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2016 IPO Prospects: Avant Will Have to Wait and Watch

Posted on Friday, Jan 8th 2016

The online lending sector may have witnessed intensified scrutiny in the recent past due to unfavorable publicity in the San Bernardino attacks and other legal cases questioning the regulations imposed on the sector. But that does not take away from the fact that analysts expect the volume of loans extended by marketplace lenders to grow 47% annually through 2020. The worrying circumstances have sent valuations of some of the companies like OnDeck and Lending Club declining, but Avant is still making it big and investing in growth.

Avant’s Offerings

In 2012, serial entrepreneur Al Goldstein realized that the majority of demand for loans came from customers earning between $50,000-$60,000 a year with credit scores ranging between 600-700. He also realized that companies giving the loans were not leveraging technology and analytics effectively to offer loans to these consumers. Al therefore connected with his former interns Paul Zhang and John Sun to set up AvantCredit. The company was founded with a vision to build an online capital line that could leverage Big Data analytics to create an online-only financing solution.

Like others in the field, Avant uses online tools for loan application and analysis to offer loans and determine the interest rate for approved loans. For more than half of the applications, loans are approved or rejected within a few minutes of application without any human interaction. But the biggest difference between Avant and its other contemporaries lies in the market they cater to and the funds they use to provide loans. Avant focuses on the sub-prime borrowers and thus sees a higher default rate, about 10% more than competitors. Additionally, Avant does not follow peer-to-peer lending. Instead, it issues debt on its own and assumes the risk associated with the loans. Driven by the success in the local markets, Avant extended its presence to the UK and Canadian markets as well.

Avant’s Financials

Since inception, Avant has provided a loan portfolio of over $2 billion processed to over 350,000 customers across the three countries. The company does not declare detailed financials, but according to market reports, revenues have increased from $7 million in 2013 to $75 million in 2014. The company in October 2015 had said that its revenues were on track to reach $275 million in 2015.

Avant continues to see additional market opportunities and is now in the process of releasing its own auto loans and credit cards in the US. According to an Equifax report, more than a third of all auto loans, personal loans, and credit card loans are taken out by sub-prime borrowers. Avant hopes to address this market with its new products. International expansion is expected to continue with Australia being the next target market.

Since Avant services loans by itself, it has received a much higher funding as well. It has raised $1.73 billion in debt and venture funding so far with investments from August Capital, Balyasny Asset Management, DFJ Growth, General Atlantic, JP Morgan Chase & Co., KKR, Mark Friedgan, Peter Thiel, QED Investors, RRE Ventures, Tiger Global Management, Jeffries Group, and Victory Park Capital. Its last round of funding was held in September 2015 when it raised $325 million at a valuation of nearly $2 billion compared with a $875 million valuation in early 2015.

In June 2015, Avant was looking to go public within the next 3-5 years, or even sooner. However, recent regulatory concerns over the online lending sector have hurt the valuations of publicly listed Lending Club and OnDeck. Other companies like SocialFinance have also deferred plans to list and are waiting on the market conditions to improve. Avant may like to wait and watch market conditions before deciding on when to list.

This segment is a part in the series : 2016 IPO Prospects

. Airbnb Sees Skyrocketing Valuations
. Actifio Looks Ready
. AppDynamics May Sustain Unicorn Valuation
. Automattic Needs to Justify Valuation
. Avant Will Have to Wait and Watch
. BuzzFeed Feeds on Native Advertising
. Coupa Manages Expenses Expertly
. Datto Bootstrapped First, Raised Money Later
. Is Uber Ready to Ride the Stock Market?
. Overfunded Domo Looks Promising
. Houzz May Unveil The Curtains
. DocuSign Looks Ready to Sign Up
. Illumio Rides On Security Trend
. Appears Ready to List
. Okta Prepares to Reveal Public Identity
. Palantir Wants to Stay Private
. Nutanix Files for IPO
. Medallia Bootstrapped First, Raised Money Later
. Slack Prepares to Communicate with the Market
. Twilio Expected to go Public Soon
. Snapchat Needs to Up Monetization ASAP
. Zscaler Sets IPO as a Long-Term Goal
. Warby Parker Should Look Before Leaping
. MuleSoft is a Unicorn, but Detailed Financials Remain Unknown
. Apttus Bootstrapped First, Raised Money Later
. Fanatics Expanding Its Playing Field
. Pinterest Finally Sees Revenues, But are they Enough?
. Tanium Bootstrapped First, Raised Money Later
. ironSource Strengthening its Revenue Generating Capabilities
. Anaplan Getting Ready to Go Public
. SecureWorks is Ready to List
. IPO-Ready Cloudera Wants to Wait and Watch
. HelloFresh Puts its IPO Plans on Hold
. Is Stripe Lining up Next?
. Qualtrics Bootstrapped First, Raised Money Later
. Skyscanner Bootstraps First from Scotland, Raises Money Later from Sequoia
. SurveyMonkey Will Likely Wait
. The Honest Company Makes the Online to Offline Model Work
. NantHealth Testing the IPO Markets, Yet Again
. BigCommerce Prepares to List
. Bloom Energy Likely to Stay Private
. Avast Software Preparing for a Listing, Yet Again
. Gusto Expands Beyond Payroll Processing
. InMobi May Have Missed the Bus
. Glassdoor Gearing up to go Public
. Human Longevity Leverages Machine Learning and Analytics to Increase Lifespan
. Blue Apron Cooking up an IPO
. Optiv Grows Inorganically
. Uber Eyeing Self-Driving
. The Trade Desk Files to List
. Deliveroo Delivers its Way to the Bank
. Selfie App Meitu Files to List on HKSE
. Apptio Files Despite Reduced Valuation and Mounting Losses
. Snap Snaps out of Chat Business to Justify Valuation
. From Bootstrapping to IPO, BlackLine Shows the Way

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