A Virginia-based online lender that focuses on veteran-owned small businesses has raised $23 million in new equity funding.
StreetShares said Wednesday that its latest funding round includes $20 million from Rotunda Capital Partners, a private equity firm based in Bethesda, Md. Existing investors provided the remaining $3 million.
StreetShares was founded in 2013 by U.S. military veteran Mark Rockefeller and former Capital One Financial executive Mickey Konson. The Reston, Va.-based company uses the peer-to-peer lending model, bringing together borrowers and savers through an online platform.
The goal is to tap into the loyalties of military veterans who already feel a sense of camaraderie. StreetShares has said that veterans who take out loans are more likely to repay if other vets are backing the loans, and they have an opportunity to connect through an online forum.
“It’s a bit like if a bank allowed depositors to interact with borrowers, and you organized that interaction around social groups to create additional loyalty to the bank,” Rockefeller said in a 2016 interview.
Today, small businesses can apply for term loans and lines of credit from StreetShares of up to $100,000.
Accredited investors are eligible to back the loans, while non-accredited investors can buy bonds that pay 5% interest.
StreetShares had previously raised $8.3 million in three equity funding rounds between 2014 and 2016.
The company did not reveal much about its plans for the latest round, other than to say that it will be used to fund growth.
“StreetShares is proud to fuel this special class of great American small businesses,” Konson said in a press release, “and our partnership with Rotunda demonstrates that we are just getting started."