SoLo Funds Inc., a mobile exchange that lines up sums of money under $1,000 for American borrowers short on cash, has moved the company’s headquarters to downtown, and is attracting big backers as it gets ready to raise $15 million in a second investment round.
The company, formerly based in Cincinnati, moved into a WeWork Cos. Inc. workspace for technology startups, a temporary office solution as it searches for a permanent spot, perhaps in Culver City, according to SoLo co-founder Travis Holoway. He said the move was predicated on attracting talent to the company.
Holoway’s partner in the startup, Rodney Williams, said SoLo raised $3 million in seed funding over the past year. A Series A round is planned for June with a $15 million target, the founders said in interviews.
SoLo’s biggest investor so far is Liberian-American beauty mogul Richelieu Dennis, who sold his Sundial Brands beauty products company to Unilever in 2017. He’s funded roughly half of the total seed money to date, according to the founders.
Holoway and Williams’ target market is Americans living paycheck-to-paycheck, and they see their peer-to-peer lending platform as an alternative to U.S. payday lenders, which charge high interest rates. The pair said the idea came to them after seeing family and friends ask to borrow money despite having high-paying jobs.
Since its launch in April 2018, the SoLo platform has completed roughly 10,000 loans for more than 85,000 registered users.
Leaning on loans
Peer-to-peer lending, also known as P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders with borrowers.
SoLo borrowers are not charged interest but instead participate in an auction-style process to get up to $1,000 deposited into their checking account by a lender on the company’s platform. Anyone can borrow or lend via the SoLo app. The borrower agrees to terms with the lender to repay in no more than 30 days the loan principal plus a so-called tip, a premium on top of the loan amount. SoLo also can get a cut of the payback in loaned money if the borrower OKs an additional payment – called a donation – to the company. The tips and donations are voluntary. Tips made by borrowers to the lenders average about 8 percent of the loans, with roughly 3 percent of the loan amounts donated to the company, Holoway said. He declined to say what percentage of borrowers received loans without offering a tip or a donation.
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