Upstart Files for $100M IPO – Reveals Financials
November 6, 2020
Upstart, the online personal lender that uses non-traditional data like a college education, job history, and residency to evaluate borrowers, is moving forward with an IPO.
The company revealed its financial statements in an S-1 filed on Thursday. In 2019, Upstart generated $164.2M in revenue and had a net loss of $5M. For 2020 through Sept 30th, revenue was at $146.7M with a net income of $4.5M.
The company said that in 2020, 98% of its revenue was generated from platform, referral and servicing fees that it receives from its bank partners. Their bank partners “include Cross River Bank, Customers Bank, FinWise Bank, First Federal Bank of Kansas City, First National Bank of Omaha, KEMBA Financial Credit Union, TCF Bank, Apple Bank for Savings and Ridgewood Savings Bank.”
Upstart borrowers tend to have limited or no credit history, which is where its AI-driven models with 1,600 variables come into play.
“Our bank partners have generally increasingly retained loans for their own customer base and balance sheet,” the company wrote in its S-1. “In the third quarter of 2020, approximately 22% of Upstart-powered loans were retained by the originating bank, while about 76% of Upstart-powered loans were purchased by institutional investors through our loan funding programs.”
Upstart was valued at $750M during its 2019 Series D.
In 2017, AltFinanceDaily referred to Upstart as the Tesla of alternative lending.
“You hear so much about how Tesla cars will drive themselves, how Google or Amazon home assistants talk to you to as if you’re human,” said Dave Girouard, Upstart co-founder, in an interview back then. “In lending we are the first company to apply these types of technologies to lending.”
Girouard’s co-founder Paul Gu, who serves as SVP of Product and Data Science, was only 21 when Upstart launched in 2012. He’s now 29.
Anna M. Counselman, the third co-founder, is SVP of People and Operations.
Upstart is planning to raise $100M from its IPO.
Upstart Welcomes Policy Head Nat Hoopes
September 15, 2020
Upstart, an AI lending platform, welcomed longtime industry advocate Nat Hoopes to the team this week, to lead as Head of Government Policy and Regulatory affairs. Hoopes previously served as the Marketplace Lending Association executive director (MLA), where he grew the trade group and advocated on behalf of its members.
“My hope is to bring the energy that I did in growing the organization [MLA] and also just in tackling a lot of different workstreams to Upstart,” Hoopes said. “But also, deepen their ties with the DC policy community.”
Hoopes is excited to join the Upstart team and advocate for the company to state and federal legislators. Hoopes intends to address the development of two main issues as he enters his new office: facilitating better credit reporting with the help of AI, and using better credit to bring financing options to disenfranchised minority communities.
Upstart uses non-traditional data like a college education, job history, and residency to evaluate borrowers for personal loans. The company recently introduced an AI-powered Credit Decision API to deliver instant credit decisions. Upstart added auto loans to the platform in June, so the new API works with personal, student, and auto loans.
Hoopes said he and Upstart shared a similar motivation: to provide credit to people and improve financial futures, especially to people unfairly blocked from receiving credit.
“I think because of the structural inequality that we have in our society, a lot of minority groups get really left behind and stuck in a low credit score environment,” Hoopes said. “By using more data, and using it in new ways with artificial intelligence we can really level the playing field.”
Hoopes said that he has already seen Federal regulators in the FDIC and the OCC, and the CFPB working on using AI learning in credit underwriting. He said the Fed is planning out how to help banks adopt more of these models to approve more people.
“I think that’s a key initiative,” Hoopes said. “A key area where I’ll be working for Upstart: Engaging with regulators on how to help banks get more comfortable in serving more customers,”
While advocating for banks to use the credit capabilities of partners like Upstart, Hoopes said he would be devoted to ensuring decisions are made with equality and inclusion in mind. Hoopes will stay on as a member of the MLA board, and working in concert with his responsibilities advocating at Upstart.
“At MLA, I helped develop the diversity and inclusion strategies for our part of the fintech industry,” Hoopes said. “I’ll remain active on those issues at Upstart both collectively with other members of the industry as a member of the MLA.”
Hoopes referred to the Diversity and Inclusion strategy released by MLA last month. Board members signed off on the paper, written with the help of the National Urban Leauge. League president and CEO Marc Morial and Representative Gregory Meeks (D-NY) to create a vision of an inclusive fintech industry.
