have grown to be worth billions out of lending platforms such as Upstart and SoFi, Korea’s online lending is only just beginning, said Tim Chae, managing partner of 500 Global that participated in all fundraising since the seed round. “While leading online lenders in the U.S. The company, which accounted for about 57% of market share in the personal loan of the P2P lending market as of October, expects to generate profit in 2022, Kim said. PeopleFund targets the traditional personal credit loans market in South Korea, which is estimated at around $67 billion, according to the company. For the borrowers and the lenders, AI-based data-driven underwriting process has been the core of its competitive advantage, which has been outperforming other non-bank players by a 3% to 5% gap in loss rate,” Kim said. “For individual and institutional lenders, we offer diversified lending opportunities at an average annual return rate of 6% to 9%. Its lenders are mostly retail customers the company has through its partnership with Kakao Pay. Kim said that its clients include near-prime borrowers and individuals and institutional investors who expect 7%-9% the ROI per annum (before tax).
Korean lending startup PeopleFund raises $11M led by chat app Kakao’s payment unit The refinancing loans account for 66% of its total loans, he added. PeopleFund built a credit scoring system (CSS) 4.0 for near-prime borrowers to provide more affordable mid-rate loans to borrowers, who use the funds to refinance existing loans taken from other second-tier lenders. PeopleFund claims it has managed over $1 billion in loans as of October 2021, with a delinquency rate of 2.06%.Īnother differentiator is its credit scoring system optimized for mid-interest loans based on about 480,000 loan customers registered on its platform. What sets PeopleFund apart from other competitors is the lowest delinquency rate in the industry, being managed by its own alternative credit scoring system, and having strong risk management capabilities, Kim said. Near-prime borrowers are not qualified for bank loans thus have no choice but to resort to non-bank lenders like credit card loans (or saving banks), Kim said. PeopleFund, which connects borrowers with lenders to enable lending, provides loans at an average interest rate of 11.25% per annum, about 3% to 4% lower than other non-bank lenders. The FSC said it will continue to review other applicants. In early June, only three Korean P2P lenders out of 41 applicants were granted licenses from the FSC to operate the business legally: PeopleFund, Lendit and 8 Percent. The financing event comes five months after PeopleFund received its regulatory approval from South Korea’s Financial Services Commission (FSC) to register with the government. 1 player in the Korean non-bank lending market to provide better loan options for average Koreans that the banks underserve.”
“For the past six years, we have been focusing on proving the performance of our data-driven risk management technology, which is the essence of consumer lending,” Kim said. PeopleFund wants to address the structural problem involving the risk of high interest-rate loans in the near-prime loan sector and offer more personalized financial products to subprime and near-prime borrowers with its data-driven technology platform, CEO and founder Joey Kim told TechCrunch.