LendingPoint took its first funding in its seven-year history in the way of a $125 million preferred equity investment from Warburg Pincus.
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The company is a financial technology platform that provides financing origination tools for e-commerce, point-of-sale, lending institutions and consumers.
Prior to the equity investment, LendingPoint had been bootstrapped, fueled by an initial friends and family raise in 2014 and subsequent other financing that now gives the company more than $325 million of equity to date, Tom Burnside, co-founder and CEO of LendingPoint, told Crunchbase News.
Eric Friedman, managing director of Warburg Pincus, said in a written statement that LendingPoint has an opportunity for continued growth.
“LendingPoint’s unique use of data and technology and best-in-class lending platform has enabled it to scale rapidly by providing financial solutions and superior service to its expanding customer base,” he said about the investment.
The Kennesaw, Georgia-based company became profitable in 2019 and completed its second year with that status in 2020.
Early on, the company sought to prove its concept and advocate for the customer without outside influence, Burnside said.
“We focused on the customer and how to get them to this point,” he added. “Outside money has a way of shaping a business. We have been in an advantageous position to be the voice of the customer and do something no one else was doing. Most other companies operate with customers at the higher end of the FICO range, but we wanted to offer something new.”
In 2018, the company was able to get into the point-of-sale space through an acquisition of San Diego-based LoanHero, which enabled LendingPoint to expand its credit models and acquire new customers.
The company has been able to bring all of the necessary components together, and with this raise, Burnside said, the company will now let all the momentum that it had built explode.
“We need the equity dollars to enable us to do that,” he added.
The funding will go toward investing in artificial intelligence and the user experience, and developing new features and capabilities for the company’s mobile app, as well as ramping up its balance sheet and forward-flow agreements.
“We need to meet the customer wherever they are,” Burnside said. “We need to continue to acquire customers at the top of the funnel, create products to meet our customers’ life journeys, and work on amazing ways of delivering the product.”
Meanwhile, as more startups enter the lending space, Burnside is optimistic that a fintech company could become the next JP Morgan.
The market is large enough–in the trillions of dollars–providing room for four or five companies “to get it right,” he said.
“There is now a preference for going online, and my feeling is we are in the middle of a revolution and an evolution to this space that has never been seen before,” Burnside added. “More people putting money into the space will make the conversion faster.”
Illustration: Li-Anne Dias