The microlending startup has already reeled in $2 million of a $10 million debt issuance, according to a filing with the SEC. Formed this year by alumni of Stanford’s Graduate School of Business, the community-based financial services company is designed as an alternative to the private loans many students use to pay for college. Social Finance is tapping Stanford GSB alumni to invest into a shared pool of capital, which is then distributed to current students. The upside for alumni is a return on their investment; students get fixed rate student loans at better terms than typical private and government loans.
Co-founder Ian Brady says the company is still operating in stealth mode, and declined to discuss the funding.
Already, there are several peer-to-peer lenders looking to provide microlending services, and they have netted substantial capital from boldface name backers lately. This includes Google executive Eric Schmidt’s TomorrowVentures, Accel, and DFJ, which were among backers in a $17.2 million round for Prosper, and Peter Thomson’s Thomvest took an equity stake alongside Union Square Ventures in Lending Club, last month. Peter Thomson is one of the directors of Thomson Reuters, publisher of this blog.
Jonathan Marino contributed reporting to this story