Avant becomes the latest online lender to feel the squeeze, laying off 7% of its workforce.
Short-term consumer loan platform Avant has thus far managed to keep clear of the negative headlines, but we now hear that the platform is cutting around 60 jobs in response to dwindling lending volumes. Crain’s Chicago Business reports that the platform has experienced a 27% drop in loan volume during the first quarter of 2016. Further to the job cuts, Avant is also said to be scrapping plans to expand its product offering.
Avant blasted past the $3bn mark in loan originations in March of this year. The platform marked the occasion by announcing plans to expand into the secured auto loans space and to launch a credit card product. Avant’s planned auto loans offering was said to include auto secured loans and direct to consumer auto refinancing (not dissimilar to Zopa’s latest product offering), with auto financing in general pointed to as “the next frontier” for the company. But these initiatives have been set aside, for the time being at least.
Avant CEO Al Goldstein made no bones about the cause of these cutbacks, telling Crain’s Chicago Business: “our biggest competitor just fell down, and the whole space is at an inflection point.” Clearly Goldstein is referring to the furor surrounding Lending Club in the wake of long-time CEO Renaud Laplanche’s recent dismissal.
Goldstein was nevertheless upbeat about the long-term prospects of Avant, saying: “we saw the capital markets really change in the beginning of the year, and we were the first lender to take appropriate action. We saw what happened to the other lenders who didn’t.”
It’s difficult to corroborate the accuracy of that claim with any kind of certainty, but we note that fellow consumer lending platform Prosper was forced to cut loose a larger 28% of its workforce in early May.
Avant ought to be well capitalised for the near term, having raised $325m in September 2015 in a Series E round that valued the company at around $1.5bn. The company also has offshoots in Canada and the UK, and secured £130m in debt capital for the latter of these two subsidiaries earlier this month.