Avant Founders Raise $15 Million for Blockchain Firm, Token Sale

(Bloomberg) -- The team that founded marketplace lender Avant Inc. raised about $15 million to start a firm that will use blockchain technology and digital tokens to motivate companies to share data about customer identities and credit worthiness.

The venture, which is called Springcoin but does business as Spring Labs, is building a decentralized network that seeks to allow lenders, banks and data providers to pay one another for direct access to consumer information, Spring Labs Chief Executive Officer Adam Jiwan said in an interview. Many companies are hesitant to give out customer data due to concerns about regulation and security, while others don’t have a financial incentive to do so, he said.

“Utility companies or social-media companies or asset managers do not provide data into the existing credit-bureau system,” said Jiwan, a founding board member of Chicago-based Avant. “In the existing ecosystem, financial institutions or lenders give up that information to a centralized party -- a credit bureau -- only for the financial institutions to buy it back in a synthesized form.”

Avant will be the Los Angeles-based venture’s first partner. August Capital, which was closely held Avant’s first institutional investor, led the seed funding for Spring Labs.

Hiring Plans

The overlap between the two firms doesn’t stop there. Avant co-founder John Sun, who left the online lender around November, will become chief product officer of Spring Labs. Al Goldstein, another Avant co-founder and the current CEO, will sit on the board of the new company. Avant’s former general counsel, Anna Fridman, will hold the same position at Spring Labs.

Fridman, who is married to Goldstein, left Avant in 2016, along with around 220 other employees, or about 30 percent of its full-time staff. The firm had offered buyouts amid a downturn in investor demand, and regulators had begun to take a closer look at the burgeoning business of providing credit to consumers over the internet. Sheila Bair, the former head of the U.S. Federal Deposit Insurance Corp., agreed to join Avant’s board at the time. She will serve as an adviser at Spring Labs.

Spring Labs joins startups such as Petal and credit-scoring firms Fair Isaac Corp. and Equifax Inc. in trying to use alternative forms of data to determine an individual’s credit-worthiness. Fair Isaac, whose FICO scores are the world’s most-used credit ratings, has partnered with startups to use cell phone data, while Equifax now relies on utility and telecommunications data when scoring customers.

Jiwan said Spring Labs is considering an initial coin offering, but it’s not the focus at the moment. The firm’s priority is hiring engineers to build the platform and engaging in discussions with potential customers, including large lending institutions, he said.

To contact the reporters on this story: Lily Katz in New York at lkatz31@bloomberg.net, Jenny Surane in New York at jsurane4@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Andrew Dunn

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