Immigrants are a vibrant part of today’s economy and play a significant role in fostering innovation globally. In fact, more than 40% of Fortune 500 companies and more than 50% of $1B+ startups were founded by first-generation immigrants or their children.
Unfortunately, many newcomers face a common barrier that many of us take for granted – access to basic financial products, cell phones or utilities. At its core, the issue is a data problem. In a world where automated credit scoring systems like those developed by FICO have become a fundamental determinant of financial success, these newcomers can be locked out.
Even if someone has a deep credit profile and significant wealth in their home market, the data is not easily transferrable to new financial institutions. The lack of a country-specific credit score is crippling. Based on our estimates, there are roughly 10M people in the US that fit this profile from the past 5 years alone. But the problem isn’t confined to the US alone – it’s global.
A mission-driven team
We first met Misha and Nicky four years ago as they were finishing their MBAs at Stanford GSB. As immigrants themselves, the problem outlined above was personal. Like many before them, both founders faced limited financial access and credit options upon migrating to the United States – so they resolved to fix it.
Over the years Nova Credit’s team has impressed us time and time again. Not only are they laser-focused on building quality products and brilliant enterprise salespeople, but they lead with mission and purpose. As builders and operators, ourselves, we understand how critical it is to hire exceptional people. Misha and Nicky have built a deeply talented organization that shares a common vision of building a financial world without borders. Today, roughly 70% of the team is composed of either first- or second-generation immigrants.
A ground-breaking product The team at Nova Credit has come up with an elegant solution to solve the global data problem. Unlike other alternative data providers, Nova is not innovating on the credit score as an input to underwriting, but rather on its portability. The company’s flagship product is the Credit Passport® , which standardizes, translates, and structures an individual’s raw credit data. Like an identity, Nova Credit believes that financial history should travel with someone when they move from Country A to Country B – so does Canapi…and incumbent financial institutions are starting to actively adopt Nova Credit’s solution.
At the end of last year, Nova Credit
launched a first-of-its-kind partnership with American Express that offers prospective Card Members the ability to share their international credit data with American Express when applying for any AmEx Personal Card. Through Nova Credit, these consumers are five times as likely to be approved for a card than they would have been using traditional underwriting solutions. The validation from the AmEx partnership just scratches the tip of iceberg as it relates to immigrant and thin-file credit underwriting. We believe Nova Credit is an industry-defining business that will play a critical role in the globalization of financial services.
For these reasons, we’re excited to announce our investment in Nova Credit as one of our first investments in the fund. We look forward to working with the Canapi bank network to implement Nova Credit’s technology into their products and offerings, and look forward to embarking on this journey with the Nova Credit team and co-investors, including Kleiner Perkins, Index Ventures, General Catalyst, Nyca Partners and First Round Capital.