DriverUp, the first online marketplace for automotive financing, has launched giving accredited investors an opportunity to directly enter the USD379 billion auto lending industry.
DriverUp is the exclusive brand of Sierra Auto Finance, an auto finance company launched with USD50 million Series A financing, led by Emerald Development Managers and RRE Ventures.
The DriverUp platform uses technology to fundamentally improve how loans are secured and serviced by creating a direct-to-investor option that until now has not existed within the auto-lending industry. Through DriverUp's proprietary software and advanced data analytics, the marketplace enables efficient processing and direct investment in auto loans, with full transparency and reporting.
"Auto lending historically has been riddled with inefficiencies and lack of innovation; it's ripe for fundamental transformation and we are leading that change with a technology-driven approach," says Sam Ellis, president and chief executive officer, DriverUp. "DriverUp democratises the auto lending industry and brings incredible efficiency and transparency to the process. Consumers, investors, and dealers all benefit."
DriverUp is the first mechanism that allows accredited investors such as hedge funds, family offices, and high net worth individuals an opportunity to participate directly in high yield auto lending. Previously, investing in this sector was limited to a handful of large institutions.
"DriverUp is the first of its kind auto-lending marketplace, and a critical solution to radically improve all stages of the auto-lending pipeline," saidsays Stuart Ellman, co-founder and managing partner, RRE Ventures, a leading VC with over USD1.5 billion in total capital commitments. "This is a highly attractive investment vehicle for the 99% of investors who previously could not access this asset class; a turnkey credit process for dealers; and delivers increased financing for consumers."
Direct sale of auto loans helps establish streamlined financing for auto financing companies and frees up funds to continue lending, a growth driver for the economy. Through DriverUp, more money is put to work, dealers increase sales of cars and consumers benefit from greater access to credit.
Demand for auto loans is driven by a series of favourable macro-factors, including search for higher yield in 0% interest rate environment, tepid growth in credit cards and improved access to credit by borrowers. There is also strong post recession industry growth, consumer credit stability and healthy employment levels.
Even in times of economic stress, such as the 2008 recession, auto loans as an asset class performed well, providing desirable diversification for investors. Through DriverUp, investors can expect attractive risk-adjusted annual yields relative to comparable alternatives.