Ahead of Martin Luther King Day, Mendoza Ventures said it has closed its third fund.
The female- and Latinx-founded fintech, artificial intelligence and cybersecurity venture capital firm landed a $100 million fund that Mendoza Ventures said it will invest in early growth stage startups with a focus on diverse teams.
The initial close was led by Bank of America, and included Grasshopper Bank and other investors.
“As a female- and Latinx-founded and -led venture fund, we are uniquely positioned to fund the series A to B for diverse or female led founders,” Mendoza Ventures general partner Adrian Mendoza said in a news release. “This is one of the very few diverse-led VC funds that are funding at this stage especially in a market where capital is shrinking for diverse founders.”
Mendoza Ventures explained Fund II’s capital allocation of 80% to underrepresented founders — defined as female, immigrant, person of color or LBGTQ — underscores how these commitments have ripple effects from diverse founders to impacting diverse communities through fintech.
The firm added Fund III breaks the $100 million “glass ceiling” for female and diverse GPs in Venture Capital and fill in the early growth capital gap for diverse and female-led startups.
“Bank of America’s investment into Mendoza Ventures underscores our ongoing efforts to address the persistent gap in access to growth capital for minority- and women-led businesses,” said Renee Nalbandyan, director in global corporate strategy at Bank of America.
“Mendoza Ventures is at the forefront of supporting innovation and driving diversity not only within venture capital, but also across the fintech industry, and our investment is a step towards creating positive change and more economic opportunities across the country.”
The news release also mentioned the anchor funding comes from Bank of America as part of its commitment to advancing racial equality and economic opportunity, of which more than $400 million is allocated to investments in mission-focused venture funds.
Carputty, a fintech company out to modernize both auto financing and vehicle ownership, announced the closing of a $12.3 million Series A funding round.
This raise, co-led by Fontinalis Partners and TTV Capital, brings Carputty’s total funding amount to $21.96 million.
Additional investors include Porsche Ventures and Grand Ventures, as well as Kickstart Fund, who led the company’s seed round.
“We created Carputty to bring transparency to auto financing and empower car owners to make more informed decisions about their vehicles, just like they would with their other investments,” Carputty co-founder and CEO Patrick Bayliss said in a news release. “We are proud to be supported by investment teams with deep experience in automotive and fintech and thrilled that they embrace our vision.”
With the Carputty Flexline, consumers and businesses get flexible lines of credit that can be used to finance any vehicle. Flexline accounts have a maximum of $250,000 and can be used to purchase new or used vehicles directly and can also be used to buyout leases or refinance existing installment contracts.
Once established, members always have financing in place for as long as they want or need it, powered by the company’s end-to-end data-driven platform.
“While it’s critical to deliver a great experience for our members, we built our software with an equally robust feature-set to support and scale with Carputty’s ever-expanding network of partners,” said Joshua Tatum, co-founder and chief product officer. “The platform can be embedded seamlessly with a broad variety of businesses who could benefit from our end-to-end capabilities – from point-of-sale all the way through to servicing.”
Chris Cheever is founder and partner at Fontinalis Partners.
“Unlike student loans or mortgages, where the consumer experience has undergone significant innovation in recent years, traditional auto-financing remains cumbersome, opaque and expensive. Carputty stands to change that, and it’s building a fundamentally new consumer solution for an automotive market that has $1.5 trillion in outstanding loans and 276 million registered cars,” Cheever said.
“We are incredibly excited to support Patrick, Joshua and the entire team as they revolutionize the complete lifecycle of automotive asset management,” Cheever continued.
Over the past year, Carputty has seen an 850% increase in members resulting in more than 14,000 members to date, a 3,100% increase in Flexline dollars approved, and a 1,200% growth in individual contracts.
The company said the new capital will be used to drive further growth through accelerated platform development, expanded business collaborations with both existing and future partners, and expedited commercialization and adoption throughout the U.S.
“The auto finance market is overdue for broad innovation. Patrick, Joshua and the Carputty team impressed us with their vision to bring transparency and accessibility to the car buying process,” said Sean Banks, partner at TTV Capital. “Carputty’s platform is unique in its ability to simplify car ownership through digitally managed payments and services.
“We see a massive opportunity for Carputty to re-engineer the auto finance market by providing a flexible line of credit that is based on the consumer’s financial standing, not the value of the transaction,” Banks went on to say.
Lendbuzz began November by announcing that it closed a $150 million credit facility with J.P. Morgan.
