San Francisco based online lender Social Finance Inc is looking to to raise $500m in equity, going against current slowing trends in the FinTech industry. SoFi hopes to utilize this funding in expanding their business to a larger selection of prime borrowers.
The push from the San Francisco-based startup will mark a new test for the broader online-lending industry. The once fast-growing sector regularly promised to disrupt banking but has been shaken this year by slower growth and a loan-disclosure scandal that forced the exit of LendingClub Corp.’s chief executive in May. Initial public offerings of lending startups have been put on hold while investors try to assess the broader damage and how public markets would value such firms. Problems started late last year when money managers that buy the companies’ loans retreated due in part to concerns about credit quality as well as the availability of higher-yielding alternatives. That contributed to a roughly 34% decline in industrywide loan volume between the second and first quarters, according to data from technology provider Orchard Platform.