Online lender Upgrade has announced that it has secured USD 165 million in a new funding round, bringing its valuation to USD 7.3 billion.
Led by Neuberger Berman, the round also saw participation from LuminArx Capital Management, marking the first time Upgrade has secured capital since 2021.
IPO plans, expansion strategy, and more
Even if, at the start of its operations, Upgrade provided relatively small personal loans, the company has grown its operations significantly, going deeper into financial services with checking and savings accounts, a credit card, credit health monitoring, and a BNPL offering.
According to the company’s officials, Upgrade has been cash flow positive since 2022, meaning that it did not have to do a new funding round. They added that Upgrade is also currently looking to go public; however, it first wants additional capital for its balance sheet. Also, the company is creating a new valuation as it starts to provide employee liquidity. Offering more details about the IPO, representatives said that Upgrade is probably 12 to 18 months away from it at this stage, and it wanted to enable everyone who wants to sell a small percentage of stock now without having to wait for the IPO.
Moreover, despite consumer lending still being led by traditional banks, the majority of Upgrade’s customers are moving away from legacy banks for more automated and faster services provided by fintech companies. Talking about its short-term plans, Upgrade mentioned optimising the customer experience across multiple products and making sure that users who might have joined through a BNPL product benefit from an improved experience. The company’s BNPL offering has mostly focused on the travel industry through collaborations with airlines, cruise lines, car rental companies, and hotels. Additionally, Upgrade has expanded into home improvement and auto financing, sectors expected to continue to grow significantly.
