DriverUp, a Dallas, TX-based online market for investing in auto loans that launched in February, has received a $20 million Series B funding round that it plans to use to bolster its marketing and product development efforts.
DriverUp provides investors access to loans used by consumers to buy cars. Those investors are typically groups such as hedge funds, endowments, family offices, and high net worth individuals—known as accredited investors—who are seeking to lend their money in ways that provide higher returns without necessarily having greater risk.
Investors can expect returns of 8 percent to 10 percent, according to the company. DriverUp, which says the auto lending industry is worth $1 trillion, uses software and data analytics to help secure and service the loans for investors. A minimum $100,000 investment is required.
Dallas-based specialty finance company Sierra Auto Finance runs DriverUp. Both investors and car dealers can sign up through DriverUp’s website to use its data analytics software.
The $20 million Series B was led by new investor SF Capital Group, a private investment firm that specializes in both equity and debt. DriverUp previously raised a $50 million Series A that was led by Emerald Development Managers and RRE Ventures, who also participated in the Series B.
Online marketplaces for investing in and obtaining loans have become far more prevalent during the last two years, from public companies such as Lending Club and OnDeck to private operators such as Fundbox and Prosper.
Neil Wolfson, president of SF Capital Group, is joining the company’s board of directors, a notable move because Wolfson is also on the boards of various other lending-related companies, including OnDeck. SF Capital participated in OnDeck’s $4 million Series C in 2011 and the company went public in 2014.
