SoFi’s IPO: Growing into a one-stop shop to “get your money right”
In 2012, DCM co-led the $77 million Series B round for a company called Social Finance Inc., now better known as SoFi, and DCM General Partner & Co-Founder David Chao joined the board. At the time we invested, it was still early days for Fintech and many consumer lending companies were just being built. When we met the SoFi team, we strongly resonated with their vision of providing a wide range of better financial products to millions of Americans who were burdened by costly student loans or excluded from buying a home.
We were also captivated by the team’s approach. SoFi acutely understood that credit models weren’t working if an engineering graduate from UC Berkeley who got a job at Google or Facebook couldn’t get student loan refinancing or mortgages just because they had a shorter credit history. While the field was crowded with failed student loan startups at the time, SoFi discovered a new way to assess risk that not even the traditional banks could see or support within their models.
When SoFi first started in 2011 at Stanford’s Graduate School of Business, they were on a mission to fundamentally change the way student loan debt is handled — a deep-rooted problem across higher education systems, banks, and the federal government. At the time, student debt in America exceeded $1 trillion, and there was a dire need for solutions to help students (especially those applying for loans for post-secondary education) lower the rates they pay on their loans.
Not to mention, many of the students getting ready to graduate were those who had started college during the 2008 financial crisis. SoFi essentially invented the student loan refinance category and was the first online lender to launch an all-digital application process. They were also the fastest marketplace lender to reach $1 billion in loan originations.
Over the course of many years working together, we witnessed SoFi expand from student loan refinance and truly become a one-stop shop for financial independence. Now, they offer a wide range of financial products — lending, brokerage, banking, and most recently, credit cards. They built a fanatical community of 2.3 million unique members who cross-buy into the multitude of different products. They have also become the infrastructure layer that powers other leading fintechs through their acquisition of Galileo. Lastly, they have also become the leading millennial focused brand for financial services and successfully made a once “boring” topic cool.
Along the way, we had the privilege of supporting the company with some of the resources that we had access to. DCM helped bring in Softbank, a long-time DCM LP, and strategic partner, to lead a $1 billion round for the company’s Series E financing in 2015. We also helped facilitate an acquisition of another DCM portfolio company, Zenbanx, which helped provide SoFi with some of its early mobile banking technology.
SoFi is building a new future of fintech, one where people can reach financial independence. As an early believer in SoFi’s mission, it’s been an honor to partner with SoFi on this journey, and we look forward to all the moments to come. Congratulations to the entire team at SoFi!
-The DCM Team