The growing fintech company making headway in the auto financing market using artificial intelligence and machine learning algorithms said this is the second credit facility with the investment bank. In January, J.P. Morgan extended a line of credit to Lendbuzz.
And in April, J.P. Morgan served as an underwriter on a broadly syndicated ABS transaction with LendBuzz.
Company leadership said the $150 million credit facility timing and terms — coming during tremendous shifts in both the automotive retail and financial industries — are advantageous to Lendbuzz and its mission to develop innovative technologies that provide underserved consumers with better access to credit.
“We are delighted with the confidence J.P. Morgan has shown in Lendbuzz by entering into this facility. This relationship is an important part of our growth strategy, expanding our capacity and ability to originate loans that unlock the power of financial opportunity for a growing number of consumers and dealerships,” Lendbuzz CEO Amitay Kalmar said in a news release.
Kalmar added that this new credit facility will help expand the number of applicants served by the company’s AI-based auto finance platform, one that can enable Lendbuzz to assess the creditworthiness of consumers with thin or no credit history.
This summer, Kalmar described the characteristics of artificial intelligence, machine learning and algorithms that intrigue him most during an episode of the Auto Remarketing Podcast, which is available in the window below.
This week, DriveItAway Holdings announced that it has received confirmation from the Financial Industry Regulatory Agency (FINRA) that the pending company name change and trading symbol change request to DriveItAway Holdings and DWAY has been approved.
Accordingly, in a development that became effective on Monday, the company’s common stock will trade on the over-the-counter market operated by OTC Markets Group, Inc. as follows:
• New name: DriveItAway Holdings Inc.
• New symbol: DWAY
This approved corporate action was related to the company’s previous amendment to its articles of incorporation on April 18, whereby the company’s corporate name had been changed to DriveItAway Holdings Inc. from Creative Learning Corp.
The company said in a news release that this recent change effectuated by FINRA will eliminate confusion in the marketplace for existing and future stockholders.
Company leadership highlighted this corporate action opens a new chapter, as it allows DriveItAway to shed the connection to the prior business and focus on our corporate mission, which is solely targeted at providing the technology platform and program for manufacturers and dealers to enable all consumers, regardless of credit score or cash down payment, to drive and buy the vehicle of his/her choice with its subscription to ownership program.
Focused in particular on sustainability, DriveItAway’s “Drive Now, Decide Later” program can enables “EVs for everyone” as it is designed to alleviate the largest barriers to mainstream electric vehicle adoption — the higher cost of EVs and range suitability.
Anyone on the DriveItAway program can drive his or her vehicle for an unlimited time before making a long-term financial commitment and build dollars toward the purchase while driving.
“I am proud to have a role in completing this corporate action as we work to make driving and owning an EV truly affordable for all,” DriveItAway Holdings founder and CEO John Possumato said in the news release.
“If you want to try out an EV or any vehicle for an unlimited time before making a long-term financial commitment, regardless of credit score or cash down, let us show you DWAY,” Possumato added.
New research from Bain & Company showed that while high-growth technology companies have been hit the hardest by recent market shifts, 77% of companies are expected to either increase their technology budgets in 2023 or keep it the same.
Bain’s third annual global Technology Report released on Monday also indicated that despite the current economic climate, technology will remain a critical investment and as a central source of productivity across global businesses.
“Value is largely determined by innovation and revenue growth and today the technology sector has been hit hard,” said David Crawford, leader of Bain & Company’s global technology practice. “Still, CIOs and CTOs are increasing their technology spending. Increasingly business leaders view technology as an investment in driving productivity, speed and competitiveness even in difficult budget environments.”
As companies consider ways to leverage new technologies, Bain explained through a news release that they do so within the context of unprecedented geopolitical, macroeconomic and innovation trends.
Some of the themes explored in Bain’s latest report include:
US-China decoupling accelerates, shockwaves spread
Bain pointed out that the separation of the world’s two largest economies is growing faster, wider and deeper than predicted.
As the U.S. heightens its regulatory oversight of Chinese companies, experts said China has since committed $1.4 trillion over five years to build strategic technologies and digital infrastructure domestically. This comes as the Chinese Internet moves further away from the global web and toward its local version.
Meanwhile, half of the CIOs and CTOs surveyed by Bain in June said that China’s zero-COVID policy has affected their business, and at least a dozen major U.S. technology companies have blamed the lockdown of Shanghai for missing quarterly revenue and earnings estimates.
“Untangling these markets is complex, and even with this year’s acceleration, will take time,” said Anne Hoecker, partner at Bain & Company and head of the firm’s Americas technology practice. “Companies must consider what investments they need to balance potential short-term shocks.”
