Borrowell has secured $25 million CAD to support its recently closed acquisition of Refresh Financial and overall growth, as financial institutions return their focus to customer acquisition following the fallout of COVID-19.
The all-equity financing included a number of new investors for Borrowell, such as Kensington Capital Partners, BDC Capital, iA Financial Group and Impact Engine, a Chicago-based social impact-focused investment fund. Existing investors Portag3 Ventures, White Star Capital, NAventures (the venture arm of National Bank of Canada) and Equitable Bank also participated with new funding.
“We’re getting back to very much where we were pre-COVID.”
Borrowell CEO and founder Andrew Graham told BetaKit a significant portion of the $25 million is going towards funding its acquisition of Refresh (terms of the deal were not disclosed), with the remainder being working capital for the startup.
Borrowell offers a variety of financial services for Canadians, spanning credit monitoring and cards, personal loans, mortgages, investing, insurance, and bank accounts. A key aspect of Borrowell’s business is allowing consumers to compare financial products from more than 50 financial institution partners, giving them personalized recommendations based on their credit profile.
Amid COVID-19, the financial landscape in Canada changed significantly. Speaking with Graham last year, the CEO noted that consumer concern about their finances skyrocketed as people were laid off in an uncertain economy. Hesitancy from financial institutions to underwrite new business led them to pull back on customer acquisition and advertising through Borrowell.
Now, Graham sees those institutions increasing their interest in new customer acquisition.
“We’re getting back to very much where we were pre-COVID,” he told BetaKit. “We’ve seen lots of financial institutions come back and return to growth mode … I think that’s certainly a positive development, but we still have some ways to go.”
With this turnaround, Borrowell is also back in growth mode.
Combining Refresh with Borrowell doubles both the size of Borrowell’s team to 130 employees and its revenue.
“[The acquisition] really positions us well to do even more to help consumers improve their financial standing, and grow their financial options and strengthen their credit,” said Graham.
Refresh is a Canadian FinTech startup that offers a Secured Savings Loan, which allows customers to build credit and savings, and a secured Visa credit card. Refresh claims to work with more than 800 referral partner locations across Canada and to have had more than 100,000 Canadian customers.
Borrowell and Refresh have been working together over the last three years, with Refresh a partner on Borrowell’s platform and an open customer referral relationship between both companies.
“Having worked with [Refresh] for so long we know that their solutions are both unique in the market and also really beneficial for many, many kinds of consumers, especially anyone who has a thin credit history or not much credit history or anyone who’s got a challenged credit history and wants to sort of prove that they can be a responsible borrower,” said Graham. “The products [from Refresh] … that have come over as part of this transaction allow exactly that, and so that’s why it’s such a good fit. It’s very well aligned with our mission.”
“We’ve seen lots of financial institutions come back and return to growth mode.”
– Andrew Graham, Borrowell
Aside from its acquisition of Refresh, which Borrowell is now working to integrate, the company has also seen growth amid its customer base. Even with financial institutions pulling back due to COVID-19, individual consumers are still looking to find solutions to their financial woes or for help with their goals. Graham said Borrowell has seen strong engagement from its more than 1.5 million person customer base amid the pandemic, with increases in logins per month per active user.
To address some financial institutions pulling back from serving new customers, Borrowell “re-balanced” its marketplace and referrals last year to ensure it was presenting the most worthwhile and useful products to its members.
“For many people, Refresh, the products that we’re acquiring here, the credit building loan and the secured credit card, can be really useful,” said Graham. “So, we’re excited to be giving those [products] sort of a wider audience.”
FinTech alternatives to traditional financial institution lending are still relatively new to Canada. A February 2020 report from TransUnion found that 61 percent of Canadian FinTech startups were founded between 2012 and 2017, while the lending market, specifically, has seen significant development in that time.
The report also found that these emerging FinTech lenders are appealing to a broader group of consumers than many might think, with nearly half (46 percent) of users over the age of 40.
Borrowell, launched in 2016, was one of the first to bring free credit scores to the Canadian market. With the company having since expanded its product offering, players in Borrowell’s space now include publicly-listed Mogo, which offers credit scores, loans, and mortgages; and even FinTech startups like Koho, which started in the spending space and recently launched a credit-building product.
The $25 million in financing brings Borrowell’s total equity financing to date to more than $55 million, according to Borrowell. Including debt financing, Borrowell has raised more than $97 million. Having since secured a $20 million Series B round in 2019, Graham told BetaKit, while this recent financing was meant to fuel its acquisition, the startup will likely look to raise a Series C round in the future.
Image courtesy Borrowell