Eye Popping Fundraise for US Real Estate Lender

By AltFi on Tuesday 5 August 2014

Alternative Lending

A US real estate peer-to-peer lender has raised a whopping $354m in debt capital from a multibillion-dollar private real estate investment fund in New York.

The inflexible banking industry has left many US self-employed business owners and those with uncharacteristic credit histories unable to take out home loans.  Founded in 2011, Privlo sought to redress that situation by matching individuals seeking home loans with investors looking to make direct loans to borrowers. Over $28 million in lending has been facilitated by the platform thus far, with Privlo currently operating in Texas and Idaho.

For a relatively new platform (and indeed for any platform!) $354 million seems like a wildly extravagant fundraise. But it’s a splash that Founder Michael Slavin intended to make. The platform has already made over 100 loans to showcase the platform’s traction to investors. Privlo charges borrowers between 4.5% and 10% and always takes security – as well maintaining 20% interest in all those loans in the style of UK property lender Wellesley & Co.

The platform is now looking to expand its operations overseas. Plans to branch out were announced following a $3.8 million fundraise during the company’s seed plus funding round from Spark Capital and QED investors.

Founder Michael Slavin stated:

"Privlo, which takes a consumer-friendly approach, provides liquidity to an important segment of the housing market—the largest economic driver in the U.S.—and reduces the government's exposure to the market"

"Traditional lenders rely on government agencies for funding and can only cater to a very specific kind of borrower. Our proprietary underwriting technology and processes enable Privlo to serve a much broader set of credit-worthy borrowers in an easy, hassle-free way."

The technology that Slavin mentions is a proprietary scoring software enabling the evaluation of each individual’s financial situation. Loans are finalized within weeks, rather than months and the Privlo team offers step-by-step guidance through a personalized service.

Frank Rotman, QED Founding Partner, commented:

"In addition to focusing on the unique needs of high credit-quality customers that don't fit within the standard mortgage box, Privlo gives private capital a direct line to high-quality mortgages."

"We're excited to see this company thrive as they address one of the most challenging problems of our time."

Spark Capital’s Alex Finkelstein also weighed in:

“Privlo’s approach is to solve credit dislocation and be highly consumer focused, resulting in a business model that yields a truly differentiated product and offers a remarkable customer experience.”

“We’re confident that the company’s outstanding team and product will have a positive impact both on the housing market and the consumers they serve.”

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