Subject: Re: About that balance sheet
Here's how I understand it works, but I could be dead wrong.

For a run-of-the-mill loan, Upstart buys the loan from its banking or credit
union partner and then immediately resells it to the VIE. Because Upstart has
controlling interest on the loan, it goes to the consolidated VIE. It is now
on the VIE's balance sheet. But because of SEC rules formulated after Enron,
Upstart has to report the loan on its own balance sheet as if it were its own.

Also, if Upstart had to use some of its credit limit using one of the warehouse
agreements when it bought this loan, the debt would show up on the VIE balance sheet,
but Upstart would also have to report the debt on its own balance sheet as well.

For the unconsolidated VIEs, Upstart has a minority interest which is included in
"Other Assets" on their balance sheet.

I understand the reasons for these VIEs. But it just makes things more complicated
and less transparent from my standpoint.

The takeaway for me from Q4 is they used cash and debt to goose loan volume in
order to goose fees so Q4 and the year would look better. Now they've maxed out
the cash they can use to buy loans and they've maxed out their credit line, so
there's nothing left for them to use to goose Q1.

Meanwhile, I've been working on the guidance numbers for Q1 and they don't make
sense unless one factors in a huge write-off and a surprise on SBC. I'll post on
this shortly.

Ears