Alt-Lending Startup Bread Picks Up A Lot Of Dough

The consumer lending startup space, also known as alternative lending, is heating up — and another newcomer in the space has secured some big backing from a big VC name.

Bread, a New York-based startup, has secured a $14.3 million Series A funding round, which was led by Bessemer Venture Partners, The WSJ‘s VentureWire reported. It also indicated that this was the firm’s first investment in a new alt lending startup in roughly a decade. RRE Ventures is also listed as one of Bread’s investors.

Bread is known for its pay-over-time buttons that are seen on retail websites. What the company does is pay that merchant in full and relies on the consumer to pay back monthly installments (with interest) over a 24-month period.

Companies such as Bread are attempting to disrupt the traditional consumer lending space — or the credit card companies — by attempting to bring an alternative option to private-label credit cards.

What makes companies like Bread unique is its approach with retailers and the technology that’s used to integrate the loan option onto their site, according to Rob Stavis, partner at Bessemer, and Charles Birnbaum, VP at the firm.

That integration, unlike other lending options, keeps the shoppers on the retailer’s page so the consumer can complete the financing option without being directed to a third-party site. The consumer can pre-qualify for that loan all within the site and can sort through the payment options before even getting to checkout.

“They are thinking about this as a holistic marketing solution for merchants,” Birnbaum told VentureWire.

While Bessemer might have been hesitant to invest in this space in the past 10 years, it appears that venture investments in alternative, online lenders are growing in popularity.

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