On Tuesday, Austin-based Self Financial announced the closing of its $40 million Series D funding round, which was led by Meritech Capital. This new round brings the fintech company’s total capital raised to $77 million, and comes less than a year after the company raised its $20 million Series C round in February.
Overall, it’s been a good year for Self. Not only did the company raise two eight-digit funding rounds, Self also increased its customer base by 250 percent in 2020. The company also went on a hiring spree this year, growing its employee headcount from 50 to 115.
Self’s success comes from its approach to helping people build credit. The company has set up a small loan lending system that gives loans to individuals who need to improve their credit scores. By paying off these loans in small and manageable increments, Self customers are able to create a demonstrable credit history and raise their credit scores.
Having a good credit score is important for getting a loan, signing up for a new credit card or making big purchases like buying a car or a home. Yet, many Americans have bad credit, which makes it harder for them to do these things or traps them into loans with high interest. Plus, it can be hard to improve your credit score if you have a bad one, because doing so requires reliably paying off loans, but signing up for a loan is difficult with a bad score.
The importance of having a good score was learned firsthand by Self’s CEO and co-founder James Garvey, who saw his credit score drop after forgetting to sign up for automatic credit card payments.
“Despite increased adversity, this year we’ve seen demand for our products increase as people look to get control of their finances where possible. Fortunately, we also see our customers keeping their commitment to themselves by sticking to their plans,” Garvey said in a statement. “The latest infusion of capital from Meritech and our other investors means that Self can continue its mission to support our customers on their journey to build credit and savings and be financially healthy.”
Fintech startups, like Self, have prospered in 2020, which has led to some of the largest VC funding rounds of the year. 2020 has brought economic hardship for millions of Americans, and as a result many have turned to the services offered by fintech startups as a way to get their personal finances in order.