Victory Park sends $100M to a personal loan provider

The firm is providing financing to Upstart, a Palo Alto-based lender that issues loans to individuals who might have poor credit histories.

Chicago-based alternatives group Victory Park Capital has agreed to provide $100 million in debt financing to loan provider Upstart over the next two years. Palo Alto-based Upstart is a lending platform that loans money to individuals by looking at factors beyond their FICO credit score. The company, which was founded by several Google alumni, awards loans based on signals of the borrower's potential, the schools they attended, their area of study, academic performance and work history.

“Based on Upstart’s successful launch, innovative management team, and our experience in the specialty finance industry, we believe Upstart is well positioned for success as the platform scales over time,” said Tom Welch, vice president at VPC. “We are excited to partner with the Upstart team and are confident they will succeed in a market that continues to be underserved by traditional providers of consumer credit.”

Dave Girouard, founder and chief executive of Upstart, added in a statement, “We are excited to announce this partnership with a team as experienced in this sector as VPC. This lending facility will go toward serving the continued need for capital by our customers, as well as allow us to expand our product into new markets for individuals that lack the credit score needed to receive a loan from conventional sources.”

As specialists in credit and private equity investments, VPC focuses on mid-market companies across a variety of industries. The firm was founded in 2007. It’s headquartered in Chicago with additional offices in Boston, Los Angeles, New York and San Francisco. VPC was the subject of PDI’s July/August Capital Talk feature.

Upstart provides fairly priced loans to borrowers who can’t secure a loan from a traditional lender. Since inception earlier this year, Upstart originated more than 500 loans, totaling more than $7.5 million. Upstart’s proprietary underwriting model identifies borrowers despite limited credit and employment experience. Upstart loans can be used for a variety of purposes, such as starting a business, paying for a coding bootcamp, eliminating student debt or paying off credit cards.