Fintech SoFi gets $500M infusion from Silver Lake, Softbank

San Francisco fintech SoFi is near to closing a deal for a $500 million infusion from buyout firm Silver Lake and tech giant Softbank, according to sources close to the matter.

The Wall Street Journal reports that the company is close to completing the deal, which won’t give Silver Lake a majority stake in the company but does signal an increasing interest by venture capital firms in fintech startups that focus on lending.

“The new equity investment, which values SoFi at more than $4 billion, would give the San Francisco-based company a fresh round of cash as it works to shake off a tough 2016 for the online lending industry it helped pioneer,” the Journal reports. ” SoftBank Group , the technology-investment conglomerate run by Japanese businessman Masayoshi Son, and other existing investors are also expected to participate in the current round, which could be announced in coming weeks if all details are completed as expected, the people added.”

This fundraising round was lead by SoFi CEO Mike Cagney, the paper reports, and is expected to have a valuation higher than a separate 2015 investment round led by SoftBank. That means SoFi’s valuation will have risen despite a challenging year, during which it weathered a rough climate for fintechs and saw the stumbling of peers like Lending Club.

“[The deal is] the latest indication that lending startups are becoming more appealing to venture-capital firms this year after investment in the sector fell 75 percent in 2016,” the Journals reports. “Since the start of 2017, online small-business lender Funding Circle Ltd raised $100 million from an investor group led by Accel, and online mortgage lender Better Mortgage Inc. raised $15 million from an investor group led by Kleiner Perkins Caufield & Byers.”

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Source: Fintech SoFi gets $500M infusion from Silver Lake, Softbank – San Francisco Business Times