(As appeared in Forbes.)
Early this year I wrote about Finova Financial, a company focused on new financing instruments to help the un- and under-banked keep their heads above water. At that time the company had just closed more than $52.5 Million in funding.
CEO, Gregory Keough, who comes from traditional banking and lending world, saw a gap in the market. Title loans and more dangerous lending instruments were taking bad situations and making them worse for borrowers.
Finova got on the map quickly for their vision to create lending products informed by analytics that helped manage risk while being ‘profitable enough’ in serving a large group of Americans—the 70 Million people that do not have $400 to deal with a financial emergency.
Transforming an unglamorous industry to better serve consumers
The first offering, which was recognized for financial innovation, was Finova’s CLOC or car line of credit. The CLOC, currently available in Florida, California, Tennessee, New Mexico, South Carolina, Oregon, and Arizona, has earned Consumer Affairs prestigious partner accreditation for delivering up to 50% lower cost than the national average on title loans to consumers.
A new way to leverage auto-equity for consumer finance
Finova’s model, unlike the ‘buy here, pay here, borrow here, beg here’ options, is built for the digital economy with instant online pre-qualification, and payment-against-principal with every payment.
With the CLOC’s early success, the company has added a secured prepaid card—secured of course by the equity in the car—the only asset that many of the un- and under-banked have to leverage. The Automobile-Secured Prepaid Card helps consumers avoid check-cashing fees, get their paychecks faster, and better manage their finances.
Investors like social impact that can scale
Keough—and clearly his investors—see not only the potential but the humanity of better lending options for struggling Americans. The model has now proven scalable and the initial investors, led by CoVenture, have upped the ante, now with $102.5 Million in equity and credit facility funding.
According to CoVenture Managing Partner Ali Hamed, ‘We look at many fintech companies, but Finova has built an incredible all-digital technology platform that consumers really like and has experienced amazing traction in a short period of time. Finova has created a customer-centric focus for Americans outside the formal financial system that is driving strong growth, rapid consumer adoption, and opportunities for rapid national expansion, which I think is what the future of banking will look like.’
Stay laser focused on the market need
When asked how you get investors who just funded $52.5 Million to turn around and re-up for $102.5 Million, Keough said you must ‘Concentrate on a clear market need, build success proof points as quickly as possible and keep building a pipeline of new business.’
He considers the early success and continued scale to be a function of understanding and ‘communicating vision.’ Keough says, ‘Too many companies ‘sell’ product or solution. Finova’s vision is to truly transform banking services for the un- and under-banked in a way that is driven by social impact, is fairly profitable, and delivers growth and opportunity for the consumer.’
Having gone from $52.5 Million and $102.5 Million in funding in under a calendar year—well above pace for growth stage capital—I wonder how long it will be before we hear about the $205.5 Million in funding.
One thing—and millions of American’s—at a time I suppose.
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