"On Thursday, Upgrade announced it has raised $165 million in a Series G funding round led by Neuberger Berman Funds, and that it now has 7.5 million customers across its various offerings, which range from checking accounts to loans to buy-now-pay-later service Flexpay. In an interview with Fortune, founder and CEO Renaud Laplanche explained that Upgrade managed to thrive during a broader reckoning for neo-banks because of product diversification and a focus on loans, which can offer a far greater margin than transaction payments."
"One of Upgrade's most popular products is a loan offering that lets customers refinance credit cards-a useful service for those who fall behind on Visa or Mastercard bills and find themselves repaying at rates well over 20 percent. For Upgrade, the business model entails underrating these loans, and then selling them on to other financial organizations in batches grouped by risk:"
Upgrade secured $165 million in Series G funding and reports 7.5 million customers across checking, lending, and Flexpay buy-now-pay-later offerings. The company emphasizes product diversification and a focus on loans, which provide higher margins than transaction payments. A notable product allows customers to refinance high-interest credit cards, with Upgrade underwriting those loans and selling them in risk-segmented batches to other financial institutions. Upgrade also supplies Flexpay to large travel partners such as United Airlines and cruise lines, using those partnerships to limit customer acquisition costs by leveraging partners as marketing channels.
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