Bain Capital Ventures, the venture arm of Boston-based Bain Capital, led a $55 million Series-C round for software-as-a-service company Defi Solutions on Friday, adding extra momentum to the CVC’s portfolio.
Defi Solutions is a financial services company that operates within the auto finance industry, working with loan origination solutions and auto loan origination software. Founded in 2012, the company operates in the same vein as other loan origination companies like Dealertrack and RouteOne.
There were several factors that made Defi an attractive investment for BCV, Brian Goldsmith, a Bain Capital Ventures senior principal who focuses on B2B, SaaS and data companies, told INV Global.
“We tend to focus on three things,” he said: team, marketplace and product.
“Is there a team that has domain expertise that makes them capable of succeeding in this marketplace?” he said, adding that Defi Solutions has “tremendous understanding of the pain points” within loan originations.
BCV also looks for startups that operate in a large marketplace that has real need. “In the case of Defi there are tens of millions of cars that are getting financed… so there’s just a significant opportunity to improve how that process works,” he said.
And last, but not least, BCV looks for companies with unique products that solve an unaddressed pain within an industry, he said. Most of the auto loan solutions that are out there in the market, are relatively old and inflexible technologies, and yet auto loans surpassed $1 trillion in 2015 alone.
But Defi does not represent the only auto-related investment from BCV. Its portfolio includes Hireology, recruiting platform for dealerships and other distributed organizations; vAuto, an inventory pricing/management for dealerships; TrueMotion, which works with telematics for auto insurance; and, Inrix working on traffic data solutions. On the financial technology side, BCV has invested over $400 million in more than two dozen companies in the last five years, according to Goldsmith.
In fact, more than 80% of its investments are B2B SaaS related, Goldsmith said.
“We continue to focus on and prioritize SaaS investments,” he said, adding that the number of investments can vary year-to-year, so how many are expected to take place in 2018 is not known, but BCV is actively looking at other potential investments.
The investment in Defi is comprised of both primary and secondary capital. The primary capital will be used by Defi Solutions to accelerate the development of existing and emerging products, expand resources and facilities, and grow the number of employees by nearly 50% in 2018, across all teams, including client support, technology services, and sales and marketing, according to a joint press release. BCV is expected to assist in these initiatives as advisers, in addition to joining the Defi Solutions board, Goldsmith said.
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