The Series C fundraise was led by Neuberger Berman Private Equity, which has around $30bn under management. In a welcome bit of good news for the online lending industry, the fundraise has been confirmed as an up-round. While exact valuation metrics have been held back, CEO David Klein said: “if we were a public stock and you invested in us a year ago, you’d be happy today”.
Existing CommonBond investors August Capital, Tribeca Venture Partners, Social Capital, Nyca Partners and Victory Park Capital also participated in the round, as did a number of key individuals. Former Citigroup CEO Vikram Pandit participated, as did former Thomson Reuters CEO Tom Glocer and ex-Barclays Private Wealth CEO Tom Kalaris.
CommonBond has also secured $300m in loan purchases from an unnamed global asset management firm. The combined debt and equity capital takes the company’s funds raised to date beyond the $1bn mark. The platform has funded and refinanced over $500m in student loans to date.
CommonBond has marked the fundraise by announcing its acquisition of personal finance platform Gradible. Gradible provides users with personalised recommendations for how to better manage and repay student debt. The acquisition feels somewhat similar in style to Prosper's acquisition of personal finance analytics firm BillGuard in September 2015.
Klein tells AltFi that the acquisition will allow CommonBond to break into the 401(k) student loan market. He says that millennials make up a third of the US workforce, and that paying off student debts is at the very top of their priorities. The 401(k) program allows employers to contribute to student loan repayments, up to a level of their choosing, as a form of employee benefit. Klein says that, while only 4% of companies in the US today contribute to paying off student debts for their employees, that figure is poised to grow to over 26% (according to a recent Willis Towers Watson survey). The acquisition of Gradible will allow CommonBond to insert itself into this process, and to charge a nominal facilitation fee to companies.
Klein says that CommonBond has already signed partnerships with around 100 companies, mostly centred on its core refinancing services. But the Gradible acquisition means that CommonBond can now offer employers a “full suite” of student loan repayment products for their employees, including 401(k) contributions and assessment functionalities. Crucially, the Gradible platform will retain its objectivity, and will recommend millennials to a range of options, including federal government programs, such as income-based repayment and public service loan forgiveness.
Commenting on the string of announcements, Klein said: “We’ve had a phenomenal stretch of growth this past year, and today’s announcement powers even more going forward. Our mission is to have as broad an impact as possible on the financial health of consumers in the U.S. And with our new investors and our new suite of employer-based products, we're able to take our mission to the next level, now reaching all 40 million Americans with student debt, regardless of their financial profile."