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Vodafone has reportedly revealed the existence of secret wires that allow government agencies to listen to all conversations on its networks.
Louis Beryl’s Big Ambitions at Earnest
Earnest is a startup that provides small loans to people based on their earning potential. But its marketing may be more savvy than earnest.
For now, the company is selling itself as an alternative for people who have trouble nabbing an affordable loan. The big difference between Earnest and traditional lenders is that Earnest looks beyond credit history to where a person attended school, what she studied, and her current job and income. The proposition isn’t so unlike that of another venture-backed startup, Upstart, which also recently jumped into the small loans business, though Earnest asks applicants for much more information, including access to their checking, savings, investment, and retirement account balances. (Both companies employ language about giving “financially responsible” clients the rates they “deserve.”)
It’s an intriguing proposition. It’s also mostly a teaser, unsurprisingly. Earnest says it can afford to charge lower interest rates than most because its technology has lowered its own costs. But the loans that Earnest offers customers — 5.5 percent interest on a one-year loan and 6.5 percent for a two-year loan of up to $20,000 – aren’t just hard to beat; they’re too low margin for Earnest to produce a meaningful return for the investors who’ve given the year-old company $15 million (money, by the way, that Earnest is partly using to extend to new customers). To learn more about what’s going on — and what’s next — I talked yesterday with Earnest founder Louis Beryl, a Princeton and HBS graduate who has worked on Wall Street and at Andreessen Horowitz. Our chat, edited for length, follows.
You spent a year-and-a-half at Andreessen Horowitz before founding Earnest. What were you doing exactly, and how did it lead to this company?
When I was coming out of [HBS], I was hired as an internal data scientist to look across [Andreessen Horowitz’s] portfolio at how we were making investments [such as] looking at how a team’s make-up changes as it grows. [Andreessen Horowitz] wants to help that great founder build a great company, and being able to anticipate in advance who [startups] need to bring on and in what capacity [is a big part of its value add].
I also did more traditional VC stuff, including looking at financial technology companies. As it relates to Earnest, I started thinking: If you were going to build a financial services company from scratch, using data to understand people, how would you do that?
Earnest says it can lend to someone at a very low rate because that person is so low risk. It doesn’t take origination fees, either. So are you counting on zero defaults, or are your products basically loss leaders, or both?
We’re making loans to very credit worthy, very responsible [customers] so yes [to your question about defaults]. We also plan to expand with [clients] over time. If you’re someone who takes a $15,000 to $20,000 loan out of graduate school, we hope to provide other products for you as your situation changes. We’re laser focused on the products we’ve just launched, but we’re going to listen and if [our customers] want credit cards, we’ll move into that. If they want home or car or student loans or a deferral product because they have low cash flow today . . . we’ll move into that.
Are you interested in the financial advisory business, as with a Wealthfront? You’re asking for an awful lot of financial information from your potential customers.
We’re not interested in Wealthfront’s business, though we think we’d be complementary to them and maybe [attract] the same types of people.
Hundreds of people come to our site and enter their information on a regular basis. You could choose not to give over much information, but a lender who doesn’t understand you well has to [charge you more interest]. We say that if you deserve better, we’ll price you at a lower rate than anything in the market.
This is a low-margin business, that’s a fact. . . But we’re not here trying to make the highest margin on every client . . . We’re similar to Amazon in that we’re always thinking how we can deliver the lowest-cost product that delivers happiness to consumers every day. This is a very mission-driven organization. We believe we’re building the modern bank of the next generation.
Allocadia Software, a four-year-old, Vancouver-based company whose cloud software helps marketers plan, budget, and analyze the return on their marketing investment, has raised $7 million in Series A funding led by Altos Ventures and iNovia Capital. Other investors to participate in the round included Illuminate Ventures, earlier investor Beehive Holdings, and individual investors Don Mattrick and Norm Francis.