Hoopes addressed what he said was the failure of the American credit scoring system. For instance, according to Upstart’s study in 2019, 80% of Americans have never defaulted, yet only half have a prime credit score. It’s a problem he says disproportionately affects minority borrowers.
According to a Federal Reserve study, more than three times as many Black consumers (53%) and nearly two times as many Hispanic consumers (30%) as White consumers (16%) are in the lowest percentiles of credit scores.
Hoopes said Upstart does not collect racial data from applicants but cites a CFPB test that found Upstart’s platform increased access to credit across race and ethnicity by 23-29% while decreasing annual interest rates by 15%-17%.
As Implementation of FICO’s UltraFICO Approaches, Upstart Says The Value is There
November 5, 2018The rise of fintech has already rocked the banking and traditional lending industry and now it’s disrupting FICO, the traditional credit scoring method that’s been in place since the mid-1900s.
FICO, which is the credit scoring system created by Fair Isaac Corp, is getting a makeover. The UltraFICO Score, which is scheduled to launch in early 2019, will pull from a consumer’s checking, savings and money-market accounts and add the data to their credit profile. It creates a broader credit picture, one that is designed to lead to more lending approvals than the static formula provides, as long as a consumer manages their cash well. Reports suggest the FICO score could jump by 20 points or more for millions of borrowers.
Meanwhile, fintech startup Upstart has been in the consumer lending business for the past five years. Upstart takes a two-pronged approaching, using more variables and more machine-learning algorithms than the traditional credit-scoring method.
“Using a variety of machine learning algorithms lets you pick up new insights from data,” said Upstart Co-Founder Paul Gu.
The company’s approach has influenced banks that frequently approach Upstart, a couple of which have become partners that are using a fully branded version of Upstart.com.
It’s not surprising considering Upstart is experiencing a lower loss rate versus its banking competitors. Upstart’s Gu explained the average lender issuing a personal loan to someone with a FICO score in the 660 range will typically experience a loss rate of 14%. Upstart’s loss rate is half that.
“That same 660-type borrower in our portfolio has an annual loss rate of 7%. That’s a pretty staggering difference and translates into benefits for our borrowers,” Gu told AltFinanceDaily, adding that if the company can cut the loss rate, they can, in turn, lower the interest rate. Certainly, non-fintech lenders are paying attention.
“I don’t want to claim credit for anything FICO is thinking about. But I do think we are showing the industry at large that there is a huge amount of opportunity out there, and that you can go after it with technology that is available today. The potential benefits for consumers and your business are enormous,” Gu said.
Upstart’s early focus was on younger consumers with no real credit history but with an education history, which Gu said has yielded great success for the company. Since then they’ve expanded to pursue other groups of people who have similarly been “lost in the cracks” of the traditional credit scoring system, including certain occupations.
Gu explained that while lenders typically examine a potential borrower’s income level and their debt-to-income ratio, there’s more to it than that. Upstart most recently has created a way to include data based a potential borrower’s occupation, which he points out is tricky to quantify.
“Occupations are combinations of words that are hard to group in a useful way for the purposes of data analysis,” said Gu. Nonetheless, Upstart and its team of nearly a dozen data scientists have poured research into employers and occupations to create a classification system and determine how to turn words into numbers to use in their machine learning model.
“It’s not shocking that some professions are more highly correlated with repayment than others. Nurses, for example, are very reliable in paying back their loans,” Gu explained.
Upstart, which has issued consumer loans to fewer than 300,000 borrowers, has made it their mission to constantly improve upon their models to find cracks. “Our best estimate suggests we’ve solved only 8% of the total opportunity so far,” he said.
Low-Hanging Fruit
It’s early days for FICO’s new credit scoring system, but according to reports lenders have already begun to show an interest. Experian has reportedly partnered with fintech startup Finicity to publish the broader credit profile to banks. But the increased competition doesn’t seem to bother Upstart.
“I think there are starting to be efforts made by other players in the space to do some of the things we’re doing. Some of the lower hanging fruit we were uncompeted for earlier might have a little bit of competition. That said, the thing people don’t realize is how much room for improvement is still left,” Gu said.
As for FICO, their new feature is a side-product to the traditional credit-scoring system, not a replacement, which could impact the pace of adoption and innovation. “This kind of technology investment should take 95% of their attention, not 5%,” said Gu.
