SoLo Funds Banks $10M Series A For Peer-to-Peer Lending

SoLo Funds is building an alternative to predatory lending through a new type of peer-to-peer lending in which strangers fund strangers asking for short-term personal loans for immediate needs.

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“Even before the pandemic, 70 percent of Americans were living paycheck to paycheck, and many didn’t have $400 in their savings account,” Travis Holoway, co-founder and CEO of SoLo Funds told Crunchbase News. “More than half of the country has been waiting on $600 for more than six months.”

The Los Angeles-based company began working on its mobile marketplace in 2016 and launched it in 2018. The platform is now powered by a $10 million Series A round.

ACME Capital led the round with participation from Impact America Fund​, ​Techstars​, ​Endeavor Catalyst​ and ​CEAS Investments. To date, SoLo has brought in $12 million, which includes a $2.8 million seed round and a series of convertible notes from other investors, according to Holoway.

ACME Capital Partner Brian Yee​ was introduced to SoLo through portfolio partners and found Holoway and co-founder Rodney Williams’ mission to be “amazing.” SoLo is important now and in the future because as a lot of jobs came back, Yee expects there to be a reckoning where people will be squeezed financially.

“You hear a lot of predatory lending stories, and these loans are a lifeline for many people,” Yee said. “When I started playing around with SoLo, it resonated with me. It is still raw, but I am always checking the application to see if there is an interesting loan I can fund. I can’t think of another company solution that solves aspects for every constituent: for the lender to lend on his or her own terms, and for the borrower to set the loan.”

Other lending vehicles typically group investors together and lend on their behalf, but SoLo Funds enables its members that provide loans to have complete autonomy to see who they could be lending to and choose which loans they ultimately fund, Holoway said. Lenders receive between 3 percent and 10 percent returns on their investment.

On the borrower side, those platform members are able to set their repayment terms and improve their credit as they pay back the loan. SoLo’s average loan is $200, with many people requesting emergency funds for groceries, child care, transportation, medical bills and rent.

“We are matching loans in an hour, which is unprecedented in peer-to-peer lending,” Holoway said. “For the borrowers, it is a personal experience going on the platform, requesting a loan and having a stranger fund it. It feels personal to them that someone chose them, so they want to pay it back because they don’t want to burn a bridge on this platform.”

In case that payoff doesn’t happen, SoLo Funds offers features, including SoLo Lender Protection, which safeguards the loan in case the borrower is delinquent, which in turn eliminates the risk of significant loss for the lender, Holoway said. There is also SoLo Score, a transaction-based view of repayment confidence based on a member’s cash flow.

In the past 12 months, the company has experienced 40 percent month-over-month growth in revenue. The platform funds tens of thousands of loans per month as well, he added.

The new funding will go toward building out the team and putting more focus on SoLo’s go-to-market strategy.

“We are the fastest-growing fintech that no one has ever heard about,” Holoway added. “We will focus on the overall experience for both sides of our user base, including resources to protect lenders, insurance against risk, and to deploy more capital. We will also be mining the analytics, which we use for underwriting based on a person’s ability to pay it back on one date. Our goal is to leverage that data to provide a path to upward mobility that will show a person is more creditworthy than deemed.”

Feature photo of SoLo co-founders Travis Holoway and Rodney Williams courtesy of the company.

Blogroll illustration: iStock

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Digital-lending startup Blend just nabbed $300 million from backers including Coatue and Tiger and is now valued at more than $3 billion. Here's how it's disrupting consumer banking.

Summary List PlacementWhen it comes to consumer banking, the offerings and services involved run the gamut from the most basic of checking accounts to highly-personalized home loans and specialty vehicle auto loans. Accessing them all in one place via a seamless, online user experience, however, isn’t always easy.
That’s one of the new focuses of digital-lending startup Blend.
On Wednesday, San Francisco-based Blend announced a new fundraising round that brought the company’s valuation to $3.3 billion, a near doubling of its valuation since it last raised money five months ago in August.
See more: Machine-learning powered mortgage startup Blend overshot its expectations with a $130 million fundraise. Their CFO explains how they pulled it off.
Blend works with traditional lenders — such as Wells Fargo, US Bank, and Navy Federal Credit Union — to streamline their process of offering and managing mortgages and loans via digital channels. 
The $300 million Series G round was led by Coatue Management and Tiger Global, whose past experience investing in software companies like Hinge Health and Rapyd appealed to Blend’s founder and CEO, Nima Ghamsari.
Previous investors include Canapi, who joined the company’s Series F round in August. 
“We are a software company and so I wanted to get people who understood software. This was just the right round. It was a right time for somebody like that in the late enough stage,” Ghamsari told Insider. 
“We’re excited because they’re both very long-term oriented investors,” he added.
A common system
Ghamsari said that a key part of Blend’s growth since the startup was founded in 2012 has been the increasing success of digital strategies at fintechs and challenger banks, placing pressure on traditional banks and lending companies to upgrade their online experience.
The COVID-19 pandemic, meanwhile, has only accelerated the “digital transformation banks and lenders are undergoing,” he said.
Read more: Blend, a startup that’s building a ‘one tap’ mortgage-application tool, is now jumping into the auto-loan market
Ghamsari said that the new capital will go primarily towards deepening existing customer relationships and further building out Blend’s suite of new consumer-banking tools used by banks like BMO Harris. 
“These banks are built product line by product, even fintechs are built product line by product line. We’re going to build this common platform that can underlie all those products.”
Blend said it added more than 200 employees in 2020, a 60% increase, and facilitated $1.4 trillion in mortgages through its online tools.
Mortgage roots
Even as Blend looks to develop what it calls its new end-to-end service for digital banking, it’s also remained true to its lending roots by continuing to innovate the online mortgage process.
Blend’s lending technology, specifically, is currently used by Wells Fargo – one of Blend’s first partnerships in the mortgage space – and US Bank, among others.
“We’ve gone really, really deep in the home buying and home-financing process,” Ghamsari said, including developing a new offering that tries to improve on the “closing table” stage of taking out a mortgage — when the borrower must sign page after page of paperwork and meet with their lender, an escrow agent, a real estate agent, and lawyers.  
Ghamsari also added that he believes Blends benefits from operating in the relatively confined industry of consumer banking and lending.
“One of the benefits of being in a vertical is that you have a small number of customers. We have a small number of customers that we can spend a lot of time on, and I want to spend more time on them, not less, as we become more successful,” Ghamsari said.
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