MBA Startup Founded at Wharton

The original trio of Wharton MBA graduates who founded Common Pond. CEO David Klein (center), COO Jesup Shen, and CFO Mike Taormina. Shane, now managing director at Evercore, has a year left in the life of the company, while Taormina left after nearly three years and is currently the co-founder and COO of Alluvial.

Founded by three Wharton MBA students in 2012, student loan company CommonBond is closing its doors. The startup was one of the Many student-founded fintech companiesincluding SoFi, Prodigy and Earnest to disrupt the student loan market.

But CommonBond has struggled during the pandemic and management’s decision to allow student lenders to defer their loan payments. Attempting to shift the company toward solar financing four months ago wasn’t enough to keep CommonBond.

CEO and co-founder David Klein wrote in LinkedIn post.

A pivotal failure of solar financing to attract financing from investors

The story of what led us to this point begins with Covid. When the pandemic hit, our student business was hit.” Half of the refinancing market went away as the government temporarily halted benefits and payments for all federal student holders. More than two years later, this policy is still in place.”

His efforts to turn CommonBond into a company that financed homeowners’ solar installations were unsuccessful when they failed to attract the additional investment needed for the hub.

“The solar business is where we’ve been growing fast, partnering with new installations, and reshaping the way the industry serves customers for the better,” Klein explained. But we were still expanding, not yet profitable, and needed fresh capital. Unfortunately, we weren’t able to run the entirety of the business fast enough.”

It was one of the first MBA startups on the annual Top Poets and Quantity List

In many of its earlier years, CommonBond was among the most successful MBA startups of its generation. constantly fell Poets and chemistsAnnual ranking of the best MBA startups. CommonBond was one of three start-ups at Wharton, with Warby Parker, who made Opening ranking in 2013. That year, CommonBond ranked 64th among the Top 100 MBA Startups after raising $4.2 million in funding. By 2016, Was among the top 20after raising $46 million from investors.

That year, in fact, three MBA loan startups were among the top 20, including Stanford’s SoFi, founded by a Stanford graduate, that ranked first with $1.4 billion in funding, and Earnest, which Founded by MBA graduates from Harvard Business School, it ranked 10th, with $99 million raised. CommonBond came in at number 19.

Klein founded the company with fellow Wharton colleagues Mike Taormina, now Alluvial’s co-founder and COO, and Jessup Shen, now managing director of Evercore, the boutique investment bank. Klein has served as CEO throughout the company’s history. Sheen left the COO after a year in the company’s life, while he left Taormina after nearly three years as CommonBond’s CFO.

Co-financed more than $5 billion in loans

Along with SoFi and Earnest, CommonBond has disrupted the student loan market, exploiting extreme customer dissatisfaction with high interest rates and poor service by the federal government and traditional banks. Fintech startups have had a special advantage over the feds. While the government issued student loans to anyone who went to college or graduate school, the financiers were able to cherry-pick and reap a bountiful harvest from some of the world’s most sought-after debtors — borrowers who had a lot of debt but almost no risk from default.

That early strategy worked like a charm. Over time, CommonBond has funded more than $5 billion in loans, with more than 1 million users and 100,000 customers served. Klein noted that the loans he obtained have saved consumers more than a billion dollars.

“While the outcome is disappointing, the impact we made will continue and will be something we will always be proud of,” he wrote. “Now I turn my attention back to completing the cooldown. Once I’m finished, I’ll think about my next steps. Until then, gratefully.”

CommonBond was the first and only funding company with a “1 for 1” social mission: for every loan they fund, CommonBond also funds the education of a child in need, through its partnership with Pencils of Promise. And the company has donated more than $2.5 million under the “Social Promise,” according to Klein.

Klein’s post on LinkedIn has attracted more than 200 comments, including one from a former colleague at American Express where Klein worked before going to Wharton for his MBA. “David, I still remember the day you called to tell me you were leaving Amex to go to graduate school,” Joshua Perwitz, now a senior vice president at American Express, wrote. “I’ve watched what you’ve accomplished with great admiration. I’m sure it’s a tough time now that you’re ending, but what you’ve built, what you’ve chosen to support and how you’ve defended your people in the past few months, says it all about you as a professional and, more importantly, as a person. Nobody can To take any of that from you. There is no doubt that you will do other wonderful things and positively affect many others along the way.”

do not miss: Top MBA Startups for 2021 or The Most Disturbing MBA Begins of 2021

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