Fintech startup Upgrade valued at $7.3 billion in new funding round

Upgrade, the online lending platform founded by Renaud Laplanche, has successfully secured $165 million in its latest funding round, bringing its total valuation to an impressive $7.3 billion. This announcement was made in a press release on Thursday, revealing that the funding was led by Neuberger Berman, with contributions from LuminArx Capital Management. Laplanche, who established Upgrade in 2016, noted that this is the company's first funding round since 2021, emphasizing their strong financial position. "We've been cash flow positive over the past three years, so we didn't have to do a new round," he explained in an interview. Originally focusing on small personal loans, Upgrade has expanded its offerings significantly. The company now provides checking and savings accounts, a credit card, credit health monitoring, and a buy now, pay later (BNPL) service. Earlier this year, Upgrade acquired the BNPL travel company Uplift for $100 million, further diversifying its portfolio. Laplanche highlighted that revenue has more than doubled since their last fundraising effort, with annualized revenue surpassing $1 billion as of May. With aspirations for an initial public offering (IPO), he expressed the need for additional capital to strengthen the company’s balance sheet. "We were probably 12 to 18 months away from an IPO at this stage," he stated. "So we wanted to go ahead and make sure everyone could sell a little bit of stock now without having to wait for the IPO." Despite the dominance of traditional banks like JPMorgan Chase in consumer lending, Laplanche observed a notable shift as many Upgrade customers transition from legacy banks to utilize the company’s more automated and efficient services. This year, he emphasized the importance of enhancing the customer experience across multiple products, ensuring that users who joined through a BNPL product enjoy a seamless interaction. The company is also placing significant focus on home improvement and auto financing, with total loan originations in these sectors exceeding $2 billion and $1 billion, respectively, earlier in the year. As competition heats up in the fintech space, Laplanche noted the rising prominence of companies like Chime, SoFi, Affirm, and Klarna, each expanding their banking services. In the BNPL sector, Upgrade is carving out its niche within the travel industry through strategic partnerships with airlines, cruise lines, car rental agencies, and hotels. "It's a pretty specific industry that's different from retail, where Klarna and Affirm are stronger," Laplanche remarked.