According to a report by Bloomberg, Earnest is up for sale. The San Francisco based online lender is said to have an asking price of $100 million. Founded in 2013, Crunchbase reports Earnest has raised over $99 million not including an undisclosed sum in a VC round in January 2016 and $200 million of debt financing.
Loans the New Fashioned Way
Earnest crossed a major milestone last November when it reported having helped to refinance $1 billion in student loans. CEO Louis Beryl said at the time, “it’s tremendous in that we have reached this milestone far quicker than many companies before us.” Earnest appeared to be tracking a similar path to SoFi, a Fintech rockstar, by adding personal loans to its offerings. But Bloomberg also reports that recently Earnest had to shelve a securitization round which probably delivered a setback to the online lender.
Earnest is not alone in its challenges. Other online lenders have struggled to regain the momentum initially experienced when institutional money discovered the sector that promised outsized risk adjusted returns. Publicly traded online lenders LendingClub and OnDeck delivered subdued Q1 earnings results. OnDeck is on a mission to deliver profitability. LendingClub wants to regain growth.
While no one doubts that lending is moving online a growing number of traditional financial firms and other non-bank lenders are entering the space to challenge early players. Meanwhile some of the fast money has moved on looking for greener pastures.