OAKLAND, Calif. (Reuters) - Lendbuzz, a Boston-based startup that offers auto loans to people who lack credit history, said on Wednesday it raised $60 million in its latest equity funding round and $300 million in debt from Goldman Sachs Group Inc’s consumer arm.
Startups that extend credit to consumers and businesses who have struggled to borrow funds have been mushrooming in recent years, with several receiving sizeable funding injections. Most of the startups aiming to disrupt the banking industry use algorithms to scrape the internet for data that is analyzed to create a personal risk profile.
Lendbuzz co-founder and Chief Executive Amitay Kalmar said he spotted a gap in the market when he moved from Israel to the United States 13 years ago to undertake an MBA.
“I opened a bank account and I was declined from a credit card a few times, despite having good employment history, good earnings potential,” Kalmar said.
Around 45 million U.S. consumers lack credit scores, leaving them facing higher borrowing costs or no access to credit, according to the Consumer Financial Protection Bureau.
Kalmar said young people and foreigners who move to the United States for school or work are often among those who lack credit scores.
The funding injection would help Lendbuzz expand from the around 300 U.S. car dealerships it currently works with, Kalmar said, adding he wants to lift that number to thousands. In the first half of this year, Lendbuzz more than tripled its loan origination volume, he said.
The equity funding round was led by Wellington Management and Goldman Sachs and MUFG Innovation Partners, the venture capital arm of Mitsubishi UFJ Financial Group, joined the round, Lendbuzz said.
Reporting By Jane Lanhee Lee; editing by Jane Wardell
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