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United States securities and exchange commission logo
August 27, 2020
Dave Girouard
Chief Executive Officer
Upstart Holdings, Inc.
2950 S. Delaware Street, Suite 300
San Mateo, CA 94403
Re: Upstart Holdings,
Inc.
Amendment No. 2 to
Draft Registration Statement on Form S-1
Submitted August
18, 2020
CIK No. 0001647639
Dear Mr. Girouard:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 2 to Draft Registration Statement on Form S-1
Prospectus Summary
Overview, page 1
1. We note your response
to comment 2. On page 2 of your prospectus, you state that you
"have been able to
demonstrate through several studies that AI lending works," and,
in your third example,
you state that "for pools of securitized loans, [y]our realized loss
rates were
approximately half of those predicted by Kroll, a prominent credit rating
agency." So that
investors understand why you believe that this third example
demonstrates that "AI
lending works," please describe how the loss rates predicted by
your AI models compare
with the loss rates predicted by Kroll, and describe how
your predicted loss
rates compare with the realized loss rates. In addition, we note your
Dave Girouard
Upstart Holdings, Inc.
August 27, 2020
Page 2
disclosure that you "regularly monitor the accuracy of [y]our AI
models in comparison
with simple credit scorebased models and have observed higher model
accuracy across a
variety of statistical measures relating to each model s predictive
accuracy." Please
briefly describe how you conduct such comparisons and the "variety of
statistical
measures relating to each model's predictive accuracy" so that
investors understand why
you believe that these comparisons demonstrate that your AI model is
more accurate.
Also, disclose the "simple credit scorebased models" used.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Interest Income and Fair Value Adjustments, Net, page 94
2. We note your response to comment 9 supporting your position that the
Company does not
believe presenting interest income, interest expense and net fair
value adjustments
separately, accompanied by a discussion and analysis of each item,
specifically explaining
the underlying reasons for fair value declines is helpful to an
investor s understanding of
the Company. While we acknowledge the fact that such components may
not be material
in future periods, given the significance of these components to the
periods presented,
combined with the significant fluctuations in these components as
disclosed on page F-23,
we continue to believe that the requested disclosures are material to
an investors
understanding. Therefore, please revise your disclosure to provide the
information
requested in comment 9 of our letter dated May 27, 2020. In addition,
please revise your
disclosure to highlight, if true, that in 2018 the Company changed the
structuring of its
ABS transactions which resulted in VIEs no longer requiring
consolidation which will
result in these components becoming less material in future periods.
Business
Overview, page 112
3. Please update your disclosure to discuss your auto lending platform.
In this regard, we
note your press release dated June 24, 2020.
You may contact Ben Phippen at 202-551-3697 or Michael Volley at
202-551-3437 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Sonia Bednarowski at 202-551-3666 or Dietrich King at 202-551-8071 with
any other
questions.
FirstName LastNameDave Girouard Sincerely,
Comapany NameUpstart Holdings, Inc.
Division of
Corporation Finance
August 27, 2020 Page 2 Office of Finance
FirstName LastName