French startup Younited Credit is building the biggest crowdlending platform in continental Europe. The company just raised $47.8 million (€40 million) to launch in new countries, work on new product features and more.
Younited Credit is currently live in France, Spain and Italy as a consumer-facing product. Consumers can borrow anything between $1,200 and $48,000 (€1,000 and €40,000) without talking to an actual bank. 40 percent of borrowers ask for a small amount between $1,200 and $3,600 (€1,000 and €3,000).
On the other side of the equation, other users can lend money, as well as companies, pension funds, insurance companies, etc. It’s a good alternative asset if you’re building a diversified portfolio.
So far, Younited Credit has managed the equivalent of $600 million in loans (€500 million), including $300 million in the last 12 months alone (€250 million).
Today’s funding round comes from existing investors Eurazeo, Crédit Mutuel Arkéa, AG2R La Mondiale and Weber Investissements. Matmut Innovation and Zencap Asset Management also invested. Bpifrance is investing in the company for the first time though its Large Venture fund.
It’s also worth noting that Younited Credit has a positive contribution margin. It means that if you deduct fixed costs, the company is generating a profit on variable costs alone. Of course, the company is not profitable yet as it is investing a ton of money in its team and other fixed costs.
And it starts with a big team of data scientists. There are currently 60 data scientists working for Younited Credit to optimize the product.
For instance, the company was using a traditional linear regression algorithm for its credit scoring system. There is no central credit rating system in France so you have to rate your clients yourself.
Recently, engineers have been using machine learning to train the credit scoring algorithm. The startup switched to this new AI-powered model to determine your credit worthiness. Younited Credit is thinking about other areas that can be optimized thanks to machine learning.
When it comes to consumer-facing products, Younited Credit is also working on improving the experience. You can already sign up from your phone without sending any physical document. You can also contact somebody on the consumer support team using WhatsApp or Messenger.
The company is working on improving its API and signing up new partners so that other companies can seamlessly integrate Younited Credit. Let’s say you’re buying a new smartphone. Your phone carrier could let you borrow money from Younited Credit for this purchase directly on its website.
That’s how Younited Credit could eventually beat traditional banks and credit cards. If you can lend money from anywhere, there would be no reason to contact your bank.