Upgrade Valuation Almost Doubles After Funding Round

The credit card startup now has a value of $6.28 billion.

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San Francisco-based fintech startup Upgrade recently closed a Series F funding round that raised $280 million. Currently, Upgrade is valued at $6.28 billion. A funding round earlier in 2021 placed a value of Upgrade at $3.43 billion. 

The company saw robust growth of 70 percent in its revenue between June and October.

The credit card and fintech venture creates fixed-rate installment loans from credit card balances. Upgrade is the latest fintech to branch out into the ‘buy now, pay later’ movement, which includes Affirm and Klarna, and more diverse players like Goldman Sachs’ Marcus, SoFi, and Lending Club, which incidentally was founded by Laplanche.

The company’s card has a starting annual interest rate from 8.99 percent, whereas traditional credit cards charge upwards of 18 percent in interest. According to the Nilson Report, Upgrade is one of the most rapidly-growing cards in the U.S.

Upgrade CEO Renaud Laplanche said the funding round was led by DST Global and Coatue, both new investors in the venture.

Laplanche added, “Consumers are discovering the benefit of a product that gives them all the convenience of a credit card but doesn’t push them further into debt. Traditional credit cards are a really bad consumer product with very high interest rates and lots of fees. They’re really designed to keep people in debt as long as possible.”

Credit card and banking behemoths like Citigroup and JPMorgan Chase still dominate the consumer lending industry, however. Laplanche said they’re unlikely to adopt the consumer-friendly features of the more popular fintechs because the banks would see reduced profits from their credit card loan portfolios.

Laplanche said, “They have no interest in changing that behavior. The Upgrade card is an innovation that should’ve come from the banks but didn’t. It’s less profitable than a traditional card because the balance comes down faster, but it’s a better deal for consumers.”

Upgrade has started branching out to become a one-stop digital shop for consumer financing. It offers its customers checking accounts, a debit card with a 2 percent cash-back incentive, and a reward-based credit card.

The company plans to go public as soon as 2023, according to Laplanche. He said, “We are growing fast and being profitable. We are working on being ready in about 18 months from now.”



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