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Online Lender Earnest Seeks to Raise $50 Million or Find Buyer

Earnest, the online lending startup, is seeking to raise $50 million in new equity as it simultaneously looks for a buyer, according to people familiar with the situation.

The San Francisco-based company hired Barclays as an adviser to pursue the so-called “dual-track” process, the people said. One of the people confirmed a Bloomberg report on Monday that Earnest hired Barclays to sell the company for about $200 million, which the person said was lower than its previous, undisclosed, valuation. Earnest has previously raised $100 million in equity as well as $200 million in debt, according to Crunchbase. 

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Meanwhile, there are signs that things are stabilizing. Lending Club, one of the biggest online lenders, reported better than expected second-quarter results on Monday. Lending Club stock was trading up 11% on Tuesday to $6.08, although that is still well down from the $25 level where the stock was trading in late 2014 when it went public.

—Tom Dotan contributed to this article.

Zachary Segal commented on this article.
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These firms typically act as a marketplace where individuals and small businesses can arrange loans from hedge funds, Wall Street firms and wealthy investors.