Avantium, a 14-year-old, Amsterdam-based company that makes packaging materials from plant-based materials, has raised $50 million from a group of strategic investors including the London-based diversified holding company Swire Pacific, the Coca-Cola Company, Danone, and an Austrian plastics manufacturer. Earlier shareholders, including Sofinnova Partners, Capricorn Venture Partners, ING Corporate Investments, Aescap Venture, Navitas Capital, Aster Capital and De Hoge Dennen Capital, also participated. The company has raised roughly $112 million to date, shows Crunchbase.
DewMobile, a Beijing-based company that sells mobile-to-mobile communication applications that don’t require a Web connection, has raised $20 million in Series B funding, including from IDG Capital, Northern Light Venture Capital, and Innovation Works. The company had previously raised at least $6 million, reports VentureWire.
Fashionandyou, a five-year-old, Gurgaon, India-based shopping site for luxury brands and designer apparel, has raised an undisclosed amount of Series D funding led by the investment arm of VIPshop, the publicly traded, China-based discount retail specialist. Earlier investors Norwest Venture Partners and Intel Capital also participated, reports TechCircle.in. Fashionandyou is a subsidiary of the holding company Smile Group. The new round represents one of few examples of Chinese digital tech ventures investing in India, notes the report.
Fixstream Network, a year-old, San Jose, Ca.-based data integration and analytics platform company, has raised $10 million in Series A funding led by Tech Mahindra, a Pune, India-based consulting firm focused on the communications industry.
Flaregames, a three-year-old, Karlsruhe, Germany-based company that makes hardcore games that can by played over shorter periods of time on mobile devices, has raised $12.2 million in venture funding from earlier investors Accel Partners and T-Venture. The company has raised $22.7 million to date, shows Crunchbase.
ImageBrief, a three-year-old, New York-based online marketplace that matches buyers of images with professional photographers, has raised $750,000 in funding from Great Oaks Venture Capital. The company, founded in Australia and moved to New York in 2013, has raised $3.2 million altogether.
Infrascale, a two-year-old El Segundo, California-based company that makes cloud data protection software for high volume cloud storage, has raised $16.3 million in Series B funding led by new investor Carrick Capital Partners. The company has raised $25 million to date, shows Crunchbase.
Montage Talent, a 6.5-year-old, Delafield, Wi-based video interviewing company, has raised $6 million in Series C funding led by Beringea, the private equity firm. Other participants included Montage’s earlier investors, including Baird Capital, Calumet Venture Fund, the State of Wisconsin Investment Board, Foley Ventures, and Gary Comer Inc The company has raised roughly $15 million altogether.
Senseonics, an 18-year-old, Germantown, Md.-based company that’s developing a long-term implantable glucose-monitoring system made with tiny sensors, has raised $20 million from earlier investors Anthem Capital,Delphi Ventures, Greenspring Associates, Healthcare Ventures and New Enterprise Associates, along with unnamed strategic investors.
TrialScope, a two-year-old, Lawrenceville, N.J.-based company that provides its customers with tools and systems to improve their clinical trial processes, has raised $10 million in funding led by Edison Ventures, with participation from Dublin Capital Partners and NewSpring Capital.
Yieldbot, a four-year-old, New York-based company whose software helps online advertisers understand consumer intent (so they can match offers and ads at the moment, presumably, when customers are most open to them), has raised $18 million in Series B funding. SJF Ventures led the round. Earlier investors Common Angels, New Atlantic Ventures and RRE Ventures also participated, along with City National Bank. The company has raised $28.4 million to date, shows Crunchbase.
Flashpoint, a three-year-old, seed-stage, Atlanta-based venture outfit and accelerator affiliated with Georgia Tech, has raised its second $1 million fund, reports the Atlanta Business Chronicle. To date, Flashpoint has helped seed three dozen startups that have gone on to raise more than $65 million from VCs, including Google Ventures, Kleiner Perkins Caufield & Byers and Andreessen Horowitz. The new fund is expected to back up to 50 startups over the next two years; those companies will pass through Flashpoint’s four-to-six-week-long program, staged twice a year, and receive $20,000 each in exchange for (an unspecified amount of) equity.
