Lending Startup Earnest Is Working With Barclays to Find BuyerBy
Startup said to seek sale as lending industry struggles
Hoping to get bids of $200 million after raising $300 million
The San Francisco-based company, which offers student loan refinancing as well as personal loans, is hoping to secure bids for around $200 million, according to people familiar with the matter. There has been more than one bid so far but it’s unclear at what price, said one of the people, who asked not to be identified because the talks are private.
Earnest has raised just over $300 million since it was founded in 2013, according to research firm PitchBook Data Inc. Its most recent funding was $9.8 million from Maveron, Wildcat Venture Partners and other undisclosed investors in March. Prior to that, it raised $75 million in equity and $200 million in debt in 2015.
Earnest wasn’t available for comment. A spokesman at Barclays declined to comment.
Earnest is part of a wave of financial-tech startups specializing in online lending, leveraging data and technology to offer lower interest rates than banks. Earnest looks at information other than a borrower’s credit score before making a loan, such as how much money the person has in a retirement account, as a way to offer better rates for less risky borrowers.
But the industry has seen a number of setbacks in the public and private markets. On Deck Capital Inc. and LendingClub Corp., for instance, both listed in late 2014 and have seen share prices fall about 80 percent each. In the private space, Prosper, the second-largest online lending startup, is close to raising new funding that would cut its valuation by 70 percent.
Earnest was growing rapidly in its early days, increasing from about 30 employees at the start of 2015 to more than 200 today.