Calgary-based FinTech startup CreditApp has closed $2.7 million CAD in financing led by Inovia Capital to commercialize its software for automotive dealerships and lenders.
CreditApp is led by FinTech veteran Marcos Lopez, who took the reins of CreditApp as CEO in January to help scale the startup’s business. Lopez is the former CEO of Calgary FinTech unicorn Solium Capital, which developed software for managing employee stock options and cap tables and was acquired by Morgan Stanley in 2019 for $1.1 billion.
“The opportunity to go and bring innovation to this ecosystem that hasn’t seen a competitor in, really, 15, 20 years was quite attractive.”
Marcos Lopez, Solium
The startup was born when former Quantifi Lending CEO Evan Ferguson built technology to meet the Calgary auto lender’s needs. In 2022, Ferguson spun CreditApp out as a standalone firm to use that tech to help other lenders improve their operations.
With a fleshed-out solution, early product-market fit, and fresh capital, CreditApp has set out to commercialize its software and expand its presence across Canada, as it looks to bring innovation and competition to a market dominated by incumbents.
“What’s happened now, not surprisingly, is when we take these products to the market, the lenders are like, ‘Oh, yeah, that’s what I need,’” Lopez told BetaKit in an interview. “It’s not some point solution developed by some tech person that didn’t really understand the business. It’s coming from a lender.”
Founded in 2022 by Ferguson, the startup’s head of growth, CreditApp has developed an indirect lending portal that connects automotive lenders like banks to dealerships to help lenders access and assess applicants more easily, and reduce inefficiencies for dealers. The company also offers a verification module designed to help prevent fraud, verify income, summarize data, and streamline lenders’ back-office operations.
CreditApp is an independent subsidiary of Quantifi and a sister company to Quantifi Lending. According to Lopez, one of CreditApp’s “superpowers” is its “research lab” through Quantifi Lending, an active auto financing business with a $45-million loan book. “We can put technology into that, fine-tune it, make it work, and then bring it into the marketplace,” he said.
The startup’s latest all-equity round closed in May and saw support from existing backers Lopez, former Solium board chair Mike Broadfoot, and Toronto’s Polar Venture Partners. Lopez declined to disclose CreditApp’s valuation or classify the round. This brings CreditApp’s total funding to $7.4 million, which includes $4.7 million in previously unannounced equity funding from 2022 CreditApp secured to support its launch and research and development efforts.
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Ferguson told BetaKit that when a consumer applies for financing to buy a vehicle, they do not apply themselves: rather, someone at a dealership submits their application to various banks.
“That sounds really simple, but under the hood, there’s a lot of inefficiencies in how the dealers choose which banks they go to [and] the cost associated with sending those applications through,” he said, claiming that the software they use to do so is old and not user-friendly.
Customers usually need to provide paystubs, registration insurance, and a variety of other documents that are typically faxed or scanned over en masse, and then manually sorted and organized. CreditApp aims to bring more efficiency to this process.
“In addition to providing the infrastructure to move the data more effectively, we also provide all the tooling to the banks to ingest that information, look at the risk … and [decide whether] to fund that loan,” said Ferguson.
Born out of an auto lender, CreditApp aims to help other lenders improve their operations.
Instead of a closed ecosystem, Lopez said that CreditApp is creating an application programming interface layer to allow others to build on top of its software. “The same way that Stripe enables Shopify to enable a bunch of entrepreneurs to build stores and innovate on top of that ecosystem, that doesn’t exist in the Canadian finance space,” he said.
“I get annoyed at how uncompetitive the Canadian landscape is and I enjoy trying to compete against monopolies, and so the opportunity to go and bring innovation to this ecosystem that hasn’t seen a competitor in, really, 15, 20 years was quite attractive,” said Lopez.
Lopez, who recently completed a stint as an executive-in-residence at Inovia, emphasized that CreditApp is happy to have Inovia join its cap table, noting that the current market leader in the indirect auto-lending market, Dealertrack, is a United States-based company owned by an American private equity firm.
“It’d be great to see a Canadian company with a Canadian [venture capital firm] and Canadian investors displace that and bring efficiencies to Canadians,” Lopez said.
Down the road, Lopez sees a “massive opportunity” to help mortgage lenders in Canada process applications more efficiently, the potential to improve lending in other markets beyond just auto and homes, and room for geographic expansion south of the border. But for now, CreditApp’s focus is primarily on auto lending. “We’ve got to solve that first,” said Lopez.
Feature image courtesy CreditApp.
