P2P lending startup says you’re more than your credit score

Upstart, a startup that uses AI to determine loan recipients and rates, raises $50m.

April 9, 2019

Upstart, the SF-based startup that leverages AI to automate the loan process, has raised $50m, VentureBeat reports

According to company founder and ex-Goog Dave Girouard, the traditional, oversimplified FICO-based loan model leads to wasted viable lending opportunities, particularly for younger applicants.

FICO scores are so last year 

Upstart’s D2C loan algorithm utilizes AI and Machine Learning (AI-ML) to analyze more comprehensive data inputs (e.g., work history, education, area of study) and identify loan recipients, sizing and rates. Most of those recipients are college grads, ages 28-35.

The startup also uses AI for fraud monitoring and automated approval processes (…Tossing out credit scores AND the need for human contact? They clearly know their millennial target base).

LaaS(t) but not least…. on the lender side, banks and credit unions can utilize Powered by Upstart, a Lending-as-a-Service platform, to apply Upstart’s risk modeling and automation to their own personalized, unsecured installment lending programs. 

Peer-to-Peer lending is trending

Upstart isn’t alone in the P2P market: Competition is growing as others, e.g., Funding Circle and Prosper, try to rule over all the lend.

But Upstart is feelin’ pretty good: Since its 2012 inception, the company has originated $3.3B in loans and claims loss rates of less than half of those of other platforms.

According to VB, they have been profitable since 2018 and plan to continue expanding their partnerships and service offerings.

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