Screen grab from Sofi website

Online student loan refinancing company SoFi attracts $80 million Series C funding

Screen grab from Sofi websiteSoFi, an online student loan refinancing company, recently announced it secured $80 million in Series C funding.

Investors in this round include Peter Thiel, Wicklow Capital, Discovery Capital Management, and several previous investors. This round of funding enables SoFi to expand its product listing while also increasing the amount of capital available for student loan refinancing.

SoFi was created by a group of Stanford Graduate School of Business students in 2011. They started with a $2 million program and in less than three years have funded $450 million in loans to more than 4,500 members.

Their niche is connecting different generations of alumni with a focus on top students in high-earning fields. The pitch is that those who excelled in school are most likely to get the best jobs in higher earning sectors, which makes them less of a risk and in turn merits a lower interest rate. This results in an average savings of $9,400 per participant, according to their website.

Entrepreneurial assistance, job search help, and payment suspension during an unemployment period are also available.

As a result of the funding, Discovery’s S.P. “Wije” Wijegoonaratna joins the SoFi Board. Mr. Wijegoonaratna has been with Discovery since January 2013 with senior positions at Moore Capital Management and Fortress Investment Group also on his resume.

Based in South Norwalk, Connecticut, Discovery Capital LLC was founded in 1999.  They have 159 total positions worth a total market value of $13.3 billion at the close of 2013.  Investments in technology, services and financials make up 81 percent of their holdings.   Discovery Capital’s annualized returns since 1999 is around 17% while the Discover Global Opportunity Partners fund provided a 27.5% return last year.

Peter Thiel was an early investor in Facebook before selling most of his stock after their IPO.  He is also a cofounder of PayPal and an investor in Airbnb, Stripe and Practice Fusion.  Palantir, a data consultancy he recently cofounded, is valued at $9 billion, making his 12% stake worth more than $1 billion.

Mr. Thiel becomes an advisor along with Duncan Niederauer, CEO of NYSE.  Mr. Niederauer joined NYSE in 2007 following a 22-year career at Goldman Sachs focused mostly on equities.

The $80 million infusion brings SoFi’s total raised to $161 million.  The new investors join Baseline Ventures, Renren Inc., DCM, and Innovation Endeavors with a stake in SoFi.

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