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.
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.