Three years, $11 million in venture funding and $1 million in loans later, online lender Vouch Financial is closing up shop, according to the Wall Street Journal. The small online lender founded by serial entrepreneur Yee Lee in 2013, makes personal loans based on the premise of a vouching network. For example, the receive a Vouch loan, at least one person must sigh as a “sponsor.” People sponsor the loan applicant by choosing an amount of money and agreeing to pay their sponsorship amount if the loan applicant does not pay Vouch back.
While large online lenders such as Lending Club have their own concerns, smaller online lenders need to contend with the recent tepid interest in online lending investment.
“… a sharp decline in investor appetite for online lenders’ loans in recent months, plus a Silicon Valley pullback in willingness to commit more funding, has curtailed the growth of some platforms, leading some of the smallest to pursue sales or, in the case of Vouch, to begin the process of winding down,” reported WSJ‘s Telis Demos and Rolfe Winkler. “The company’s decision to shut its doors is a further indication of pressure affecting online lenders. It also suggests that more activity may begin to gravitate toward larger players and even potentially banks that are now increasingly offering online loans of their own.”
Twenty-eight employees are currently listed on Vouch Financial’s website, but no further updates have been posted. Twitter activity came to a standstill on 4 March.