ZestCash Completes $73 Million Round of FundingMatrix Partners Leads $23M Series B, Victory Park Capital Provides $50M Credit Facility
January 19, 2012
LOS ANGELES, Calif.—January 19, 2012—ZestCash, Inc., a financial services technology startup committed to serving the needs of the underbanked, today announced it has closed a $73 million round of funding. The company raised $23 million in an equity round led by Matrix Partners, which will help fund ZestCash’s innovation in underwriting, expansion into additional states, and company growth. The company also raised a separate $50 million line of debt financing from Victory Park Capital to fund its growing customer loan portfolio.
ZestCash’s Series A investors - Lightspeed Venture Partners, GRP Partners, Flybridge Capital Partners, and Lighthouse Capital Partners - also fully participated in the round.
Most traditional lenders determine who they will lend to using a small amount of credit data. ZestCash takes an entirely different approach to underwriting by combining Google-style machine learning techniques and data analysis, combined with traditional credit scoring. As a result, the company can offer credit to many people who historically would have been turned away.
“We believe all data should be credit data,” says Douglas Merrill, Founder and CEO of ZestCash. “By using ‘big data’ analytical techniques we are able to offer a fair, lower cost alternative to people who do not have access to traditional credit.”
Shawn Budde, Co-Founder and Chief Risk Officer of Zestcash, said, “In the 25 years I’ve been doing credit underwriting, I’ve seen a lot of improvements in data quality and analytic tools but it’s not enough. We’ve reached the natural limit of what traditional underwriting tools are capable of. The machine learning-based underwriting techniques ZestCash is developing will completely change the way lenders view and use data,” he said.
Since its launch in 2009, ZestCash has grown its staff to more than 75 people and has loaned millions of dollars to thousands of customers. ZestCash loans are currently available in Utah, Idaho, South Dakota and Missouri, and will be offered in additional states in the coming months.
“Matrix looks to invest in the companies and entrepreneurs who will radically change the way big markets run, and ZestCash brings innovation to a giant category,” said Dana Stalder, general partner at Matrix Partners and former PayPal executive. “ZestCash will disrupt the financial services industry by offering new services to millions of unbanked consumers. The opportunity is analogous to my experience at PayPal in the sense that both PayPal and ZestCash have figured out a way to provide more cost effective services to customers through the novel application of analytics and technology.”
About ZestCash, Inc.
ZestCash offers fair and transparent credit alternatives to underbanked Americans who do not have access to credit from traditional lending institutions. The company offers short-term installment loans designed to help people cover unexpected bills and basic life necessities. The company was founded in September, 2009 by Douglas Merrill, the former Chief Information Officer of Google, and Shawn Budde, the former Head of Subprime Credit Cards at Capital One. For more information, please visit www.zestcash.com.