• SoFi

  Led · Debt Financing · Jun 2013

  SoFi is a San Francisco-based online lender that offers consumer loans, student loans and a range of personal-finance products. The company has been expanding its product mix, most recently launching two no-fee exchange-traded funds to access the $3.9 trillion U.S. ETF market. That ETF launch triggered customer issues when SoFi liquidated existing ETF investments and funneled proceeds into its own funds, which prompted reported tax consequences for at least one customer. SoFi largely markets to younger customers and faces competition from LendingClub, Prosper, OnDeck, StreetShares, CommonBond and newer entrants like Affirm. Financially, the company has raised $2.3 billion in total funding and just closed a $500 million round led by Qatar Investment Authority at a pre-money valuation of $4.3 billion. The round appears to be a flat one and is the first major outside vote of confidence for CEO Anthony Noto since he joined the company in January; Noto participated in the financing. SoFi began by refinancing student loans and has expanded its product suite to include personal loans, mortgages, life insurance, and wealth-management tools. The company acquired banking startup Zenbanx in a deal valued at around $100 million to add banking, debit, payments and money-transfer services and plans to offer SoFi-branded traditional banking later this year. SoFi targets HENRYs (high earners, not rich yet) and evaluates applicants using income and cash-flow measures in addition to FICO scores. That selectivity has limited its addressable market: members grew from about 100,000 in 2015 to 225,000 at the end of 2016, still small relative to the U.S. financial-services market. To support growth and geographic expansion, SoFi confirmed a new $500 million equity financing led by Silver Lake, bringing total equity financing to $1.9 billion. The company says it plans to expand services to Australia and Canada by the end of the year. SoFi is an online lender that started by enabling college alumni to lend to recent graduates and offering student‑loan refinancing. Over the last year the four-and-a-half‑year‑old company has expanded into mortgages and personal loans and now counts more than 400 full‑time employees. CEO Mike Cagney has said the company is profitable and previously indicated an IPO could occur “in the next 12 months,” but the new $1 billion financing appears to push back those plans. The $1 billion round was a Series E led by SoftBank, with earlier investors — including Third Point Ventures and affiliates of Third Point LLC, Wellington Management Company, Institutional Venture Partners, RenRen, Baseline Ventures, and DCM Ventures — participating. With this round SoFi has now raised $1.42 billion in total. The article notes SoftBank seeks startups with proven business models and writes large checks to accelerate growth. Social Finance, Inc. (SoFi) is a San Francisco-based marketplace lending platform that originates federal and private student loans, MBA loans, mortgages and personal loans. Led by CEO Mike Cagney, the company has issued over $1.75 billion in loans and employs nearly 200 people. SoFi also offers services such as career advising, access to a member network and entrepreneurial support. It has offices in Washington, D.C., Helena, Montana, Frisco, Texas and recently opened a 50+ person office in Healdsburg, California. SoFi intends to use the new capital to expand its consumer lending products across the United States and to build out its marketplace with new options for investors. The company is actively recruiting across several areas. Social Finance operates a peer-to-peer, affinity-based lending marketplace that connects high-quality alumni borrowers and investors. The company offers student loan refinancing and related services plus unemployment protection, career services and an entrepreneur program. Launched in 2011 and led by CEO Mike Cagney, SoFi has funded over $450 million in loans and has more than 5,000 members. It intends to use the new funds to expand its presence, broaden loan offerings to include mortgages and personal loans, and bolster options for individual investors. The business is based in San Francisco, CA.

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