Online payday loan provider LendUp raises $150M Series B, launches its own credit card and a companion app that can be used to halt or monitor purchases
As it positions itself for further growth …
Context & Ripple Effects
In January 2016, LendUp used a $150M Series B to push beyond its core online payday-loan business, launching its own credit card and a companion app that lets users halt or monitor purchases — a bid to become a full-stack financial product for subprime borrowers rather than a single-product lender.
The arc that followed was steep in both directions: an August $48M raise for the subprime credit-card push at a reported $500M valuation confirmed investor appetite, but September brought a $6.3M refund-and-penalty order for deceptive practices, by 2018 sources reported the company splitting its lending and credit-card businesses, and in late 2021 the CFPB ordered LendUp to shut down its lending operations after finding it repeatedly lied to and cheated customers.
First-order effects
- LendUp immediately competes with traditional card issuers for subprime borrowers, with the companion app's purchase-halt and monitoring features as its differentiation against both payday rivals and entry-level credit cards.
Second-order effects
- The $150M round signals to other online-lending startups — Upstart's Series D and ex-Google CFO hire came weeks later — that venture capital will fund the move upmarket from small-dollar loans into revolving credit.
Third-order effects
- LendUp's trajectory shows the structural risk of this model: rapid product expansion outpacing compliance, with regulatory findings on deceptive practices escalating from monetary penalties to a forced shutdown of the original lending business.
The trend: Online lenders are expanding from payday loans into mainstream credit products, but the pattern pairs fast capital raises with mounting regulatory exposure over customer treatment.