Valuation jumps 83% to $ 6.28 billion after just four months – .

Valuation jumps 83% to $ 6.28 billion after just four months – .

Upgrade, the fintech startup that turns credit card balances into installment loans, closed a fundraiser that values ​​the company at $ 6.28 billion, CNBC has learned.
The company raised $ 280 million in its Series F funding round led by new investors Coatue Management and DST Global, according to Upgrade CEO Renaud Laplanche. That’s an 83% jump from this year’s previous cycle which valued Upgrade at $ 3.43 billion, he said.

Most of that increase is due to strong revenue growth at the San Francisco-based company, which rose 70% between June and October, the two fundraising periods, Laplanche said in a Zoom interview.

Upgrade’s core product is a card that turns purchases into fixed-rate installment loans, making the startup the latest company to benefit from fintech’s “buy now, pay later” trend. While traditional cards charge over 18% interest per year, the Upgrade card starts at 8.99%, Laplanche said. This has made it one of the fastest growing cards in the country, according to industry newsletter Nilson Report.

“Consumers are discovering the benefit of a product that gives them all the convenience of a credit card but does not push them further into debt,” said Laplanche. “Traditional credit cards are a very bad consumer product with very high interest rates and a lot of fees. They are really designed to keep people in debt for as long as possible. “

FinTech companies targeting the huge US consumer credit market include Affirm ‘buy now, pay later’ fintech as well as more diverse players such as SoFi, Goldman Sachs’ Marcus brand and Lending Club, which was co-founded by Laplanche.

But consumer loans are still dominated by the credit card giants in traditional banks, including JPMorgan Chase and Citigroup. They have little incentive to copy some of the more user-friendly features of fintech, as it would reduce the profits of their huge card loan portfolios, Lapanche said.

“They have no interest in changing this behavior,” he said. “The Upgrade card is an innovation that should have come from the banks, but did not. It is less profitable than a traditional card because the balance decreases faster, but it is a better deal for consumers. “

Like other fintech players aiming to eventually become digital one-stop shops for consumer credit, Upgrade has started to diversify. It offers checking accounts, a debit card with 2% cash back, and a credit card that pays out bitcoin rewards. About 10% of the new cards issued by the start-up are bitcoin rewards cards, Laplanche said.

The company is preparing to go public as early as 2023, he said.

“We are growing fast and profitable,” said Laplanche. “We are working to be ready in about 18 months from now. “


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