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Fintech for car loans raises $360M to fuel expansion, Boston hires

Fintech for car loans raises $360M to fuel expansion, Boston hires

Lendbuzz, a Boston-based fintech company with 75 employees in Massachusetts, raised $360 million in a combination of debt and equity to finance car loans to customers.

Based at 100 Summer St. next to Boston's South Station, Lendbuzz provides car loans to people who don’t have a U.S. credit history or FICO score, and makes money by charging interests. A machine learning platform evaluates applicants based on their employment history and their educational background. Approved applicants can either receive their loans directly, or redirect the funds to one of the 300 car dealerships nationwide partnering with Lendbuzz.

The largest slice of the latest round — $300 million from leading lender Goldman Sachs Bank USA (NYSE: GS) — will go into car loans to customers, according to Lendbuzz CEO Amitay Kalmar.

The remaining sum, $60 million in Series C equity financing led by Wellington Management, will be used to expand the company's engineering and machine learning teams based in Boston, plus its distributed sales team.

"Our platform has been growing very fast," Kalmar said. "We grew our loan origination to 100% in the first half of 2021, so to keep the accelerated growth rate, we focused on increasing our funding capacity."

Lendbuzz has also raised money through a combination of equity and debt in 2019. Another local company that uses a similar model is cloud storage provider Wasabi Technologies Inc., which uses the debt side of its financing to build more data centers, and the equity side to hire the people who work there.

Kalmar said that in the current quarter, Lendbuzz had an annual revenue run rate of $50 million, but he declined to share the company's current valuation. He expects to grow its current team of 100 by another 50 in the next six months, mostly in Boston. Outside of Massachusetts, Lendbuzz has sales teams in different locations in the U.S. and recently opened an R&D center in Tel Aviv, Israel to diversify its engineering hires.

Customers of Lendbuzz are primarily foreign nationals who are relocating to the U.S. for work or school, and have trouble accessing traditional forms of credit because of lack of financial history in the States. Kalmar and co-founder and CTO Dan Raviv, both originally from Israel but now based in Boston, teamed up at MIT to launch Lendbuzz in 2015.

"We're focused on building a significantly larger company. Then, at the right time, we'll evaluate whether we want to become a public company," Kalmar said. "We have not yet started to think whether a traditional IPO or SPAC is the right vehicle for going public."