The latest financial startup to take on traditional banks is getting a boost from some celebrity entrepreneurs.
Momofuku founder and chef David Chang, Airbnb co-founder Nathan Blecharczyk, and the founders of Sweetgreen all participated in a recent round of financing for Bond Street Marketplace, which makes loans to small businesses.
The New York City-based startup raised $10 million in equity, from investors led by venture firm Spark Capital, and $100 million in debt from investors led by investment bank Jefferies. The company’s valuation in the deal was not disclosed.
Bond Street co-founder and CEO David Haber, who previously worked at Spark, met some of his high-profile investors through his work there. (He made other connections at Harvard, where he met Blecharczyk.) The Sweetgreen founders, meanwhile, introduced Haber to Chang, who had invested in the salad chain.
Now Haber is hoping that their money will help his startup stand out in the increasingly crowded field of online lenders. Companies including Lending Club, OnDeck, Prosper, and Kabbage are providing loans and other financial services that are generally faster, easier, and more readily available than what traditional banks sell.
In fact, the online lending market is so popular and so fast-growing that those traditional banks are now trying to get into it; Goldman Sachs is reportedly planning to build out its own online lending platform, according to reports this week.
Still, Haber, speaking a few days before the Goldman news broke, said he sees plenty of room for Bond Street to carve out its own market.
“Many of these businesses that we work with are borrowing online for the first time,” he says. “We’re still early in this much more macro trend of consumers and small businesses expecting to do all of their financial services online.”
That’s an enthusiasm echoed by his lead equity investor and former employer. Spark Capital has invested in a wide range of financial startups, including Affirm, Orchard, and Wealthfront; general partner Mo Koyfman calls small-business online lending “one of the biggest opportunities” in the financial startup market.
“The number of small businesses that apply for a loan versus the number that get them--the gap is extreme,” he says. “The time is right, the climate is right, the opportunity is right to offer these businesses the credit they need.”
Bond Street, which made its first loan last summer, says it will use the new investment to expand its products and to meet fast-growing customer demand. The company specializes in lending to existing small businesses; the average loan size is about $170,000, and applications for its loans are rising 35 percent every month, according to Haber.
“Our biggest constraint the past year was capital,” meaning that Bond Street couldn’t lend to all of its qualified applicants, he said. “Now we’re able to turn back on the faucet.”