdaq Global Select Market. Jefferies and Barclays are also book-running managers while JMP Securities and Blaylock Van are co-managers.
