Online lender Pave attracts $300M

Online lender Pave has attracted a $300-million investment from a consortium led by Seer Capital.

The funds will be invested in Pave loans and will also provide them with equity capital which is earmarked for a United States expansion and additional growth in 2016.

Pave CEO and co-founder Oren Bass
Pave CEO and co-founder Oren Bass

Such a significant infusion only five months after a national launch is a vote of confidence in Pave’s mission, CEO and co-founder Oren Bass said.

“Pave works with a subset of those people with limited credit histories whose needs have not properly been addressed.”

The majority of those are millennials who are younger and just beginning their careers, Mr. Bass explained. Even though their FICO score is nothing special, they have good educational backgrounds, are employed in solid fields with good earning potential and are taking steps such as further education which reduce their risk.

Pave partners with 30 different institutions offering courses in high-demand areas like coding, design and product management. Borrowers taking those courses benefit from an underwriting model which takes into account the pursuance of further education, Mr. Bass said.

“That is what excited investors,” Mr. Bass said. “We are looking beyond FICO in a risk adjusted way.”

Pave logoPave’s model also seems to excite borrowers. Recent month-on-month loan volume growth is greater than 40 percent, a feat accomplished with little actual advertising, Mr. Bass said.

“Most of our growth has been word-of-mouth from customers and partners like Lending Tree and Credit Sesame.”

Mr. Bass said Pave continually looks at ways of improving its data analytics, through the identification of additional data sets which are reliable risk predictors.

“Data analysis is all about identifying additional signals to assess risk and provide a better rate. Additional history and payment data benefit the borrower.”

Pave was founded in 2012. Borrowers receive loans ranging from $3,000 to $25,000 at rates beginning at 6.5 percent.