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US fintech Deserve closes $50m credit facility

Creating credit products for college students is seemingly an enticing market to venture capital firms, as Deserve gets new backing.

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Californian fintech start-up Deserve has today announced the closing of $50m in debt financing from Keystone National Group to help fuel growth in account receivables and further scale the company’s mission.

Deserve uses machine learning to help determine a user’s credit-worthiness without using the FICO system, aiming to cater to the 2 in 3 Americans aged 18 to 29 without enough credit history to access traditional lending products.

The start-up began life as analytics-based lender SelfScore, which launched its first credit card product for international students based in the US in March 2016. After rebranding to Deserve last year, the fintech now offers two credit card products: Deserve Edu, a card which rewards and reinforces good credit behaviour, and Deserve Pro, an extension of the Edu cards designed for graduates who have already begun their credit journey.

Neither of Deserve’s credit products carry annual fees, required deposits or cosigner, or fees on foreign transactions. Instead, both come with some attractive rewards like a free Amazon Prime Student subscription, and 1-3 per cent cashback on purchases.

“Since launching the Deserve brand in October of 2017 and addressing the needs of young people who are new to credit, we’ve seen a huge response from young adults and college students across the nation,” said Kalpesh Kapadia, CEO and founder of Deserve. 

“The strong initial response to our brand and high demand for our products validate the fact that Gen Z and millennials need access to fair credit products that allow them to build credit history and reward them along the way. This new credit facility will help us bring deserving consumers to the credit system who are often overlooked by the traditional approach and allow them to pave their path to financial independence.”

The announcement follows the start-up’s recent $12m fundraising round led by venture capital firm Accel, with supporting participation from Aspect Ventures, Pelion Ventures, Mission Holdings, Alumni Venture Group and GDP Venture. The accounts themselves are issued and protected by Celtic Bank, a chartered industrial bank based in Utah and FDIC member.

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