FinTech Startup Upgrade Reaches $1 Billion Valuation — After $40 Million Injection
On June 17, 2020 a FinTech startup called Upgrade raised $40 million in a Series D investment round, upgrading its valuation to $1 billion. Upgrade focuses its business model on credit-related services. The platform continues the beginning of a trend in which FinTech startups gain massive valuations based on relatively moderate funding infusions.
Moderate Investments Spike Valuations
One of the first FinTech companies to pave the road for this trend was Notion, an exemplar of how to simplify complex work and study-related tasks. What was previously the domain of multiple specialized productivity apps, Notion intuitively merged into a single, unified, mobile work platform.
This is how Notion quickly demonstrated its value, as more people downloaded the app and rated it highly. Consequently, Notion doubled its valuation to $2 billion this year, from a meager $50 million investment round. Upgrade followed a similar pattern, upgrading its valuation from $500 million during Series C Santander InnoVentures investment, in 2018, to now a $1 billion valuation, based on the $40 million Series D round.
Upgrade, headed by CEO Renaud Laplanche, is a FinTech startup that aims to develop into a neobank like Revolut and N26, but it didn’t follow the usual neobank’s path. Instead, Upgrade came into investors’ spotlight by offering simplified loans at low-interest rates alongside credit cards.
Upgrade’s Emerging Value
By delaying its digital checking and savings accounts and focusing on loans from the get-go, Upgrade’s strategy seems to have paid off. Upgrade did not only manage to rapidly upscale its revenue base but it is already running in the positive, which cannot be said for most FinTech startups. Thus far, including the latest Series D fundraising, Upgrade amassed $100 million in investments, with 10 times higher valuation.
Although FinTech investments are on the downturn in the wake of the coronavirus shutdown of the economy, Venture Capitalists still seek out opportunities for growth. Upgrade matched that growth criterion perfectly with its $60 million revenue in 2019, which is an outstanding result for a startup. Upgrade’s CEO, Laplanche, projects a continued rise in revenue of $160 million this year.
Sometimes, a company’s success can be attributed to many factors, but this time, it is quite clear that Upgrade owes its financial harvest to its CEO – Renaud Laplanche. If his name sounds familiar, it is because he founded a P2P FinTech company called LendingClub, in 2014. Unfortunately, regulatory woes caused him too much trouble which made him leave LendingClub and establish Upgrade.
On top of his rich FinTech experience, Laplanche also adopted a business strategy that aims to provide clients with one of the premier personal loans for low interest, so they don’t end up in a vicious wealth-sapping cycle. Upgrade achieves this goal by providing 6.9% interest rates for credit cards, in addition to the possibility of restructuring repayment timetables.
As demand for loans skyrockets, so will FinTech companies like Upgrade. Have you or your friends seriously considered taking advantage of their services? We want to know what you think in the comments section below.