US-based financial technology company SoFi has raised $1 billion in a Series E funding round, led by SoftBank Group. The funding round is expected to contribute to the SoFi’s further growth as a financial services partner.
By far, it is the second biggest investment made by SoftBank in the fintech industry. This June, it announced a $1 billion investment in Korean online retailer Coupang.
The news about the $1 billion fundraising round first appeared in the WSJ in August, but none of the two companies gave any comments at the time.
“SoftBank seeks to invest in large industries or geographies that are ripe for change. This investment gives SoftBank exposure to the financial services sector, which is one of the largest and most important industries in the world. SoFi is clearly a game changer in the fintech space,” stated SoFi COO, Nikesh Arora, in a conversation with Forbes.
Earlier, SoftBank already invested in numerous technology companies, including Yahoo Japan Corporation and Group Holding. Last year, it put $250 million into Singapore-based mobile ride e-hailing app GrabTaxi. Among its recent investments is a largest shopping website in India, called Snapdeal. Besides, SoftBank informed that it had increased its share in a telecommunications holding company Sprint Corp by 1.2 %, thus reaching a stake of 83.19 %.
Other investors included hedge fund Third Point LLC, private equity firms Third Point, Institutional Venture Partners, Wellington Management Company, social network service RenRen, venture capital investment companies DCM Ventures and Baseline Ventures. In total, the company has raised $1.42 billion.
According to Fortune, SoFi CEO Mike Cagney hopes the investment will defer the company’s IPO plans. “We had just done that round of fundraising in January but were growing ahead of expectations so wanted some incremental capital to support a higher pace of growth,” he said.
“I’ve known [SoftBank founder] Masayoshi Son from a couple of years back and, in classic Masa fashion, he agreed we could use some incremental capital but told me we should take $1 billion. At first we thought it was too much dilution but, we went back to see how acretive this could be by accelerating our expansion plans, that we ultimately felt it made sense. We’ll do nearly $5 billion in loans this year, and we want to double it next year.”
Initially, SoFi was mainly concentrated on lending money to college students, but later started offering mortgages, personal, MBA and parent loans. Founded in 2011, the company now includes over 400 employees, but plans to increase its staff to 500 people by the end of the year. Besides, SoFi projects to boost its loan volume to more than $6 billion by the end of 2015.