Nova Credit has raised $35 million in Series D funding, led by Socium Ventures along with contributions from existing investors Canapi Ventures, Kleiner Perkins, General Catalyst, Index Ventures, Y Combinator, NAVentures, National Bank of Canada’s corporate venture capital arm, Harmonic Growth Partners, Radiate Capital, and Gaingels. This funding round arrives at a ley moment—cash flow underwriting has reached an “inflection point,” and they’re accelerating their build of the tech that makes it “plug and play.”
Nova Credit noted in a blog post that the outdated legacy credit bureau system is in dire need of an upgrade, leaving almost 100 million US consumers with quite limited or no access to credit.
The Fintech also mentioned that traditional credit bureau data alone provides an “incomplete picture of financial health.” And that picture is only getting more “difficult to understand.” New entrants face a Catch-22: they need to have been approved for credit to build history, and “only once they’ve built history can they get approved for credit.”
In addition to the gap, BNPL is said to be largely absent, credit builder trades are being artificially inflated then “deliberately reversed, and the proliferation of soft inquiries obscures credit-seeking behavior.”
And compounding these issues, bureaus still have very limited “visibility into ability-to-pay and assets.”
This isn’t a theoretical problem–it’s one they’ve been focused on solving.
Nova Credit wants to help Americans improve their access to credit.
With infrastructure, analytics, and compliance in place, Nova Credit has played a key role in supporting the alternative credit data evolution.
Over the years, the Nova Credit team has worked to build the foundation for the credit bureau system of the foreseeable future.
A bureau system that cuts through the Catch-22 “blocking millions of Americans from realizing their potential.” One that’s increasingly “adopted and trusted by the world’s largest banks.”
For those who haven’t studied the credit bureau industry, it is one of the most well-protected industries out there, “surrounded by moats of all shapes and sizes–data asset moats, to arduous sale cycle moats, to nuanced regulatory moats, and the infamous credit seasoning moat.”
Finding a wedge in this industry is not so easy, and after nearly a decade of building, they have “established the foundation from which to scale.”
However, infrastructure alone isn’t enough.
That is why they have built “bureau-grade” analytics—normalization, attributes, scores, and adverse action codes—backed “by nearly a decade of operating as a Consumer Reporting Agency for some of the most regulated institutions.”
This connectivity, analytics, and compliance are said to be the foundation for the credit bureau of the future.
Nova Credit pointed out that it is a system that doesn’t rely on third parties collecting and “disseminating consumer data without consent, but rather puts the consumer at the center.”
Nova Credit concluded that the Series D enables them to accelerate the development of products, improves their ability to serve use cases, and their entry into other verticals.
With the core infrastructure, analytics, and compliance in place, they aim to bring the benefits of the Nova Credit Platform to businesses and consumers.