OT: Interest investment by Upstart in Q4



nice catch. made me look and found:


The PayPal-backed company says it wants to develop the first mass-market crypto product for emerging markets and making crypto affordable to its users. Then, Tala plans to use blockchain-based finance to refine its capital market strategy and connect investors and borrowers on the Tala platform.

Upstart and the Stellar Development Foundation (SDF), two investors in the round, are critical to this next phase of growth for Tala. An AI lending platform, Upstart has assisted banks and credit unions originate more than $13 billion worth of loans. At the same time, SDF — the nonprofit arm of the Stellar network — leverages interoperability with the world’s existing financial systems.

“For us, it really kind of matches both things. One is continuing to refine and become even better in terms of our credit offerings,” said Siroya. “And then the other side is really thinking about how do we accelerate this experience and leverage crypto with these platforms.”

Following the announcement, Paul Gu, the co-founder of Upstart and Denelle Dixon, the executive director and CEO of the Stellar Development Foundation, will join Tala’s board of directors.


Thanks Dreamer!

it occurred to her that while lenders were willing to finance a mergers and acquisitions transaction to figures as high as $650 million, they turned away from lending a meager $1,000 to a rural entrepreneur primarily due to lacking a credit score.

Shivani, developed a credit rating system for rural borrowers.

Shivani’s profile from https://www.ashoka.org/en-us/fellow/shivani-siroya

Shivani grew up in India before moving to the US for high school. It was in high school when public health issues first appeared on her radar. One of her friends had lost her mother to HIV and Shivani saw that as her friend was trying to cope with the loss, she also had to deal with mistreatment from her fellow students in class. Stunned by how in an advanced economy like the US, HIV was still taboo, she rallied around her friend and helped raise school awareness by making the students active participants in the process. Completing her undergraduate degree from Wesleyan University in 2004, she worked on equity research with UBS, tracking stocks of companies in the healthcare consumer space. Although she thoroughly enjoyed understanding the metrics behind why businesses are successful, she felt something was amiss.

Shivani left UBS in 2007 to work with a small CO focused on sex workers in the Devadasi community in south India. She realized that women, once seen as religious figures pre-independence, were suddenly seen as prostitutes and marginalized. Shivani realized how public perception impacts the livelihood and economic opportunities of communities.

To better understand both the importance of self-sufficiency in terms of livelihoods and the need for public access to healthcare, she pursued her master’s degree in health economics and finance at Columbia University. Shivani wanted to understand how these two issues worked in conjunction to impact the healthcare sector. For example, one needed to be healthy in order to be productive and one needed to be productive in order to access healthcare. After her degree, she worked with the UN. Here, Shivani worked alongside an economist focused on South Asia and sub-Saharan Africa who was building costing models for reproductive health and microfinance programs in different countries. On one project, Shivani analyzed how micro-entrepreneurs were running their business and how the extra cash inflow affected their business and household spending patterns. She recognized that once these micro-entrepreneurs took out a small loan to start a business, they continued to take out more loans to keep the business running and to take care of the interest payments. Shivani knew that there were two reasons for this: first, unfavorable loan terms (smaller loans, higher interest rates and shorter repayment tenures) and second, that these micro-entrepreneurs lacked financial literacy to effectively manage cashflows and expenses.

After the UN, Shivani returned to the US and joined an investment bank as part of their mergers and acquisitions team. While assisting the team with financial matters such as bookkeeping and creating valuations, it occurred to her that while lenders were willing to finance a mergers and acquisitions transaction to figures as high as $650 million, they turned away from lending a meager $1,000 to a rural entrepreneur primarily due to lacking a credit score. She began to connect the dots and founded the InVenture Foundation and worked in parallel part-time.

Shivani sought to test her hypothesis and pilot an initiative. She screened and conducted experiments on her design with 12 micro-entrepreneurs to understand potential risk. Using her savings, she lent to borrowers and her loans differed from the existing models in three ways: she provided longer tenures of the loan, offered lower interest rates and tracked their progress after receiving the loan by working with the entrepreneur daily on his/her business. After 18 months, her venture had 100 percent repayment rates and higher cashflow generation from all the micro-entrepreneurs involved. This success proved that there was a need to lend on more flexible terms and empower communities with financial literacy by providing them with business skills. Rather than launch another MFI, Shivani felt it would be more effective for her to equip existing MFIs with the critical data they need to challenge their traditional forms of lending.

Shivani determined the need for such data and services within the scope of 85 lending institutions of all sizes and their willingness to pay for InSight. She then transitioned full-time to InVenture.

Separately the credit rating is key to UPST, it allowed the lenders/ banks to bundle the loans and sell it to investors. There are Investors (shareholders) who are worried that will be put to test during the “raising interest rate/ QT” regime and could dry up UPST business.

That’s the challenge/ risk, also an opportunity for those who want to roll the dice that USPT will be chucking along.