Direct lending platform Bread announced completion of a Series A funding round last week led by Bessemer Ventures Partners. Bessemer was an early investor in trailblazing P2P platform Zopa. The funding raised $14.3 to help the young platform grow, fund initial loans, and compete with credit card providers and a new generation of internet payment options that are quickly swamping the digital credit space. According to a reporting WSJ.com, Bessemer Partner Rob Stavis stated;
“Too many startups have built businesses around a simple “arbitrage” of originating loans and reselling them to others at a higher price. He said he always feared that their costs of acquiring customers could go up as competition heated, which is indeed what is happening across the online-lending market.”
Bread provides credit at the point of purchase, similar to competitor Affirm which was founded by PayPal co-founder Max Levchin. Bread does not want to be defined as a credit card but provide a similar, improved service. When visiting a retailer, consumers may select a pay over time option at the point of purchase and pay a lower rate than credit companies charge over an extended period of time. Users may pay off the balance at any time without penalty. The company prides itself on fair rates, transparent terms and no hidden fees.