Lending firm Earnest raises $275M as FinTech stays in the spotlight – TechCrunch
With a whopping $275 million in equity and debt financing, the next-gen lending company Serious now has the firepower and strategic partners to become a more full-service financial services company.
The lending segment of the financial services industry has been one of the areas that has garnered the most interest from venture capitalists with mature companies like SoFi raises massive $1 billion seed round from Softbank Capital earlier this fall and young lenders like CommonBond raising $35 million over the same period.
Earnest’s $75 million in equity was led by Battery Ventures and the company received another $200 million in debt from a syndicate of mostly undisclosed insurance companies led by New York Life.
The Earnest round is just another drop in what has been an incredibly large bucket of investment for fintech companies. In total, more than $11 billion has been invested in a fintech services company, according to CB Insights. This represents an increase of more than $5 billion over the previous year, and the highest amount invested in financial services technology companies in the past five years.
According to Earnest’s managing director, Louis Beryl Earnest lends between $2 million and $5 million a day and the total dollar amount lent by the company has increased 50 times over the past year. On average, the company’s loans are around $70,000 and Earnest’s headcount has grown from 30 to 160 people since Earnest raised its $19.8 million Series A from Maveron. earlier in the year.
Among its products, Earnest’s student loan business is the largest, followed by its lending business for personal loans. The coding academy lending activity completes the pack. Interest rates on Earnest products are the same as other online loan products, according to Beryl, but the company’s technology saves users money on their payments. “The average person saves $18,000 with Earnest,” says Beryl. “The best we’ve seen is $14,000.”
Precise pricing gives customers flexibility, they can choose their monthly payment and thus offer them a lower interest rate, Beryl told me.
Beryl said the company plans to hire an additional 200 people over the next year as it rolls out a mobile version of its lending tools.
“One of the things we believe about the future of finance is real-time connected accounts using software and data [can] reduce costs,” says Beryl. “Today we do that in the area of lending. As we build our platform, it could be in financial planning, or it could be in financial education.
People familiar with the company’s plans say Earnest could use its lending business to expand into other markets. “The market opportunity for what we build is truly limitless,” says our source. “Whether it’s saving for the future, paying for your education, or living your life and managing your life in a financially responsible way.”