Lendful raises $15 million from new partner Alterna Bank

Lendful startup

Vancouver-based Lendful has announced a major investment today, securing $15 million CAD from Ottawa-based Alterna Bank, a wholly-owned subsidiary of credit union Alterna Savings. The investment follows previous undisclosed investments from Stanley Park Ventures and Ferst Capital Partners of Montreal.

The announcement is big news for the consumer lending marketplace startup, not only in amount, but as CEO and co-founder Alex Benjamin explained, in the experience and opportunity the new partnership provides.

“We really felt that starting to develop relationships with FinTech companies would be a catalyst for us.”
– Rob Paterson, Alterna CEO

“Alterna are incredibly entrepreneurial, and really understand the needs of a business like ours,” Benjamin said over the phone. “[Alterna CEO] Rob Paterson’s background has really helped tackle the problems we’ve encountered and had to overcome.”

For his part, Paterson seemed as excited to be working with a young FinTech company to reach new customers, something yet to be seen from the major financial institutions in Canada.

“For our part, we’re a small financial institution based in Ottawa – we’re not a Bay St. firm,” he said. “We were really interested in the FinTech space and where innovation was going. For myself, I dabbled in the dotcom space many years ago, and saw how that could be disruptive but how it could also be complimentary. So from our standpoint, we really felt that starting to develop relationships with FinTech companies would be a catalyst for us, but because we look at our banking offer as a cooperative banking offer, we felt we could also help FinTech companies like Alex’s. That comes not just in capital, but in guidance going forward, and being able to jointly see how we can accelerate this company.”

Benjamin noted that the funding would be used to provide more loans to its customers, but that working with Alterna would also help Lendful offer better security and more competitive rates for its customers. Which is good, as the consumer lending sector has heated up in the past year, and Lendful faces some stiff competition from the likes of Borrowell and Grow. Anything that makes Lendful stand out from the pack will help.

To that end, Lendful touts its lending algorithm, which can leverage social data points to better understand and rate potential customers (more on that here) as a key differentiator. But Benjamin also believes that a strong public partnership with a institution like Alterna Bank will resonate.

“I think it gives us the credibility that people visiting other sites might not feel,” he said. “It does show the market that we’re serious, and people can feel really comfortable that we’re a legitimate business delivering a solid outcome.”

Lendful says it will be releasing some interesting data derived from its algorithm soon – information that Alterna is helping to parse and validate. For now, Benjamin did share that since approving its first loan in September 2015, the company has seen $20 million in loan applications.

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.

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