An online loan provider that offers Canadians free credit reports has raised an additional $ 20 million in equity and venture capital, co-led by Portag3 Ventures of Power Financial.
Borrowell, which launched in 2015, will announce on Monday that it has received a second round of funding co-led by existing investors Portag3 and White Star Capital. The group also included new investors Clocktower Ventures, Argo Ventures and Silicon Valley Bank. The fintech provider claims to have surpassed more than one million users on its platform.
The funding and growth of Toronto-based Borrowell’s consumer base comes at a time when the adoption of FinTech services by Canadians is lagging behind other countries, primarily due to a lack of consumer awareness of the alternative options available in the market.
“Canada has been lagging behind in the adoption rate of fintech services, so seeing so many Canadians – one million of them – using a fintech product in their day-to-day lives is an important milestone not only for us, but for the broader fintech industry as a whole, ”Borrowell CEO Andrew Graham said in an interview.
The company first entered the financial services industry by providing personal loans to Canadians with good credit ratings looking to refinance their debt. They were seen as disruptors to banks and major credit card companies as they began to offer competitive and transparent rates on loans. The company quickly caught the attention of investors Paul Desmarais Jr., CEO of Power Financial Corporation, and David Chilton, former panelist on the popular CBC television show. The dragon’s lair and author of The rich barber.
In 2016, Power Financial, through its subsidiary Portag3, joined Equitable Bank and Hedgewood Inc. in a $ 6.4 million investment in Borrowell.
To date, Borrowell has raised $ 36.7 million in equity.
“Fintech is a difficult space to be successful because it is expensive to acquire clients,” said Jean-François Marcoux, Managing Partner of White Star Capital, in an interview. “But Borrowell has a profitable business model because they have been able to demonstrate a very predictable customer acquisition strategy.”
This strategy was introduced in 2018, offering free credit score reports to online users and providing them with tips on what they can do to improve their score.
Although the company still offers personal loans, Graham says the biggest opportunity was clear after seeing how many consumers weren’t aware of their financial situation because it was “traditionally difficult to access free of charge. a credit score in Canada ”.
The company is now a partner of more than 50 financial institutions, including the six major Canadian banks, American Express, MBNA and Wealthsimple. After receiving a credit report, Borrowell customers receive advice on which products are best suited to their financial situation, including credit cards, mortgages, loans, investments, insurance and banking services.
“Financial services are complex and complicated and we know that many people look for help when it comes to making the right choices to achieve their financial goals,” Graham said.
Product recommendations and referrals are made using artificial intelligence technology. Big data and machine learning are areas where Graham says the company has invested heavily and will continue to do so. For example, last month the company released a financial health app where members can access real-time credit scores and product recommendations that will help them improve their scores.
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