Lendbuzz, the fintech startup that is trying to disrupt the car financing market, has raised $150 million in new debt and equity financing.
The latest round, announced earlier in July, was led by 83North and included participation from existing investors on the equity side. The debt funding was led by BHI, ConnectOne Bank, IDB Bank, Viola Credit and a large insurance company Lendbuzz did not name. A year ago Lendbuzz raised $30 million in debt funding. The debt funding will go to issue more auto loans.
Lendbuzz relies on machine learning and algorithms to issue loans to consumers that have limited credit histories and are underserved by traditional banks. It's part of a group of fintech companies that are using alternative data to assess the creditworthiness of consumers that while unbanked are very able to pay back their loans. According to Lendbuzz, there are more than 43 million foreign-born nationals living in the U.S. with at least 27 million holding professional jobs. They are largely ignored by the big financial players because they lack a credit history and thus a credit score.
The Boston-based startup said its technology also helps auto dealerships close on additional sales that would be lost because the customer appeared to be too much of a risk. Its loan origination business grew 320% last year amid an increase in its dealership networks including expanding into key markets such as California and Florida.
"This is a significant step forward for Lendbuzz,” said Amitay Kalmar, co-founder, and CEO of Lendbuzz in a press release announcing the equity and debt raise. “The capital will allow us to further accelerate our fast-growing car financing platform and enhance our ability to provide the best terms to borrowers that do not have an established U.S. credit history.”
Lendbuzz was founded in 2015 with the aim of helping consumers with a limited U.S. credit history obtain the necessary financing to buy a car. The company’s use of machine learning and algorithms enables it to offer these borrowers attractive terms, catering to a segment of the market that is often overlooked.
“After backing some of the world’s leading fintech companies, we are very excited to join Lendbuzz and support their ambitious growth plans,” said Arnon Dinur, Partner at 83North in the same press release. “Lendbuzz is addressing a large and underserved market, has innovative technological underwriting capabilities and unique customer acquisition strategy that supports their high growth.”