Fintech startup Upgrade valued at $7.3 billion in new funding round

Upgrade, the online lender started by LendingClub founder Renaud Laplanche, has raised a new round of funding that values the startup at $7.3 billion.

The company said in a press release on Thursday that it raised $165 million in a round led by Neuberger Berman, with participation from LuminArx Capital Management. Laplanche, who created Upgrade in 2016, said it’s the first time the company has raised money since 2021.

“We’ve been cash flow positive over the past three years, so we didn’t have to do a new round,” Laplanche said in an interview.

Upgrade got its start offering relatively small personal loans, operating in a similar market as LendingClub. The company has since expanded deeper into financial services with checking and savings accounts, a credit card, credit health monitoring and a buy now, pay later offering. In 2023, Upgrade acquired BNPL travel company Uplift for $100 million.

Revenue has more than doubled since the company’s last fundraise, Laplanche said, and annualized revenue passed $1 billion in May.

Laplanche, who took LendingClub public in 2014, said Upgrade is looking to IPO but wanted additional capital for its balance sheet in the meantime. He said the company is also establishing a new valuation as it begins to offer employee liquidity.

“We were probably 12 to 18 months away from an IPO at this stage,” he said. “So we wanted to go ahead and make sure everyone could sell a little bit of stock now without having to wait for the IPO.”

Although consumer lending is still dominated by traditional banks like JPMorgan Chase, Laplanche said the majority of Upgrade’s customers are migrating from the legacy banks to take advantage of more automated and faster services.

“This year, we’re focusing mostly on making the customer experience make sense across multiple products and making sure that the customer who might have joined Upgrade through a BNPL product has a very seamless experience,” Laplanche said.

The company has also been focusing on home improvement and auto financing, areas that surpassed $2 billion and $1 billion, respectively, in total loan originations earlier this year.

Competition is rising across the board.

Chime, which offers an array of online banking services, went public in June. SoFi has been gaining popularity. And fintech companies including PayPal and Square parent Block have been adding more banking services to their portfolios.

Within BNPL, there’s Affirm and Klarna, which held its IPO last month.

Laplanche said Upgrade’s focus in BNPL has been in the travel industry, through relationships with airlines, cruise lines, car rental companies and hotels.

“It’s a pretty specific industry that’s different from retail, where Klarna and Affirm are stronger,” he said.

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