Upstart’s Average Borrower
June 12, 2017Online lender Upstart considers more than 10,000 variables such as an applicant’s education, academic performance, and employment background, according to their website, a proprietary system they say is used to detect “future prime” borrowers. But according to a recent Kroll Rating Agency report, their borrower base looks prime even by traditional standards in that their average borrower is 28 years old, earns $95,000 a year and has a FICO score of 690. Upstart lends money (through Cross River Bank) to individuals for a variety of purposes including student loan refinancing and debt consolidation.
In the Kroll report, Upstart asserts its belief that its use of additional data points will outperform traditional credit models, but concedes that their system has not been tested through economic cycles.
Upstart has raised $88.35 million in equity to-date. The Kroll Report was prepared in anticipation of a $163 million securitization transaction that is expected to close this month. They expect to be making $100 million of loans per month by the end of the year.
Upstart Raises $32.5M
March 6, 2017It’s been three years since we launched the Upstart lending platform, and today we’re pleased to announce we’ve raised $32.5M to take our business to the next level. The funding round was lead by Rakuten, a global leader in internet services and global innovation headquartered in Japan, and by a large US based asset manager. Existing investors Third Point Ventures, Khosla Ventures, and First Round Capital also participated. We’re particularly excited to have Oskar Mielczarek de la Miel, Oskar Miel, Managing Partner of the Rakuten FinTech Fund join Upstart’s Board of Directors.
With more than 50,000 loans originated, Upstart has the highest consumer ratings in the industry, has Net Promoter Scores (NPS) in excess of 80, and has delivered industry-leading returns to loan investors.
Leaders in Technology and Data Science for Lending
Upstart was the first platform to leverage modern data science and technology to power credit decisions, automate verification, and deliver a superior borrower experience. In 2014, we were first to launch next-day funding. In the last year, we virtually eliminated loan stacking on the Upstart platform, a central cause of credit issues in online lending. Today, more than 20% of our loans are fully automated, helping us attract the best quality borrowers with a superior experience.
As a result of our efforts, we’ve seen unparalleled credit performance, with 2016 cohorts our strongest yet. Upstart loans are funded in four distinct ways: 1) whole loan sales to institutions, 2) retention by Upstart’s originating bank partner, 3) sales to Upstart itself, and 4) via individuals in our fractional market. Furthermore, we expect our first loan securitization transaction within a few months.
2017 and Beyond!
We’ve focused considerable effort on our credit quality and loan economics, and the results speak for themselves. We aim to originate more than $1B in loans in 2017, and expect to reach cash flow profitability this year.
But that’s not all. We’re also thrilled to announce that Sanjay Datta has joined Upstart as CFO. Sanjay was formerly VP of Global Advertising Finance at Google, having spent a decade to help build and internationally expand Google’s $80B core economic engine.
Those that know my history at Google will understand why I’m excited to tell you about “Powered by Upstart”, a Software-as-a Service offering derived from Upstart’s top-rated consumer lending platform. From rate requests through servicing and collections, this new service brings modern technology and data science to the entire lending lifecycle.
Our beginnings
Anna, Paul, and I founded Upstart to bring the best of Google to consumer lending. Upstart was the first platform to leverage modern data science and technology to power credit decisions, automate verification, and deliver a superior borrower experience. In 2014, we were first to launch next-day funding. As of today, more than 20% of our loans are fully automated and we expect this percentage to increase significantly through 2017. With more than 50,000 Upstart loans originated, we have the highest consumer ratings in the industry and have delivered industry-leading returns to loan investors. With Net Promoter Scores (NPS) in excess of 80, we’re excited about the impact we’re having.
Technology partner
FinTech is disrupting all areas of financial services. As a leading tech platform in marketplace lending, Upstart aims to partner with financial institutions rather than compete with them. Given the pace of change in lending, technology partnerships will be critical in the years to come, and Upstart aims to be a partner the industry can rely on.
But “Powered by Upstart” is not just software – it’s a turnkey solution that provides all necessary document review, verification phone calls, fraud analysis, and (optionally) customer service, loan servicing and collections.
Software-as-a-Service in lending
SaaS has grown exponentially in the last decade because of its obvious virtues: rather than buying, installing, configuring, hosting, and supporting software yourself, the software is delivered over the cloud. It’s more reliable and always up to date. Delivering cloud software can be challenging in any industry. Usability, reliability, and performance are the minimum to play, and effective change management is critical to success. As the team that delivered Google’s SaaS platform before it was called “cloud”, we understand these challenges.
