An online marketplace for auto loans called DriverUp has grabbed $50 million in Series A funding to launch its service.
DriverUp, which is run by Dallas-based specialty finance company Sierra Auto Finance, helps auto dealers make loans to their customers by crowd-sourcing accredited investors who want to make direct investments in the auto loans. Both investors and car dealers can sign up through DriverUp’s website to use its data analytics software.
DriverUp’s launch comes as crowdfunding has gained popularity, although such websites typically cater to individuals wishing to donate to or invest in a company or specific product. There are some crowd-sourced lending Web sites though, such as Kiva, which allows the public to make zero-interest loans in small businesses.
DriverUp, meanwhile, is targeting investors such as hedge funds, family offices, and high net worth individuals who are seeking higher-yielding investments. Traditional investments from Treasury bonds to junk-rated debt have offered record-low interest rates in recent years, and investors have moved their money into assets that pay higher interest rates, which can also mean they are riskier.
DriverUp expects a return of 8 percent to 10 percent, a spokeswoman said. It requires a minimum $100,000 investment.
The Series A funding was led by Emerald Development Managers and RRE Ventures.
