The fundraising round announced on Wednesday was led by SoftBank, the Japanese telecoms group, and will accelerate SoFi’s growth in popularity among consumers “disenchanted with traditional banking”.
“This funding will dramatically advance expansion of our disruptive products and experiences,” said Mike, SoFi chief executive and co-founder.
Mike was previously a senior vice president for proprietary trading and financial products at US bank Wells Fargo, and the CEO and founder of Finaplex, a wealth management technology business, for six years. Before founding SoFi in 2011, he also launched Cabezon Investment Group, a macro hedge fund.
The $1 billion in funding is thought to be the largest single round of financing in the nascent financial technology — fintech — sector. It brings total equity investment in SoFi to $1.4 billion.
“SoFi is clearly a game changer in the fintech space,” said Nikesh Arora, president and chief commercial officer at SoftBank.
SoFi became the first company to enable graduates to consolidate and refinance their federal and private student loans. The firm has funded more than $4 billion in loans and is expected to surpass $6 billion by the end of this year.
It has expanded into new areas including mortgages, mortgage refinancing, and personal loans. The firm has been profitable since 2014.
A valuation was not disclosed. But SoFi was valued at $1.3 billion in a previous funding round in February this year.
SoFi is in the growing ranks of “unicorns” — ventures valued at or above $1 billion — to come out of Stanford GSB. The Californian business school has produced 11 unicorns, including Nasdaq-listed HomeAway, and Prosper, the second-biggest peer-to-peer lending platform in the US, which is valued at $1.9 billion.
Students at the top US business schools are increasingly moving away from corporate careers to entrepreneurship, and many to Silicon Valley tech.
Headquartered in San Francisco, SoFi employs 400 people full-time and expects to hire 100 more through 2015.
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