The $13 million Series C fund is a combination of $8 million in equity funding as well as $5 million in debt financing. The main investor was North Atlantic Capital, but other companies such as DFJ, Updata Partners, Gotham Ventures, and TTV Capital made contributions to the funding round.
The money raised will help LendKey expand their workforce and the services that they offer. The online lending partner will be expanding its office in Cincinnati, Ohio while also growing their account development and sales teams.
Vince Passione, CEO of LendKey, issued the following statement for the press release:
“Since LendKey’s launch eight years ago, we have experienced steady growth. This new round of funding will help support this growth allowing us to meet the strong bank and credit union demand for our service.”
LendKey has partnered with hundreds of financial institutions including banks and credit unions, to assist them in conducting digital lending. LendKey’s lending-as-a-service solution enables traditional banks and credit unions to conduct online loan programs for products including private student loans, student loan refinancing, auto loans, and home improvement loans.
Some notable LendKey clients include Navy Federal, McGraw-Hill Federal Credit Union, and WSFS Bank.
As the 21st century progresses and more services become digital, banks and credit unions are attempting to keep up with the demand for online banking and lending solutions. Although many U.S. consumers do their banking through their mobile device or computer, many banks lack the resources to create their own digital lending solutions for products including private student loans and auto loans.
LendKey has carved out a sizeable market share in the online lending niche. Their lending-as-a-service solution allows traditional banks and credit unions to make a profit from digital lending. LendKey’s online lending solution manages the entire process for the traditional financial institutions including generation, online decisioning, loan origination, customer service, and balance sheet management.
“Traditional financial institutions are now more than ever adapting to evolving customer needs to remain competitive and better reach millennials. LendKey empowers these institutions to compete in today’s lending market by digitizing their loan businesses,” said Passione.
When it comes to the lending industry, specifically the student loan industry, the market for investing has been hot as of late. Just yesterday, LendEDU covered MPOWER Financing’s announcement that they have launched a $100 million debt financing round to meet the growing demand for student loans. MPOWER’s business model puts a strong emphasis on granting educational loans to international students with high potential for success.
And, last week it was reported that student loan refinancing and fin-tech company Earnest has teamed up with Barclays to find a buyer for the student loan company. Early estimates indicate that Earnest is looking for a purchase price of around $200 million.
It makes sense that student loan companies are receiving strong interest from investors around the U.S. The student loan industry is a huge marketplace; according to LendEDU, 44 million student loan borrowers collectively owe $1.41 trillion in student loan debt. Additionally, the average student loan borrower owes $27,975 in student loan debt.
Author: Mike Brown
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