SoFi, a private technology company best known for student debt refinancing, announced this morning that it raised more than $500 million from the Qatar Investment Authority (QIA) and others. The company disclosed that the new capital valued the company at $4.3 billion, pre-money. On a post-money basis, the SoFi is now worth over $4.8 billion.
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This is not SoFi’s first half-billion dollar round. The company raised a $500 million Series F in early 2017, led by Silver Lake Partners. In Autumn of 2015, SoftBank invested $1 billion. Before its new capital, SoFi had raised around $2 billion.
What this meant was not immediately clear, so we reached out to SoFi. Per the company, the firm has now raised $2.4 billion in total, of which it has $2.3 billion in cash. This implies a net burn of just $100 million. That’s far better than expected, given that we presume SoFi is growing revenue at a steep clip; most companies who raise as much as SoFi has needed the capital to pay the bills.
So put SoFi next to Slack in the raising-capital-while-you-can camp.
While SoFi is best known for its student loan business, helping people refinance and thus possibly save money, it’s up to new tricks.
Indeed, according to Noto in the company’s release concerning the new capital, he said that the firm has “worked aggressively to grow [itself] from a desktop lending business to a broad-based, mobile-first financial” shop that can handle an array of financial needs, including the power to “borrow, save, spend, invest and protect” capital.
So SoFi is moving into a broader set of financial tooling. It’s not alone. Chime is working to reinvent banking from a different angle. Acorns is in the mix as well, albeit from a distinct perspective. Each of these companies views themselves as a special snowflake. Whether that is fair is up for debate.
Indeed, as they each add new services to their platforms (moving, say, into investing, or checking, or loans), they sit closer and closer together. And since the neo-banking world has found a geyser of available capital to tap into, there is little stopping its players from adding more features, boosting shared competitive space and, possibly, affording consumers well-priced products at the expense of their own margins.
In the case of SoFi it found an investor looking to deploy about $15 billion into the United States. Here’s Reuters from January of this year:
QIA currently has about $30 billion invested in the U.S., Mansour Ibrahim al-Mahmoud told reporters on the sidelines of a conference. “We are talking about $45 billion for the U.S. market..we are on track for this over the next two years,” he said.
Given the timeline and the capital commit, expect to see more money from the QIA invested. (Qatari treatment of migrant laborers and construction staff is poor, making at least some of this new capital predicated on systemic exploitation.) File this story under your mental unicorns avoiding going public, capital sourced from theocratic monarchies, and megarounds.
Illustration: Li-Anne Dias.
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