Financial technology startups are offering a legitimate alternative to the traditional bank.
The latest fin-tech startup to get a stamp of approval (and very large cheque) from the venture capital community is On Deck. The New York-based company nabbed an additional $17 millon in investment for its fourth round from Google Ventures and PayPal cofounder and investor Peter Thiel.
In February, the company closed $42 million in funding led by Institutional Venture Partners. This brings its total fourth round funding to $59 million.
Above: On Deck customer Kristopher Jackson was granted a $25,000 loan.
On Deck says it opened its round to further investment so it can build more products, and hire technical talent. But the company will also benefit from its association with Thiel, a major player in Silicon Valley, and a notoriously founder-friendly investor.
In a nutshell, On Deck offers short-term loans ranging from $5,000 to $150,000 to small businesses that need them. The application process typically only takes a few minutes, and the company is often able to give applicants decisions within a day.
CEO Noah Breslow he aims to make it easier for all Main Street businesses to secure a loan. Breslow’s ambitious goal is to make “on demand capital” a reality for small businesses.
On Deck has a novel approach to determine whether to grant a loan, and the appropriate amount to lend. It has developed proprietary technology to evaluate hundreds of non-traditional data sources to best evaluate the health of a business. These data points include Yelp reviews, and “social media is also part of the equation,” Breslow told me. The company also tracks engagement on a loan applicant’s LinkedIn and Facebook page.
OnDeck isn’t the only startup that is helping cash-strapped businesses. Kabbage provides loans to online merchants, and Kreditech uses thousands of data points to determine how creditworthy you really are.