Upstart, a relatively new firm that uses educational data to find creditworthy younger borrowers, now has plenty of cash to try to win more business in the competitive — and increasingly well-funded — peer-to-peer lending market.

The Palo Alto, Calif., firm recently completed a $35 million round of funding led by Third Point Ventures, the venture-capital arm of hedge fund manager Dan Loeb's Third Point. Venture-capital firms Khosala Ventures, First Round Capital and the Collaborative Fund also made investments.

Upstart, which was launched three years ago by former Google employees, has raised $56 million since its formation. The firm also has more than $800 million in investor money committed to fund loans.

The company, which plans to use the new moneyto refine its analytics, should start to offer new products early next year, Dave Girouard, the firm's chief executive and co-founder, said. Upstart currently offers unsecured loans, focusing on young college graduates that are on an upward trajectory.

"We're going to invest a lot in data science and engineering," Girouard said. "We feel it's the thing that makes us a lot different from other companies."

The latest financing round is another demonstration of investors' high hopes for marketplace lending. Many lenders, including Lending Club, which makes personal and small-business loans,and OnDeck, which specializes in business lending, have become flush with cash.

Upstart is one of a handful of online lenders trying to use new sources of data to uncover high-quality borrowers that are not given a fair shake by ordinary credit-reporting methods. Companies such as Kabbage, OnDeck and Lexis Nexis Risk Solutions are using alternative metrics for underwriting and pricing consumer loans.

Upstart's pitch is that, in addition to the traditional FICO scores and income, it looks at what schools customers attended, their grade-point average, academic major and standardized-test scores. The idea is to use that data to identify high-achieving borrowers, especially millennials, who don't have long enough credit history to qualify for traditional loans.

"Most credit is priced on your own credit history, and when you're young you don't have that," said Girouard. "The founding concept was that we could use other data to understand whether a loan is risky."

The company has originated 875 loans totaling more than $125 million, at interest rates ranging from 5% to 25% and averaging 11%. About 70% of the loans have been used to refinance credit-card debt, Upstart said.

Along with the new funding, Upstart also said it plans to allow investors to make tax-deferred investments in loans through an IRA by the end of the month.

Several hundred accredited investors and institutions have backed loans through Upstart, earning a cumulative return on investment of 7.4%, Girouard said.

The large amount of cash already committed to loans differentiates Upstart from other marketplace lenders, which allow potential investors to pick and choose the loans they want to fund, Girouard said. Because investors put up the money in advance, borrowers can get funded quickly — generally less than a day — once they're approved, he added.

"The borrower shouldn't wait around," Girouard said. "That creates a bad experience, both for the investor and the borrower."

Third Point Ventures, Upstart's largest stakeholder, is affiliated with Loeb,who is known for his activist investing strategy and sometimes incendiary proxy and letter-writing campaigns to force about management changes. A former Yahoo director, Loeb led a campaign to replace Scott Thompson, the tech company's former chief executive, with Marissa Mayer, in 2012.

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