Of course, the regulatory environment in lending raises the bar even higher. We’ve long demonstrated our commitment to trustful and compliant lending, and we’re likewise committed to delivering robust and compliant lending software.
ACH, Wire, and Soon Stablecoin Transfers?
June 30, 2025“Many of the users out there today are not aware of stablecoins, or not interested in stablecoins, and they should not be,” said Jose Fernandez da Ponte, PayPal’s SVP of blockchain, crypto and digital currencies to CNBC. “It should just be a way in which you move value, and in many cases, is going to be an infrastructure layer.”
Stablecoins, blockchain-based units typically pegged to the US Dollar, are taking off. According to Visa, for example, $3.7 trillion worth of stablecoins were transacted in the last 30 days alone. Since there’s no speculation angle to be gained from holding them, the value of using stablecoins versus other methods of payments is primarily speed and cost. As an infrastructure layer, traditional lenders may want to keep an eye on developments there. For example, where ACHs may become too costly or impossible to utilize efficiently, USD-> Stablecoins-> USD could become a viable mechanism to sweep funds from a traditional bank account to a third party. Borrowers may not ever even need to know or be aware that blockchain rails are being used to transmit payments. Lenders too need not be burdened by crypto and instead merely leave the conversion of one to the other and back to a payment service.
This is not the domain of edgy upstart fintechs any longer either. According to American Banker, “The progress of the GENIUS Act has spurred banks to forge stablecoin strategies, with Citigroup, Bank of America and dozens of others considering launching their own stablecoin, joining a stablecoin consortium or both.” Additionally, stablecoin issuer Circle just applied for a national bank charter.
🚨34% of ETH transactions now involve stablecoins, driving network activity near all-time highs pic.twitter.com/iTWBCHZT6b
— matthew sigel, recovering CFA (@matthew_sigel) June 30, 2025
While much of the early blockchain utopian ideals speculated that commerce may be transacted with bitcoin, using the rails to transact in dollars may be a much more near-term and universally accepted method.
Coming Soon: Domain Names as Loan Collateral
April 25, 2024
It’s called a DeFi Cash Advance, a collateralized loan with 1-30 day terms. It’s just one of many products created by Teller, a peer-to-peer lending platform that relies on smart contracts to facilitate the transactions. The key word is “collateralized” because the blockchain-tethered asset doesn’t necessarily have to be crypto-native per se anymore. Virtually any business owner with a website can offer up its online domain name as collateral for a loan thanks to rapidly developing blockchain technology.
“Essentially what Teller is at the core is basically like an OTC desk as a way to think about it because Teller doesn’t do any lending,” said Kieran Daniels, Growth at Teller.
Instead it’s done by peers which have historically used the platform to lend against very esoteric crypto assets that traditional commercial finance folks would probably roll their eyes at. But all that’s poised to change ever since a Silicon Valley-based startup called Namefi recently found a way to bridge regular old internet domain names to the ethereum blockchain. Namefi’s tech can turn any .com or similar internet domain into a real life NFT without any disruption to the underlying website it hosts. And once ownership of the domain name is governed by whomever owns the NFT, then voilà, it can be offered up as collateral for a loan on the blockchain.
The advantage of doing something this way is the efficiency in which it transforms a widely recognized digital asset, a domain name, into a liquid piece of collateral for a loan. For example, a loan can be made instantly just with a smart contract, it can be transferred to escrow (while still working the whole time) instantly, and also transferred to the lender in the instance of a default without any headache or hassle. The hard part, if one could even consider it hard, is that in order for the domain name to turn into an NFT, it has to be transferred from the owner’s current domain name registrar to the one operated by Namefi. This can be accomplished in less than an hour. It’s the exact same process as if one were to transfer a domain name from say Godaddy to Namecheap. Namefi does all the techy stuff that turns it into an NFT and the user can still manage their regular DNS settings via Namefi.
As mentioned previously, Teller is accustomed to other assets on its platform, things like “meme coins” and digital artwork, some of which use a technological token standard called ERC-721. That’s kind of where I ironically enter the story because I noticed that Namefi relied on the same standard when turning domain names into NFTs. And so without informing either Namefi or Teller of what I was up to, I turned a domain name that I owned into an NFT via Namefi and then used the Teller platform to set up and execute a loan transaction, resulting in a self-aggrandizing press release this past January about how smart I was for possibly doing the first domain name loan over ethereum in the world.
