Dec 15 (Reuters) - Japanese e-commerce company Rakuten has made a 10 million euro ($10.4 million) investment in Kreditech, a German financial technology startup that uses big data technology to assess the creditworthiness of potential borrowers with little or no conventional credit history.
The Hamburg-based company said on Thursday that it will use the investment from Rakuten’s FinTech Fund to expand its business that partners with other companies to provide lending services.
As part of these efforts, it is in discussions with banks interested in offering digital personal loan products to their customer base, but “lack technical capabilities to do so,” said Rene Griemens, Kreditech’s chief financial officer.
The company is also assessing potential collaboration opportunities with Rakuten.
“We are already evaluating potential strategic cooperation in many areas, including payments, financing and potentially, at a later stage point of sale financing,” Griemens said.
The investment brings Kreditech’s total equity funding raised since launch to 135 million euros ($140.78 million). In September 2015, it raised 82.5 million euros ($86.03 million) in a round led by private equity firm J.C. Flowers.
Other backers include PayPal co-founder Peter Thiel and venture capital firms Amadeus Capital Partners, Värde Partners, HPE Growth Capital and Blumberg Capital.
It is the latest investment by Rakuten’s fund dedicated to the emerging financial technology sector, launched in 2015 to keep up with innovations in financial services. The Japanese company’s financial divisions include online banking, credit cards, insurance, securities and asset management in Japan and internationally. In May, it backed London-based money transfer company Azimo.
Founded in 2012, Kreditech offers consumer credit products such as micro-loans and prepaid credit cards. It has processed nearly 3 million loan applications since launch, and has granted 1 million loans so far.
It is among online companies that automate the processing of large swathes of data to make lending decisions in minutes or second.
To determine creditworthiness, Kreditech’s technology processes up to 20,000 data points for each application, taking roughly 32 seconds per application. The company said its revenues were 43.7 million euros ($45.57 million) in 2015, up 107 percent from the previous year. ($1 = 0.9590 euros) (Reporting by Anna Irrera; Editing by Nick Zieminski)