Fast & Furious: Why we’re leading defi SOLUTIONS’ $55M Series C Investment
When we think about innovation within the automotive sector today, we tend to conjure up images of self-driving cars and longer lasting batteries. If asked about the hottest topics in financial services, we might reference the disruptive potential of the blockchain or the latest crypto-currency. In either case, we likely wouldn’t list auto loan origination as an area of particular innovation. And rightfully so.
But auto financing is a huge industry. In 2016, the total balance of auto loans outstanding in the U.S. topped $1 trillion, and two-thirds of the 56M cars sold included some form of financing. And despite the fact that the technology in the cars we’re driving off the lot is advancing constantly, the software systems lenders use to underwrite these purchases have been frustratingly unchanged for decades.
Today, we’re excited to announce our $55 million Series C investment in defi SOLUTIONS, a modern SaaS platform for loan origination, servicing, and analytics. defi gives lenders complete control and configurability, enabling them to manage a loan’s entire lifecycle, without expensive and oft-delayed professional services, empowering lenders with speed & flexibility at a time when consumers and auto dealers are saying no more to the slow and painful process of updating legacy systems.
Over the past two years, we’ve gotten to know defi, led by CEO & Founder Stephanie Alsbrooks and COO & Co-Founder Georgine Muntz. Stephanie and Georgine are incredible domain experts with remarkable insight into the customers’ pain points. Each has 20+ years’ experience in automotive financing, having spent much of their careers dealing with existing origination and servicing systems at lenders such as AmeriCredit, Exeter Finance, Sixth Gear and ThinkCash. Frustrated by the quality of the solutions available, they founded defi in 2012 to give lenders a better alternative.
Aside from a great product and strong team, there are several external factors helping drive defi’s success and our desire to partner with them. First, consumers’ expectations are changing. Accustomed to the seamless shopping experiences of Jet.com and Amazon, or the ease of ordering a ride on Uber, consumers are demanding a faster, simpler auto financing experience and existing systems are struggling to keep up. In addition, integrating with legacy solutions is often a difficult and expensive undertaking. Whether a new source of applications like Dealertrack, RouteOne or CUDL, or one of the many alternative data sources lenders can now leverage to improve their performance, the rigidity of incumbent systems is a growing concern for lenders. By contrast, defi gives lenders the freedom to stay competitive by being nimble, data-driven, and more responsive to the shifting consumer and industry landscapes.
defi is an exciting addition to BCV’s growing portfolio of automotive and financial services technology. Our auto-related investments, both past and present, include Hireology (recruiting platform for dealerships and other distributed organizations), vAuto (inventory pricing/management for dealerships), TrueMotion (telematics for auto insurance), and Inrix (traffic data solutions). On the financial technology side, BCV has invested over $400M in more than two dozen companies in the last five years, including companies like Venminder (vendor management and compliance for banks, credit unions & other lenders) Passport and Flywire (vertical-specific payments), AvidXchange (accounts payable automation), Swift (digital prepaid cards), and IEX (fair-access trading platform).
We are thrilled to be partnering with Stephanie, Georgine, and the entire defi team to build the next generation of lending software. If you’re interested in learning more about what they’re up to, drop me a line — I’d be happy to chat.