Why Canapi is Leading Nova Credit's Series C
When we announced our Series B investment in Nova Credit in February 2020, we wrote of an exceptional team with great promise and a vision of building a financial world without borders. We, along with the Nova Credit team, were eager to see the immigration trends of the last several decades not only persist, but accelerate, using Nova’s Credit Passport product to provide newcomers with an international credit file that would allow them to gain access to financial products in the United States and countries across the world.
A month after we published our thoughts, the COVID-19 pandemic shut down global borders, and it seemed as though the vision that Misha and his team set forth might be over before it started. However, over the last three years, the grit and tenacity that initially drew us to Misha and the Nova team has become more pronounced and apparent than ever – despite the undeniable headwinds presented by the pandemic, Nova persevered under Misha’s leadership, and in the last three years, has created an enduring foundation for an even more consequential company in the financial services industry. Today, Nova has built upon its initial success with its Credit Passport product and expanded the vision to more fully serve all new-to-credit, new-to-country, and other thin-file consumers vis a vis Cash Atlas, a cashflow underwriting tool helping more individuals access financial opportunity.
To that end, it is our privilege to share that we are leading Nova Credit’s Series C round and doubling down on one of the most talented teams in the Canapi portfolio.
Growing the core business
In the three years since our last investment, Nova managed to grow to a multi-product, multinational company with blue chip customers and partners representing some of the largest financial institutions across the world. Nova’s relationship with American Express is stronger than ever, especially with immigration rapidly returning to pre-pandemic levels. Nova’s ability to unlock credit data across more geographies over time has enabled Amex and other large financial institutions to approve a growing number of credit-worthy newcomers to the United States.
Beyond the US, Nova has successfully executed an international roll-out strategy. For example, in January, Nova Credit received permission from the Financial Conduct Authority to operate in the UK, becoming the nation’s first cross-border credit reference provider. With the Credit Passport product, Nova helps banks in the UK and beyond unlock over 2 billion credit profiles worldwide. Moreover, Nova’s partnership with HSBC allows the bank to leverage Credit Passport to approve credit card applicants in Singapore and the UK, with more geographies to follow shortly. Nova has also found footholds in Canada and the UAE, and underscores the team’s goal of creating a credit system that enables financial identity to follow individuals across borders.
Credit Passport has also enjoyed strong traction with other leading global enterprises. Last March, Verizon announced a partnership with Nova Credit, enabling U.S. immigrants to access Verizon networks and devices. Verizon leverages the Credit Passport to allow customers to share their international credit history as part of the application process, and as of March 2023, is present in 1,500 Verizon retail stores across the U.S.
Introducing a new product
As COVID threatened the core Credit Passport business, Misha and the Nova team proved their determination and adaptability with the launch of Cash Atlas, which has seen considerable adoption since launch with clients including leading fintech and technology companies.
Cash Atlas enables lenders with cash flow underwriting and verification solutions to reach over 60 million new-to-credit, new-to-country, and other thin-file consumers. Cash flow underwriting is a powerful application of open finance that fills in the gaps where traditional credit reporting is limited or absent. Unlike Credit Passport, which is applicable exclusively to immigrant populations, Cash Atlas can be used to underwrite a wide range of consumers, and will become increasingly important with the rise of credit washing, which by some estimates, has increased 6x since 2018.
By building upon the Credit Passport product, Cash Atlas maintains a distinct edge over competitive offerings. Indeed, the team has taken lessons from the Credit Passport product development process, which creates a seamless experience for customers to permission their data for this use. Moreover, Nova has years of experience driving value and utility inside large enterprise organizations, which will allow them to approach a stable of enterprise customers with this new, value-additive product.
Doubling down on our founders
At Canapi, we do not make the decision to back our founders lightly. It is an honor and a privilege to work with each and every one of our 28 portfolio companies, who we spend months – if not years – getting to know before making an investment decision. We take pride in working shoulder to shoulder with our teams, opening up our networks, sharing our knowledge, and providing support where we can to ensure that we can collectively reach our full potential.
In venture, not all investments move steadily up and to the right. Nova Credit’s journey has not always been easy; however, by remaining patient and supporting Misha and his team through the ups and downs, we are now in the privileged position of seeing the company succeed at scale. At Canapi, we take every opportunity to double and triple down on teams with game-changing visions and game-winning conviction, and we believe that Misha and Nova Credit are a shining example of this kind of opportunity. To that end, we are excited to share that we’ve led Nova Credit’s $45M Series C, alongside a very strong roster of investors.
We look forward to continuing to support Nova Credit on its journey to create a more financially open and inclusive world for all.