When Renaud Laplanche launched hist latest lending start up, Upgrade, the venture was both quite similar to and yet quite different from his previous endeavor, LendingClub, the platform that made “marketplace lending” a household phrase in the U.S.
While pleased with everything Lending Club was able to do in its capacity as a lender, when forming Upgrade, he found he wanted to start with the business model invented for LendingClub, and then find a way to go bigger with it, and do more.
Personal loans, Laplanche noted, are a great product — but they are just one product, and a relatively low-touch proposition. Consumers would apply for a loan, be accepted, utilize the loan, pay it back and maybe come back in two or three years if they needed a new loan.
With Upgrade, borrowers don’t just get access to funds — they gain free access to Upgrade’s Credit Health tools to help them build better credit and become more responsible credit users.
The benefits include standard credit line monitoring and alerts, as well as educational content and interactive tools that help customers make better decisions about how to use money and improve their financial health. Even those who may be turned down for a loan are given tools to improve their financial standing, so they can try again and have a different outcome.
“It is a much better declined experience,” Laplanche noted.
The tools also let customers figure out their free cash flow every month, and how to divert more of that cash flow into savings.
Moreover, working with clients in a continuous way also means Upgrade can, well, Upgrade its borrower quality, because it can monitor how a customer is doing from application through the life of their loan. That means adjustments can be made to credit lines as necessary, so that neither the borrower nor the lender end up upside down in debt.
It’s a big idea, but one that has drawn $63 million in Series C Funding, announced today (Aug. 23).