LendStreet, where we’re investors, is a debt consolidation and refinancing service focusing on people in financial distress. Founded by Jerry Nemorin, the company uses its technology platform and credit scoring algorithms to help customers pay off their old debts at a discount and refinance them at better terms through LendStreet. For the company to be successful, it needs to accurately assess the loan repayment likelihoods of financially distressed applicants. This isn’t an easy job.
Despite the challenges of serving its target customer segment, LendStreet has achieved low single digit charge off rates on its portfolio thus far. Since the initial results are promising, the company’s next challenge is to replicate these results at scale. And this is where its new $28M loan facility from FLOCK Specialty Finance comes in.
Together with the $28M in additional capital, LendStreet is going to be able to refinance many more loans. And the more loans it’s able to refinance, the more data it’s going to have about what parameters make an applicant worthy of refinancing, and how LendStreet can educate its customers to increase their likelihood of sticking to their new payment schedule after they’ve been refinanced.
LendStreet’s end goal is two-fold. The company’s profits depend on its ability to get financially distressed customers out of debt. If it can do the latter, the former will follow. And the latter is a goal worth pursuing.
Originally published at Thoughts of a VC.