A former Google exec’s startup lends money based on your school, SAT score, and job history — and a star Wall Street investor’s betting on it. Traditional banks require years of credit and employment history from anyone looking to borrow money from them. So if you’re young and don’t have much credit experience, you’re probably going to have a hard time getting personal bank loans.
But Dave Girouard, CEO of the online-lending startup Upstart and former leader of Google Enterprise, thinks the current credit system is flawed. He believes young people, millennials particularly, need a better vetting process that can predict their creditworthiness years in advance, even if they don’t have much experience with credit now.
His startup, Upstart (www.upstart.com), run by a bunch of former Google data scientists, aims to do just that.
The decision to pivot seems to be paying off so far. Upstart issued more than 8,700 loans worth a total of $125 million in the past year, with about $20 million coming in June alone. Considering it targets millennials between the ages of 22 and 34, and most loans are below $35,000, it’s not a bad growth rate. And investors are buying into Upstart’s concept too. On Thursday, it announced a $35 million series C round led by Third Point Ventures, the Wall Street firm founded by Dan Loeb, who’s best known for hiring Marissa Mayer as Yahoo’s CEO when he was on its board.