It was noticed. The outcome is that Namefi and Teller have been talking to each other since. On February 28, the two took to social media to announce a partnership.
Namefi is partnering with Teller (@useteller) to bring DeFi to your internet domains! Now lending with Namefi domains as collateral is made easy through this partnership.
As a result of the partnership, customers will be able to:
1. List DNS names gaslessly for liquidity: List… pic.twitter.com/nHJpkUKeXj
— Namefi.io 🍊 (@namefi_io) February 28, 2024
“We’re fully leaning into it,” said Daniels to AltFinanceDaily, “we did a spaces [on X] with Namefi.”
“I think we’re just really bridging that gap for a lot of people right now and actually making that connection to say that ‘hey, NFTs aren’t just JPEGs, they aren’t just digital identity, they can have other forms of utility,'” said Alexander Walker, Ambassador at Namefi. “And there’s millions of people out there with domain names already.”
And that’s sort of the point. Everyone already understands domain names as a digital asset. The tech has just finally caught up to do that much more with them.
The typical challenge of any upstart peer-to-peer lending platform, however, is liquidity. As some readers may recall in the very early years of LendingClub and Prosper, hopeful borrowers would languish on those platforms while they waited for individual retail investors to pool together enough money to actually fund the full value of the loans. Teller has already come up with a solution for other assets it understands well, standing liquidity pools funded by peers or investors that will automatically lend against assets it recognizes. There would be a similar goal with certain categories of domain names.
“When you go to Teller, you’ll see Pokemon on ENS or 999s or certain collections of NFTs,” said Daniels of Teller. “So those are the more popular NFTs and so what Teller has done is created standing offers for those. So again, Teller isn’t the LP, but LPs can come in and add to that pool. And anyone with one of those categories can instantly get a loan or instantly borrow against that.”
Enter .coms into the fray.
“The bigger vision is right now when you go to Teller you see Tokens, NFTs, and ENS,” Daniels said. “We want to change that to Tokens, NFTs, and Domains. […] Once we integrate that and once we get set up, then we can really lean into it and grow it from there.”
The market is still mostly unaware that this technology is here. Early interest seems to be coming from domain name investors in particular, those that think about the standalone speculative or resale value of a domain name independent of any active business use. Valuations on that basis might be too small or risky for a commercial lender to get excited about. The real opportunity then perhaps is domain names that are actively in use where the corresponding website is driving revenue for a business or even generating it on site. In the digital era, it’d be reasonable to say that many businesses depend on their web traffic to generate hundreds of thousands or millions of dollars a year in annual sales. A domain name that is being used to make that all happen is theoretically worth much more than an unused clever sounding domain name. It’s also the sort of collateral that could be monetized by a lender familiar with the market of its borrower.
With 360 million domain names registered worldwide as of Q3 2023, there’s a large market at stake.
“Domains don’t have that liquidity as of yet,” said Walker of Namefi. “But we’re currently building out that infrastructure. And that’s what makes me really excited.”
Loan Applicants Might Just Give Up After Unattractive Offer
August 13, 2023
A lender offering unattractive loan terms may not be driving those prospects into the arms of a competitor. Instead, they might actually be discouraging them from searching any further.
This phenomenon was raised in Upstart’s most recently quarterly earnings call when analysts began asking about APRs and acceptance rates. Upstart’s max APR is 36% and they’ve found that the higher the rate goes, the less likely the applicant will accept it.
“I mean it’s very simple,” said Upstart CFO Sanjay Datta. “It’s a pretty classic sort of supply and demand construct, where we raise our rates and not only do our approval rates go down because of the 36% APR cut off but for those who remain approved they’ll be less likely to take a loan.”
That is when Datta expanded further on what becomes of applicants who choose not to move forward.
“And typically, at least what we’ve observed in our data is that people who don’t take loans with us don’t necessarily take them from a competing source,” Datta said. “The majority of them just don’t take the loan. So it causes people’s demand to reduce.”
The Q&A did not invite further opportunity for additional insight on why that might be. Upstart’s experience as a consumer lender also may not translate into small business lending either. For example, in April 2022, a fintech lending study found that 40% of business loan seekers compared more than six options.
