The company, which was started by former PayPal and Prosper alumni, uses a predictive model for loan underwriting based on trust, whereby prospective borrowers leverage their personal network of friends and family to act as loan sponsors. People sponsor a borrower by choosing an amount of money and agreeing to pay back that amount if the borrower defaults on their loan.

Sponsorships are used alongside standard financial data to gain a more complete picture of creditworthiness, which can help the borrower get a larger loan, lower their interest rate, or both.

Yee Lee, formerly of PayPal and now CEO of Vouch, says: “We are taking advantage of the unprecedented level of digital connectedness exhibited by modern borrowers to accomplish what the banking industry has never before been able to do at scale: incorporate a borrower’s social network into credit decisions.”

The latest round of financing comes on the heels of the company’s official launch in April 2015 and brings the total amount raised to $9.6M. Investors this time round include Core Innovation Capital, Data Collective, Stanford StartX Fund and Cooley joining existing sponsors, First Round Capital, Greylock, IDG Ventures and AngelList.

“It’s rare to come across an idea so simple, yet so transformative that it has the potential to fundamentally change a key pillar of the financial system - and that’s exactly what Vouch is doing,” says Arjan Schütte, founder and managing partner of Core Innovation Capital. “By uncovering a borrower’s true creditworthiness and helping them improve it over time with the help of the people who know them best, Vouch has an opportunity to revalue an entire asset class, putting extra money in consumers’ pocket and helping grow the economy.”