Online lender Earnest raises $275m to build 'modern bank for the next generation'

Online lender Earnest raises $275m to build 'modern bank for the next generation'

Earnest has raised $75 million in a Series B funding round and secured another $200 million in debt financing as it prepares to take on traditional banks with its data-centric approach to online lending.

The funding round was led by Battery Ventures and joined by Adams Street Partners and previous investors including Maveron. New York Life is among those providing lending capital.

Founded in 2013, San Francisco-based Earnest has established itself as leader in the student loan refinancing sector, although it also offers money for other purposes.

The firm says that it uses rich data science and proprietary software to develop a holistic understanding of clients' financial habits and preferences while reducing overhead and infrastructure costs.

By carrying out sophisticated credit analysis, it claims to offer lower rates and better term flexibility, helping it to win over enough customers to lend between $2 million and $5 million a day.

The firm will use its new funding to massively expand its technology, data and engineering teams as it bids to move into other sectors and become what Louis Beryl, CEO and co-founder, calls a "modern bank for the next generation".

"We founded Earnest to reengineer financial services from scratch and deliver a hyper-personalised client experience using software automation, data science, and world-class client service," says Beryl.

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