OnDeck has obtained a $77 million growth investment from various investors, TechCrunch reported.
Tiger Global Management led the round for the alternative lending firm which was also participated in by its current backers which include Institutional Venture Partners, RRE Ventures, SAP Ventures, Google Ventures, First Round Capital and Peter Thiel. To date, OnDeck's equity fundraising proceeds total $180 million. Goldman, Deutsche and Key Bank also led the company's debt financing which has so far raised more than $300 million, the report said.
The funds will be deployed towards hastening the development of new products as well as for its expansion and marketing initiatives. It will also be used to hire more people to the team, the report said.
OnDeck provides loans to small businesses in search of capital whose applications would otherwise be denied by banks. Small enterprises usually look to banks to apply for business loans. However, they don't often qualify even if their businesses are viable because banks use personal credit scores to determine if their businesses are creditworthy. Small business owners don't always possess the personal credit scores that banks would like to see before granting them these loans, the report said.
OnDeck Chief Executive Noah Breslow told TechCrunch that their platform can grant up to a $250,000 business loan although the average amount that borrowers follow is $40,000. Unlike traditional banks that take a long time to process loans, OnDeck prides itself in being able to determine if an individual is qualified in just minutes and can release the funds within 24 hours. The loans usually run anywhere from 3 to 24 months, the report said.
According to Breslow, they are able to provide quick service because they follow an alternative FICO-like scoring system for those businesses that apply for a loan. What differentiates their system from that of traditional FICO scores is the data that OnDeck gathers to come up with the score. Instead of looking at the personal credit history of the borrower, it looks at the revenue and the number of repeat customers that the business generates, among others, to gauge how the business will perform, the report said.
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