human fund, a South Korean marketplace that connects borrowers and investors to facilitate loans recently added $20 million to its $63.4 million Series C.
Existing financier Bain Capital led the expansion, with participation from previous investors including Access Ventures, CLSA Capital Partners Lending Ark Asia, D3 Jubilee Partners, 500 Global, Kakao Investment, TBT Partners and IBX Partners.
The additional funding brings the total PeopleFund raised to approximately $100 million in equity. Aside from the capital, PeopleFund has also secured $240 million in debt financing in 2022 from Goldman Sachs, CLSA Lending Ark Asia and Bain Capital. When asked, the company did not disclose its valuation.
In 2021, PeopleFund raised $63.4 million (won 75.9 billion) in equity for Series C, also led by Bain Capital, to further develop its credit scoring system.
PeopleFund plans to use its new capital to further develop its AI-powered risk management and credit scoring system for its users, including borrowers and lenders. In addition, the startup aims to launch a B2B service this year to provide customized AI services for credit scoring systems to financial institutions.
Another reason for the runway extension is to meet one of the requirements for a P2P lending license, according to industry sources. In South Korea, P2P lending marketplaces must meet annual requirements to be licensed by the Financial Services Commission (FSC) to operate their business. To run its business in 2023, PeopleFund, which reports it is losing profits, must have minimum capital that ranges from $400,000 to $2.4 million, depending on the loan balance. (The loan balance is the remaining amount of loans from PeopleFund that the borrowers have not yet repaid.) PeopleFund’s loan balance was $264.3 million (won 326.8 billion) as of December 2022, the company said. That means the outfit’s required capital is around $1.5 million to $2.4 million, according to industry sources and local media.
Joey Kim, founder of PeopleFund, said in a statement that “2022 will be marked as a year of turbulence for fintech, with global public market adjustment alongside changes in the macro environment. Meanwhile, the Korean consumer lending market has undergone a dramatic transition to the mobile world, with major players like KakaoPay and Toss leading the change. This transition, coupled with the instability of the credit market, opens up opportunities for tech-enabled digital lenders and their technologies to highlight our competency relative to traditional financial institutions.”
The outfit says the total amount of loans extended to borrowers to date was estimated at $1.3 billion in December, up from $936 billion in October 2021. The startup says it has experienced growth of more than 56.7% in the number of borrowers and 9.6% in the number of lenders compared to last year. The number of borrowers and lenders in December last year was 20,688 and 2,943,883 respectively.
Founded in 2015, the Seoul-based P2P lending startup has successfully completed its expansion. Still, the impact of the extremely difficult market conditions was unavoidable, leading to several layoffs in the technology industry in recent months. PeopleFund confirmed it had cut about 10% of its workforce in Q4 2022 to “run the business efficiently and effectively” amid the possibility of a worsening economy. PeopleFund had nearly 150 people in December 2021.
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