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Draper Fish Jurvetson, DFJ Gotham Ventures invest in private student lending platformFynanz, a startup which provides private student lending platforms, announced it has closed $6.5 million in Series A funding. Investors include Draper Fisher Jurvetson, and DFJ Gotham Ventures. Also participating in the round were The Brazos Group, Zelkova Ventures and JBR Media Ventures.
The New York-based startup operates www.cuStudentLoans.org, a private lending marketplace that enables credit unions and fields of membership try and monetize private student lending. The company said cuStudentloans has 'younger members' and is 'growing their membership base.' Fynanz said it is currently working with 30 credit unions across the nation.
The business model addresses the fact that private student loans are used to fill a funding gap which remains for students once they exhaust all other financial aid, like grants, scholarships and federal student loans. As tuition costs go up and limits in federal loans increase, there's become a need for private student loans. Fynanz said the market has grown by more than 500% in the past 10 years - from $3 billion in 1997-1998 to $22.8 billion in 2007-2008.
Students may find Fynanz's offerings an attractive option as it offers low interest rates which can be 0.60% to 1.0% lower than they would receive from a bank.
With this round of funding, Fynanz has now raised a total of $8.2 million.
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