Not satisfied with raising $1.9 billion in a six years, Social Finance Inc., the online lender known as SoFi, is gearing up to raise even more money in venture funding to grow its online lending business. SoFi is looking to support its push to offer more financial services with the additional funds.
According to a Bloomberg News report, which cited people familiar with the matter, the latest fund raising is being led by Silver Lake Partners, the private equity firm that’s invested in Symantec, Alibaba, and GoDaddy among a slew of others. Others expected to take part in the fund raising round include multiple investors from Asia as well as DCM Ventures and Third Point, the two VC firms.
A Wall Street Journal report cited unnamed sources and reported Softbank Group, the Japanese bank that has investments in a slew of tech companies, may also take part in the round. Softbank Chief Executive Masayoshi Son pledged in December to invest $50 billion in businesses in the U.S. via its $100 billion technology fund. The tech fund is a joint venture between Saudi Arabia’s sovereign wealth fund, the Public Investment Fund and Softbank.
With the latest round, SoFi will have a market value of roughly $4.3 billion, not too shabby for a startup that has disrupted student loan lending. For years, banks balked at making private loans to college bound students, but SoFi is trying to fill the space with an online platform.
SoFi has branched into refinancing mortgages, offering personal loans, and eyeing banking services with its recent $100 million acquisition of Zenbanx Holdings, a startup fintech company. In short, SoFi is trying to fill a space of the market with their lending platform, and student loans are a big part of their business.
Students in need of a private education loan can look to SoFi for help among other lenders. However, online platforms such as SoFi, Earnest, College Ave and others may have to fight harder for their piece of the pie in the future.
Speculation over the privatization of student loans is rampant after the inauguration of President Trump. While such a move would increase the value of SoFi substantially, it will also usher in a new era of competition between big banks and well-established private lenders.
Author: Dave Rathmanner
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