Avant Launches Institutional Marketplace with Some Big Name Investors

avant

Avant has been somewhat of a quiet achiever in the online lending space. In just over two years CEO Al Goldstein and his team have built a successful business that is set to become a dominant player.

Strictly a balance sheet lender until now, Avant is launching their institutional marketplace today. And they have signed on three very big names for their launch. KKR, the legendary private equity firm, is the lead investor and they are joined by Victory Park Capital, who seem to be in every major deal these days, along with Jefferies, the leading investment bank, who have also invested in CircleBack Lending.

An Introduction to Avant

So who is Avant? They recently rebranded from AvantCredit to just Avant and they are probably the leading near-prime online consumer lender in the US today. They focus on the 600-720 FICO segment and they have an average FICO score of 640.

When I spoke with CEO Al Goldstein a while back he told me that he thinks the mid-prime segment is a huge opportunity but that it is difficult to execute on. At Avant they are very much focused on big data and machine learning algorithms. Goldstein said that all loans are approved within 24 hours and for half the customer base underwriting is completely automated. Their goal is to increase that to 100% of their customers in the near future.

While there is some overlap with Lending Club and Prosper in the 600-720 FICO segment Goldstein said that he didn’t really view them as direct competitors. He views some of the brick and mortar mid-prime lenders as Avant’s competitors.

Avant’s loans have a slightly different profile to the other major online lenders. Their average loan size is around $5,000 and their interest rates range from 9% to 39%. Around 50% of the borrowers are using these loans for debt consolidation with the remainder using them for car or home repairs, medical or major life events.

In an industry with many fast growing companies Avant is more than holding its own. They issued $480 million last year and this year their goal is $1.5 billion in new loans.

Two Big Name Board Members

This is not Al Goldstein’s first rodeo. He was co-founder, President and CEO of CashNetUSA, which is now publicly traded Enova International, the online subprime lender. But with Avant he has moved up the credit spectrum and is focused on the mid-prime where there seems to be less competition.

He has recently added a couple of very impressive names to the Avant board. Jim Robinson III was the long time CEO and Chairman of American Express and Bobby Mehta was the former President and CEO of Transunion, both are now Avant board members.

The transition from a pure balance sheet lender to one that also includes a marketplace has definite advantages for Avant. Their CFO, Suk Shah, put it this way, “Avant Institutional Marketplace offers institutional investors access to this new, emerging asset class and benefits Avant by diversifying funding sources and adding off-balance sheet flexibility.”

While Avant only launched in January 2013 they have already built an impressive track record while staying somewhat under the radar. But I think that is about to change. Al Goldstein will be speaking on a couple of different panels at LendIt this week and I have a feeling we are going to be hearing a lot more about Avant in the future.

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