Backed, a peer-to-peer lending company, has received $1.5 million in funding from angel investors and venture capitalists, bringing the total of its seed capital to over $2 million.
The company, founded by Gilad Woltsovitch and George Popescu, the latter founder and former CEO of Boston Technologies, offers loans of between $3,000 and $25,000, at interest rates of around 11 per cent on average.
Focus on millennials
The company is specifically focusing on the millennial demographic – a group that typically has no credit rating or credit history. There is strong competition for the credit-related affections of millennials, so Backed has come up with a unique edge: it allows borrowers to use the support of individuals with a solid credit history. If their loan is backed by such a sponsor, the interest rate is lowered.
Speaking with Finance Magnates before the launch of Backed earlier in the year, Popescu explained the company’s decision to focus on millennials: “62% don’t have a credit card, and banks don’t know how to extend credit to them.” To solve this problem, he explained: “We have an algorithm that analyzes non-credit score items which are used to analyze risk for loans.”
Backed is already accepting loan applications in three states: Florida, New York, and New Jersey.