Venture Investment Associates, a venture fund of funds based in Peapack, N.J., is nearing a final close of $50 million on a second seed-stage fund, reports peHUB. The firm closed its debut fund with $25 million in 2012. It has backed the funds of True Ventures and Data Collective, among others.
As its highly anticipated IPO gets underway today, Arista Networks and its cofounder, Andy Bechtolsheim, face an unprecedented lawsuit from the company’s other cofounder, David Cheriton. The case may have implications beyond damaging the cofounders’ 30-year-old business partnership, notes Forbes.
Alenty, a seven-year-old, Paris-based online platform that helps advertisers and agencies measure and optimize online branding marketing, has been acquired by the ad tech company AppNexus for an undisclosed amount. Alenty looks to have raised seed capital alone, raising roughly $570,000 in 2007, shows Crunchbase.
Dragonplay, a three-year-old, Tel Aviv-based mobile social gaming startup, has been acquired by games company Bally Technologies for $100 million. Dragonplay looks to have raised just $14 million in Series A funding from Accel Partners, Founder Collective, and Entrée Capital.
Droptalk, a year-old, Bay Area, stealth messaging startup founded by serial entrepreneurs, including Rakesh Mathur, has been acquired byDropbox for an undisclosed amount. Droptalk’s tools reportedly allow users to share links privately with friends via a Chrome extension. TechCrunch has the story here.
Rivet & Sway, a three-year-old, Seattle-based online retailer of designer and prescription glasses, is shutting down, says the company in a postingto its site first flagged by VentureWire. The company had raised $2.4 million from Harrison Metal, Mousse Partners, and its earliest investor, Baseline Ventures.
Shelby.tv, a three-year-old, New York-based company that created personalized video streams from sources like Vimeo and YouTube, is being shut down as its team heads to Samsung, reports VentureBeat. The team tells the outlet that Shelby.tv will live on as a separate entity developing “new technology … as part of Samsung Electronics.” The company had raised $3.9 million in funding from a long list of investors, shows Crunchbase. Among them is Draper Associates, Avalon Ventures, Bobby Yazdani and Allen Morgan.
The tech exec cover bands of Silicon Valley.
WhatsApp cofounder Brian Acton on having his company acquired byFacebook for $19 billion: “More than anything you are somewhat numb and dumbstruck. There are a flotilla of lawyers around you, 96 hours of being in a conference room with lawyers non-stop. By the end of it, it’s just hazy. You are just numb and trying to grasp it all and I don’t think I really grasp it all just yet. It will hit me in stages. I’m looking forward to it, but also with some apprehension.”
Venture capitalist Ben Horowitz talks with FastCompany about why bitcoin isn’t a “fake currency” or a fad. ”When you talk about fake money that you created out of the air, economists are like, ‘What the hell?’ But some of the commentary on it is crazy.” (Video.)
Tragedy and secrets have begun to plague Tony Hsieh‘s $350 million Downtown Project in Las Vegas.
Softbank’s billionaire president Masayoshi Son says robots should be tender and make people smile, so he’s putting one on sale in Japan in February. Meet Pepper, the emotional humanoid that will give you nightmares tonight.
Get your checkbooks ready. Yesterday, investor Peter Thiel introduced the 2014 class of new Thiel Fellows. The complete list is here.
Earnest (see story above) is looking to hire someone in business development. The job is in San Francisco.
Datafox takes a quick look at which investors are leading the pack when it comes to big data investments.
Fab’s board has approved yet another new strategic plan for the e-commerce company that will include the purchase of a European furniture company.
Pinterest is rolling out self-service ads.
How China’s Xiaomi became the world’s fastest-growing smartphone maker.
Mo’ majors, mo’ money: Stanford introduces a joint electrical engineering MS/MBA degree program.
Oh. No. Lifetime’s newest reality show will feature women birthing “alone” in the wild.
Revealed: What goes on inside your dishwasher.
Your neighbors are going to love this home improvement.