With a whopping $275 million in equity and debt financing, the next-generation lending company Earnest now has the firepower and strategic partners to become a more full-service financial services firm.
The lending segment of the financial services industry has been one of the areas that has attracted the most interest from venture investors with mature companies like SoFi raising a massive $1 billion round from Softbank Capital earlier this Fall and younger lenders like CommonBond raising $35 million in 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.
Earnest’s round is just another drop in what has been an incredibly large bucket of investment for fintech companies. In all, over $11 billion has been invested in financial technology services company, according to CB Insights. That’s up over $5 billion from the previous year, and the highest amount invested into financial services technology companies in the past five years.
According to Earnest chief executive Louis Beryl Earnest lends between $2 million and $5 million per day and the total dollar amount the company has loaned has increased 50 times over the past year. On average the company’s loans are about $70,000 and headcount at Earnest has grown from 30 people to 160 people since Earnest raised its $19.8 million Series A from Maveron earlier in the year.
Of its products, Earnest’s student loan business is its largest followed by its lending business for personal loans. The lending business for coding academies rounds out the pack. Interest rates on the Earnest products are the same as for other online lending products, according to Beryl, but the company’s technology lets users save money on their payments. “The average person saves $18,000 with Earnest,” says Beryl. “The best we’ve seen is $14,000.”
Precision pricing gives clients flexibility, they can pick their monthly payment and giving them a lower interest rate as a result, Beryl told me.
Beryl said the company intended to hire another 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] drive down costs,” says Beryl. “Today we’re doing that in lending. As we build out our platform that could be in financial planning, or that could be in financial education.”
People with knowledge of the firm’s plans say that Earnest could use its lending business to expand into other markets. “The market opportunity for what we’re building is really unbounded,” says our source. “Whether that is saving for the future, paying for your education, or living your life and managing your life in a financially responsible way.”