Confirming our earlier reporting, the peer-to-peer lender Social Finance said it closed on $80 million in fresh funding, as it looks to expand its lending operations to mortgages and personal loans.
The new round was led by the hedge fund Discovery Capital Management and included commitments from Wicklow Capital and the billionaire investor Peter Thiel — who is perhaps as famous for his stance against the necessity of a college education as he is for his investments. Previous investors, Renren, Baseline Ventures, and DCM also participated in the new financing.
As a result of the financing, Sri P. Wijegoonaratna will take a seat on the Social Finance board of directors, while Thiel and New York Stock Exchange chief executive Duncan Niederauer, will join as company advisors, according to a statement.
Since launching in 2011, SoFi has funded $450 million in loans to over 5,000 members. Borrowers using the company’s lending service average $9,400 in savings by refinancing their student loans.
In addition to its loans, San Francisco-based SoFi provides unemployment protection, career services and an entrepreneur program for borrowers.
Through the entrepreneur program, SoFi offers debt deferment, mentorship, and capital to budding business owners.
Now with its fresh cash, SoFi will expand its loan offerings to include mortgages and personal loans, as well as providing new avenues for lenders to invest money through the platform.
Part of a generation of startups tackling the financial services industry with new offerings, SoFi’s diversification into different types of loans was only a matter of time. Companies like Lending Club are making similar moves.
With over $1 trillion in student loans weighing on the U.S. economy, thousands of young professionals could benefit from refinancing their student loans, according to SoFi chief executive Mike Cagney.
SoFi’s lending program was initially set up to link student borrowers at top tier universities with alumni lenders from their school. The idea was that borrowers would be less likely to default on loans made through a community with which the debtors had an affinity.
Typically consolidated loans for up to $200,000 are offered at a fixed rate of 5.99% for recent graduates, which is lower than the federal consolidation rate.
For alumni lending on the network, there’s an offer of a roughly 5% return on investments, after fees, according to data from SoFi.
Photo via Flickr user StockMonkeys.com