Vouch, a startup which vouches for credit on social networks, has raised $6 Million in Series A funding from investors including Core Innovation Capital, Data Collective, Stanford StartX Fund and Cooley LLP. Including the recent funding, the company has so far raised $9.6 million; the investors in the first round were First Round Capital, Greylock, IDG Ventures and AngelList.
As stated in the company’s website, its approach is “Taking lending back to its roots”. Vouch helps customers build a network of trusted friends and family, people who would vouch for them in times of need.
Some of the requirements to apply for a Vouch loan are: the candidate must be at least 18 years of age and should have a credit score of 600 or greater, and cannot be in bankruptcy or foreclosure proceedings.
Old Wine In a new bottle
“We are taking advantage of the unprecedented level of digital connectedness exhibited by modern borrowers to accomplish what the banking industry has never before been able to do at scale: incorporate a borrower’s social network into credit decisions”, states Yee Lee, CEO of Vouch.
The idea of countersigning a loan is followed from the ages, but Vouch has enabled the same concept to fit the digital world. Vouch’s user base is diverse and heavily mobile with 70-80 percent of Vouch’s traffic from mobile via its iOS and Android apps. Social networking plays a vital role in being creditworthy. The company offers loans to people who get their friends and family to vouch for them by promising that if the borrower defaults on the loan from Vouch, they will pay it on behalf of the borrower.
The process of borrowing through Vouch begins by sending emails to people they know and asking them to vouch for them. The process involves answering a series of questions about the nature and duration of their relationship and ends with the signing of a legally binding document promising to pay the amount borrowed, in the event that the borrower forfeits on the loan. The more people who vouch for the individual, the greater the loan amount with a lower interest rate. Interest rates range from 5% to 30%.
About the Company:
Vouch was co-founded in 2013 by CEO Yee Lee, previously worked with PayPal, Slide, Skype and others and Sue Korn, previously VP of Finance at peer-to-peer lending marketplace Prosper. The vouch team includes several executives from PayPal, Prosper and Google. The company states their values to be transparency, balance, productivity and connection.