The online student lending space looks to get a little less crowded than some observers predicted, at least as measured by publicly traded companies. Social Finance may be backing away from previously declared plans — albeit informal ones — to bring shares to market.
[bctt tweet=”The online student lending space looks to get a little less crowded than some observers predicted.”]
TechCrunch reported Thursday (Oct. 1) that four-year-old SoFi (the shorthand moniker for the company) has gotten a $1 billion round of funding from a series of investors led by Japan’s SoftBank. The investment, which comes as a Series E, also featured capital inputs from earlier SoFi investors, such as Third Point Ventures and some of its affiliates, Institutional Venture Partners, Baseline Ventures, Wellington and DCM Ventures.
The latest capital infusion more than doubles the previous cumulative amount raised, with the total now at $1.4 billion. As a business model, the company, like many of its student loan brethren — many of whom, even if platform-only companies rather than actual lenders, have also raised capital recently, including seed capital earlier this year as alternative lending kept attracting attention — had set sights on well-educated graduates with relatively well-paying jobs, seeking to refinance their student loans. But SoFi has also broadened its business to include personal loans and mortgages.
As far as an anticipated IPO is concerned, SoFi CEO Mike Cagney stated in May in an interview with CNBC that his company was fully in the black (i.e., making profits) and said that “as any private company, we want to be opportunistic about when we go public.” He went so far as to predict that “realistically, in the next 12 months, it will happen.” And, as TechCrunch noted, SoftBank typically likes to take big stakes in (smaller) growth-laden companies, with an average check size of $100 million and an eye toward funding growth and transforming smaller players into billion dollar companies.
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