Credit card start-up Upgrade jumps 83% in valuation in just four months to $6.28 billion

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  • Upgrade, the fintech start-up that converts credit card balances into installment loans, has closed a fundraising round that values ​​the company at $6.28 billion, CNBC has learned.
  • According to Upgrade CEO Renaud Laplanche, the company raised $280 million in its Series F round led by new investors Coatue Management and DST Global. This year is an 83% jump from the previous round, which is valued at $3.43 billion, he said.
  • Much of that growth stemmed from sharp growth in revenue for the San Francisco-based company, which climbed 70% between June and October, the two fundraising periods, Laplanche said in a Zoom interview.

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upgrade, the fintech start-up that converts credit card balances into installment loans, has closed a fundraising round that values ​​the company at $6.28 billion, CNBC has learned.

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According to Upgrade CEO Renaud Laplanche, the company raised $280 million in its Series F round led by new investors Coatue Management and DST Global. This year is an 83% jump from the previous round, which is valued at $3.43 billion, he said.

Much of that growth stemmed from sharp growth in revenue for the San Francisco-based company, which climbed 70% between June and October, the two fundraising periods, Laplanche said in a Zoom interview.

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Upgrade’s core product is a card that converts purchases into fixed-rate installment loans, making the start-up the latest company to benefit from the “buy now, pay later” trend in fintech. While traditional cards charge over 18 In annualized interest, upgrade cards start at 8.99%, Laplanche said. According to the industry newspaper, this has made it one of the fastest growing cards in the country Nielsen Report,

“Consumers are discovering the benefits of a product that gives them all the convenience of a credit card, but doesn’t push them into debt,” Laplanche said. “Traditional credit cards are a really bad consumer product with very high interest rates and a lot of fees. They are really designed to keep people in debt for as long as possible.”

Fintech companies that target the vast market for US consumer credit include “buy now, pay later” fintech firms as well as more diverse players including SoFi, Goldman Sachs’ Marcus Brand and Lending Club, also known as Laplaunch. was co-founded by.

But credit card giants are still dominated by consumer credit at traditional banks, including JPMorgan Chase and Citigroup. Lapunch said they have little incentive to copy some of the fintech’s more consumer-friendly features because it would reduce profits from their large card loan portfolio.

“They have no interest in changing that behavior,” he said. “The upgrade card is an innovation that should have come from banks, but hasn’t. It’s less profitable than a traditional card because balances come down faster, but it’s a better deal for consumers.”

Like other fintech players that aim to eventually become a digital one-stop shop for consumer finance, Upgrade has started branching out. It offers checking accounts, a 2% cash-back debit card, and a credit card that pays rewards in bitcoin. Laplanche said that about 10% of new cards issued by the startup are bitcoin rewards cards.

He said the company is preparing to go public by 2023.

“We are growing rapidly and becoming profitable,” Laplanche said. “We’re working on being ready in about 18 months from now.”

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