NEW YORK (Reuters) – Online student lender CommonBond has laid off around 18 percent of its staff, a company spokeswoman said, citing a plan to shift investment into new areas.
The start-up’s layoffs follow challenging years for the online lending industry, which has seen widespread job cuts, plummeting shares and a stricter focus on credit quality.
CommonBond’s job cuts, which impacted 22 people in total, were announced to employees in a “all hands” company meeting on Tuesday afternoon, the spokeswoman told Reuters in an email. The layoffs have not been reported elsewhere.
The company is increasing investments into areas that promise to generate higher returns in the future, she said. It plans to improve margins in its refinance business and take advantage of a recent acquisition to grow its in-school business, she said.
“We continue to hire in areas that amplify our growth, and we remain on the lookout for companies to acquire that allow us to serve the market in efficient and differentiated ways,” the spokeswoman said.
New York-based CommonBond was founded in 2012 to fund and refinance student loans at lower interest rates. It is among a cohort of companies looking to take advantage of digital technologies to offer cheaper and easier-to-use financial services than banks.
In March, CommonBond announced it had raised $50 million in a round led by from Fifth Third Capital Holdings, LLC, a wholly owned subsidiary of Fifth Third Bancorp (FITB.O). Investors also included First Republic Bank (FRC.N) and Columbia Seligman Investments.
The round brought CommonBond’s total funding raised to more than $130 million, with backers including investment manager Neuberger Berman, former Citigroup Inc (C.N) CEO Vikram Pandit and former Thomson Reuters Corp (TRI.TO) CEO Tom Glocer.
The company processed $1 billion in loans in 2018, the spokeswoman said.
Reporting by Daniel Medina and Anna Irrera, Editing by Rosalba O’Brien