LoanStar Technologies – a leading financial technology company focused on embedded lending – announced it agreed to raise approximately $28 million of growth equity from a group of strategic investors, including approximately $20 million from Sageview Capital and the remainder from a mix of existing and new partners including, Launch Credit Union (via their wholly owned CUSO Holding Company), TruMark Financial Credit Union, Ben Franklin Technology Partners of Southeastern Pennsylvania, and Monarch Strategic Advisors.
LoanStar plans to utilize about $12 million of the investment, which closed in January, to expand its sales and marketing organization, continue investment into its market-leading technology platform, deepen strategic partnerships, and strengthen its balance sheet in anticipation of future growth opportunities. And LoanStar expects to close on the remaining amount (approximately $16 million) in the next two months, which will be used to repurchase shares from early investors in the Company.
The funding comes at a time of significant momentum for LoanStar. Last year, the company saw $1 billion in total funded loan volume, added 1,000+ active merchants, hired 17 new employees, and added 13 new lenders, totaling over 55 partnered lenders on its platform. 92% of loans created through the LoanStar channel have resulted in a new customer for financial institutions, which have reported around $10 of expanded revenue for every $1 in lending activity through cross-sales of products to the consumer and merchant.
As a part of the funding, LoanStar expanded its board of directors to include Scott Stuart, Founding Partner at Sageview, Mark Brewer, CEO of Launch CUSO Holdings, LLC, and independent director Ronny Chapman, who previously worked at FIS and TruStage. And these new members will join existing board members Andy Turner and Craig Haynes, LoanStar’s CEO and Chief Innovation Officer, respectively.
LoanStar offers a comprehensive suite of proprietary software, APIs, and LOS integrations that enable embedded lending by connecting lenders and merchants to accelerate the adoption of digital lending at the point of consumption. And the recent rise in interest rates has made lending challenging for many non-depository financial technology companies. By partnering with banks and credit unions, LoanStar is positioned to drive volume in the current and any future cyclical environments with a broad portfolio of lending products that re-intermediate financial institutions into digital lending.
Lauletta Birnbaum LLC served as legal advisor to LoanStar. And Morris, Manning & Martin, LLP served as legal advisor to Sageview Capital.
KEY QUOTES:
“This is an exciting milestone for LoanStar and allows us to take advantage of the current state of the lending market where the unique characteristics of our technology offer a differentiated value proposition to both the lenders and merchants on our platform. We are beyond excited to partner with an experienced fintech investor like Sageview Capital, who recognizes the value that we have built and can help us execute our next phase of growth. We are also appreciative of the continued support from our existing investors, several of whom are great business partners on our mission to re-intermediate financial institutions into the digital lending process at the point of sale.”
– Andy Turner, LoanStar CEO
“Sageview partners with proven companies that leverage disruptive technologies and that have an intimate understanding of their customers’ business challenges and objectives. LoanStar clearly excels in all these regards as a unique software provider in the embedded lending market. We were drawn to the unique product design and go-to-market approach of LoanStar and believe that Andy and Craig have put together the right team to develop this business into an industry powerhouse.”
– Scott Stuart at Sageview
