Helping individuals pay back their student loans through refinancing as low as 2.13%
Nate Matherson is the CEO and co-founder of LendEDU, an online platform for student debt refinancing. LendEDU allows its users to compare rates between 12 different student loan lenders, including SoFi, LendKey, iHelp, Education Success Loans, College Ave Student Loans, Upstart, and more. Nate started the company with his dormmate, Matt Lenhard, at the University of Delaware in 2014; since then, LendEDU has graduated the Iowa Startup Accelerator and Y Combinator business accelerator programs, and has been featured in media outlets such as The New York Times, The Wall Street Journal, CNN, Bloomberg, NPR, CBS News, Fox News, TechCrunch, and many others.
EDWIN WARFIELD: Tell us your story about starting LendEDU.
NATE MATHERSON: In January 2014, my partner Matt and I started Shop Tutors, which was a tutoring software program. We helped tutoring departments manage their tutors, specifically at colleges and universities. We worked on Shop Tutors for about eight months, and we eventually realized that neither of us was passionate about tutoring. Tutoring was a very niche, small market. We also realized that we weren’t really solving a big problem; we weren’t fixing a big need.
So, out of Shop Tutors, LendEDU was born. We killed our company, Shop Tutors, but we still had money in the bank, we still had investors that invested in us, and we had to come up with a new business, and that’s how we started LendEDU—really, one week after we killed Shop Tutors.
In that year—separating the Iowa Startup Accelerator and Y Combinator—we ended up, right as we left the Iowa Startup Accelerator, launching LendEDU. We launched the first version of LendEDU in November 2014 with three lenders on our marketplace for student loan refinancing. We thought if we built a great product, people would come and use it. We didn’t realize that you had to build a great product and find those people and get those people to use it.
Immediately leaving the Iowa Startup Accelerator, we raised a small amount of capital from an angel investment fund in Iowa. We thought, “Hey, we built this great marketplace—let’s just buy ads and put people into it,” but quickly we found out it is very expensive to acquire customers in the student loan industry, and we lost about 80% of the money that we had raised in the first two months after we left the Iowa program.
We stumbled around for about five months. In May of 2015 we were still exactly where we were when we had left the Iowa Startup Accelerator Program: We had this marketplace that we’d built, but we had no one using it and we had no money. We actually emailed our investors and told them that LendEDU was about to die, and that they should expect that our company would be gone within the next couple of months.
At that point, we actually put LendEDU up for sale. We got an offer to sell LendEDU for next to nothing, and we took the offer to our previous investors—the investment fund in Iowa—and these guys looked at the offer and they said, “This offer is so bad. If you take this, we’re going to die.” They just decided to reinvest and double their investment in us, which gave LendEDU more capital and extended our life so that we could continue working on it for the next few months.
After the old investors put additional money into our business, that’s when things really started to go right for us. We figured out how to acquire customers. We hired all of our college roommates to come work for us part-time. Right as we did that, we started growing. We started making money and then we thought, “Why not apply to Y Combinator?” We applied to Y Combinator and we got in. We went from a failing startup to a successful startup very quickly.
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