Goldman Backs $50M Funding Of Deserve To Expand Credit For Underbanked

Goldman Sachs is the lead investor in a $50 million funding round for credit card startup Deserve, CNBC reported on Monday (Nov. 4).

In addition to Goldman Sachs, investors in the funding round included Sallie Mae, Aspect Ventures, Pelion Venture Partners, and Mission Holdings.

Deserve offers credit cards to nontraditional consumers and sells its cloud-based platform to companies wanting to launch their own branded cards. The platform uses machine learning and alternative data to assess credit-worthiness.

“There’s a need for a modern, mobile-first, digital-first, highly configurable solution that’s completely in the cloud,” Deserve CEO Kalpesh Kapadia told CNBC. “Goldman sees the value in that given they didn’t have any legacy infrastructure when they started Marcus.”

Most of the industry still relies on 1970s era technology like mainframes and COBOL, he said.

Deserve was originally launched in 2013 as SelfScore, which served international students who had trouble getting credit cards. It then expanded to people having an insufficient credit history. 

Last year, the firm starting offering its tech to financial institutions and other companies, which Kapadia dubbed “credit-card as a service.” 

The credit card program offers credit education, cash-back rewards and perks that include Amazon Prime Student.

In October, Deserve partnered with the New Jersey Institute of Technology (NJIT) to offer a branded card to its student body and alumni.

“We know that building credit as a young adult is important but can be difficult, particularly for first-generation college students and international students,” NJIT President Joel S. Bloom said in a press release at the time. “Deserve was able to quickly implement a full credit card program for both our students and alumni that makes sense for the members of the NJIT community.”

The NJIT news came on the heels of Deserve’s Sallie Mae partnership announcement in September, and the company’s recent recognition in Business Insider and Nerdwallet as one of the best student credit cards for 2019.

The Apple Card was Goldman Sachs’s latest inroad into the retail consumer business after establishing its online Marcus brand, which makes unsecured personal loans, in 2016.