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Upgrade has seen a major rise in its customer-base availing its personal loan and credit card services. The neobank specializes in offering lower rate credit to its customers with preset repayment periods.
On Wednesday, June 17, the credit-focused fintech startup Upgrade announced that it has raised $40 million in the Series D funding round. Santander InnoVentures, the venture capital fund of banking giant Santander Group led the funding round. The latest funding has now taken Upgrade’s valuations to above $1 billion in total.
Upgrade is basically a credit-focused fintech startup and a neobank offering affordable credit to mainstream consumers. Unlike the traditional banks, Upgrade didn’t adopt the checking-and-saving business model. Rather, from the very beginning, Upgrade differentiated itself with personal loans and credit cards.
Upgrade CEO Renaud Laplanche tells that this model has helped the quickly scale their revenue base. Speaking to TechCrunch, Upgrade informed that the company is currently cash-flow positive and also operating at $100 million run-rate. Well, it pretty great considering Upgrade managed to raise capital even during these uncertain times.
Last year in 2019, Upgrade managed to strike $60 million in revenue. For 2020, Upgrade has raised its revenue target three times to $160 million. As of now, Upgrade has some big investors under its kitty. Since its inception in 2017, the fintech startup has managed to raise $200 million in total. Leading this Series D funding, Chris Gottschalk, senior advisor at Santander InnoVentures, said:
“We’re excited to support Upgrade in their next stage of growth. Upgrade is building a neobank with credit at its heart, which we believe is a smart strategy as credit represents 70% of banking revenue globally and is often the main reason customers seek banking services.”
FinTech Startup Upgrade Adopts Different Credit-based Model from Traditional Banks
Speaking to TechCrunch, Upgrade CEO Renaud Laplanche said that “Banks have an incentive to keep customers in debt as long as possible”. Upgrade adopts a different philosophy. Upgrade offers lower rates with cards starting at 6.9%. Moreover, it sets repayment periods for debt to make sure that customers don’t end up trapped in a never-ending credit cycle.
Upgrade’s credit card model and even its personal loan service have proved to be quite successful. As on date, Upgrade has over 10 million customers who have applied for the company card or loan. The company plans a total of $3 billion in lending this year – $2 billion in personal loans and $1 billion in credit cards.
Besides, it will also put a major focus on further expanding its user-base. On this latest fundraising, Upgrade co-founder and CEO Renaud Laplanche, said:
“We are thrilled to welcome Santander InnoVentures as a new shareholder. Our strategy of partnering with banks and credit unions of all sizes is delivering tremendous value to our partners and customers, and we are delighted to add one of the world’s largest banks to our partner roster.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.