Consumer finance firm Upgrade, has raised $165m in its latest funding round as it eyes a potential IPO within the next 12 to 18 months.
According to Reuters, the round, which marks the company’s first external financing in nearly four years, was led by investment firm Neuberger, which also purchases loans from Upgrade.
Existing investors DST Global and Ribbit Capital also participated in the round. The latest deal values Upgrade at $7.3bn pre-money, representing a 21.7% premium over its previous valuation.
Founded in 2017, Upgrade has become a significant player in the U.S. consumer finance space, providing a range of services that include mobile banking, credit cards, buy now-pay later options, and personal, home-improvement, and auto-financing loans. The company has disbursed more than $42bn in consumer credit to date, positioning itself among the leading digital lenders in the U.S.
Upgrade plans to use the fresh funding to accelerate growth and prepare for an IPO, expected within the next year and a half. The new capital injection will support product expansion and strengthen its technology infrastructure as it scales its consumer credit platform.
The company’s latest raise comes amid renewed optimism in the FinTech sector. A rebound in equity markets and easing macroeconomic conditions have reignited IPO activity, with high-profile listings such as Klarna and Chime debuting in New York in recent months. The trend signals a resurgence for FinTechs after several years of subdued investment following the 2021 boom.
Neuberger’s Head of Specialty Finance, Peter Sterling, who led the firm’s participation, has joined Upgrade’s board of directors as part of the deal.
The broader FinTech environment has seen shifting investor sentiment. According to a PitchBook report, venture funding for retail FinTechs fell 49% in the second quarter compared to the previous year, as capital increasingly flowed toward enterprise AI-driven solutions. While the impact of AI on consumer-facing products has been less immediate, it has prompted firms like Upgrade to rethink their marketing and growth strategies.
Upgrade last raised external funding in 2021, at the peak of the FinTech investment boom, when low interest rates and abundant liquidity drove record valuations across the sector.
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