CommonBond: Simpler, Smarter Student Loans
June 16, 2020 | Scott Murphy
Alumni Ventures Group portfolio company CommonBond addresses a vast and growing market opportunity in student loans, from both a consumer and employer perspective. Over the last decade, the amount of outstanding student loan debt has tripled. More than 44 million Americans now collectively owe $1.5+ trillion in student debt. This is more than what’s owed on debt for cars and credit cards. Moreover, as many as seven out of 10 millennials (the largest generation in American history) have student loan debt. At the same time, delinquency rates are at 11%+ and rising.
Better Process, Better Rates
CommonBond focuses on helping ultra-creditworthy millennials manage their student debt by lowering monthly student loans while providing a simpler process and better customer service. Their platform refinances student loans, provides in-school loans for college and graduate students, and offers student loan benefit programs to employers through a SaaS-based employer platform. Their financing rates are much lower than the federal government or private banks.
CommonBond has established a disciplined underwriting process that ensures rigorous quality control without sacrificing customer experience and scalability. By focusing only on ultra-creditworthy borrowers, the company can offer lower interest rates on loans while maintaining the lowest default rates in the industry. They employ a thorough two-layered loan underwriting model that has been validated through back testing.
Doing Well While Doing Good
CommonBond grew revenue significantly in 2019, continues its topline growth in 2020, and has been profitable year-to-date (end of May). Demonstrating its significant traction, CommonBond has funded $3 billion in loans, reaching over 500,000 consumers and thousands of corporate clients. Customer approval has also been high, with CommonBond achieving a Net Promoter Score of 75. In recognition of its innovative approach, the company was named to Fast Company’s World’s 50 Most Innovative Companies 2018 and to Time’s 2018 Genius Company list.
CommonBond is not only doing well, but doing good:
- Providing a tool for anyone in the U.S. with student debt to navigate their options and find the right path for them.
- Helping enterprises prepare for tax-free employee student loan contributions, which was part of the stimulus bill.
- Giving medical professionals — and anyone else facing economic hardship due to COVID-19 — the ability to postpone student loan payments as part of a natural disaster forbearance program.
- Supporting thousands of young students in the developing world through a charitable partnership with Pencils of Promise.
CommonBond is led by an experienced and capable management team. CEO and Co-founder David Klein is was formerly Director of Strategic Planning and Business Development at American Express. He was one of Crain’s New York 2016 40 Under 40, as well as a 2017 Ernst & Young New York Entrepreneur of the Year award winner. CommonBond operations are managed by President Robb Granado, who founded Raiseworks, a lending platform that connects businesses with individual investors.
Veena Ramaswamy is VP, Head of Strategy & Corporate Development, joining CommonBond after holding a similar role at Morgan Stanley. She and Klein appeared on an episode of our Founders & Funders podcast to discuss how the company is aiming to address our student loan crisis.
How We’re Involved
Chestnut Street Ventures, AVG’s fund for the UPenn community, led AVG’s investment in CommonBond in 2018, in a Series D round led by Fifth Third Capital. The company has been backed by some of the leading venture firms in the country, including August Capital, Social Capital, and Neuberger Berman. Additionally, CommonBond has obtained investment from leading individual investors with financial services expertise including Vikram Pandit (former CEO, Citigroup) and Tom Glocer (former CEO, Thomson Reuters).
The company has deep roots at Wharton. CommonBond was founded in 2011 as part of the Wharton Venture Initiation Program. After deciding to pilot their model at Wharton, the Company focused on fundraising in 2012, raising equity and loan capital from Wharton alumni. CEO David Klein is a UPenn grad.