What Is Kreditech, And Why Is Peter Thiel Investing In It?

Kreditech, the online finance startup based in Germany that loans money to those with limited credit histories, is raising roughly $110 million in Series C funding.

According to TechCrunch in an article on Friday (July 10), of that $110 million, as much as $44 million is coming from investors that include PayPal cofounder Peter Thiel.

TechCrunch stated the funding was initially reported by the German media. The site said that it had confirmed the tranche amount and also that the round “could be around €100 million” and that it could be as long as three months before all of the funding is in place and official.

The site noted that Kreditech has raised roughly $78 million in equity and another $206 million in debt. Though other investors have yet to be identified, TechCrunch noted that the previous investors in the company have included Point Nine, Kreos and Global Founders Capital, among others.

The Kreditech funding helps spotlight the rising interest in, and funding of, what are known as “fintech” startups, especially in Europe. TechCrunch noted that other companies based on the Continent, such as WorldRemit and TransferWise, have been able to raise significant amounts of capital. And, of course, there has been a rising tide of M&A in the space, with one of the more notable headlines in recent weeks stemming from PayPal’s announcement that it would buy Xoom for $890 million.

Turning back to Kreditech, TechCrunch said Friday that a year ago, when the startup raised $40 million in Series B funding, the firm was valued at about $190 million. Significant growth lies ahead for the company, which has seen its run rate of loan activity this year more than triple last year’s $130 million. That translates to expectations by the company that it will make as much as €55 million in revenues this year, which in turn are tied to fees and interest garnered from loans it makes. The revenue projection for this year compares to €21 million made last year. The loan process takes into account as many as 20,000 data points to assess creditworthiness.

According to TechCrunch, the company intends to keep its focus on emerging and developing economies marked by limited credit histories and limited banking access. The company now does business in seven markets, including Australia, Mexico, Peru, Poland and Spain, among others, and will look to expand into Brazil and Romania.

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