As U.S.-China trade restrictions remain in place, Bain noted that the CHIPS for America Act, which establishes investments and incentives to support U.S. semiconductor manufacturing, independent R&D and the supply chain has since taken effect, though, China’s Semiconductor Manufacturing International Corp. is on the U.S. Commerce Department’s entity list limiting the company’s access to key U.S. technologies.
When will the chip shortage end? When will my company get relief?
That’s what many technology executives are asking themselves as the global chip shortage continues.
According to Bain’s analysis, while some companies are starting to see relief this year, others may have to wait until 2024 or later before they start to recover. But even with recent investments and signs of improvement, that recovery period is expected to be uneven and is dependent on several wild cards that are out of executives’ control.
These include things like chip demand pull-back, shortages of extreme ultraviolet (EUV) lithography equipment (a bottleneck machinery needed by chip makers) and the current status of geopolitical frictions. Because of these limitations, Bain encourages tech companies to design products for flexible resilience and assess risks regularly:
“Leading companies proactively and continuously assess risks across their entire supply chain,” Hoecker said in the news release. “It is important to refine products to increase resilience, ideally beginning early in product development and before a supply disruption hits.”
Web3 and multiverse could rewrite the rules of user identity
Bain mentioned technology and telecommunications architectures continue to evolve as we accelerate into the data-centric era.
Experts predict a major new wave of content creation, technology and innovation will be unleashed around the metaverses and web3 technologies.
Beyond the extraordinary investments already made by Microsoft, Meta, Google, Apple and Tencent, Bain said the ecosystem already boasts thousands of companies and more than $80 billion of start-up funding from venture capital, hedge funds, private equity and other investors.
Experts explained web3 and metaverse innovation intensifies battlegrounds in gaming, physics engines, digital twinning and simulations; parallel compute hardware, and enterprise uses for training, collaboration and productivity.
One of the emerging battlegrounds that will define future profit pools in web3 is the concept of identity, according to the firm.
“Identity is central to what many see as web3’s greatest opportunity: the chance to democratize the online experience, enable users to reclaim control of their data and open the door to mass customization. This approach will have important implications for other technologies, such as artificial intelligence (AI) and machine learning, that will be needed to manage the proliferation and complexity of data required to serve and track customers,” Bain said in the news release.
“Not to mention, investment in AI is growing rapidly, and nearly all technology providers say it’s becoming critical for gaining market share and building customer loyalty. Web3 can no longer be ignored,” the firm added.
Incumbents versus disrupters: The best defense is offense
Bain acknowledged traditional enterprise software companies face intensifying competition, but experts said they can regain their edge with a plan to fearlessly disrupt themselves.
More than 90 tech companies were recently surveyed by Bain, and nearly half of them said they lack a strong ability to identify disrupters in their core markets; nearly half also said they see disruptive threats to their company’s market share position as mild or not critical at all, and only 5% saw such threats as severe.
Despite disruptive trends, more than 75% of the largest venture capital investments in recent years went to IT infrastructure and industry-focused enterprise software companies, illustrating the potential for innovation.
Bain is reminding companies that the most successful organizations reject the legacy mindset, effectively monitor emerging business threats, invest in a clear R&D and M&A strategy, and fearlessly disrupt themselves.
The entire Bain report can be found via this website.
Bank Director’s 2022 Technology Survey, sponsored by CDW, delved into the technology concerns and challenges bank senior executives and board members face, and where they’ve been investing their resources.
And survey results showed that competitive pressures continue to alter the landscape for financial institutions.
Bank Director reported 81% of survey respondents say their bank increased its technology budget for 2022, reporting a median increase of 11% compared to 2021.
Still, banks acknowledged that leveraging technology to create a more competitive and efficient organization requires internal know-how, and almost half of responding directors and executives worry that their bank lacks an adequate understanding of emerging technologies.
Further, Bank Director discovered 45% say their bank relies on outdated technology.
“Almost half of the respondents point to big and superregional banks as significant threats — and that doesn’t account for companies like PayPal, Chime and others that are nipping at banks’ business,” said Emily McCormick, vice president of research at Bank Director.
“Bank Director’s 2022 Compensation Survey, conducted earlier this year, found technology talent to be in high demand. I believe we can see a direct connection between a need for in-house expertise and the industry’s ability to meet today’s challenges,” McCormick continued in a news release.
The 2022 Technology Survey indicated that most banks employ high-level executives focused on technology, particularly in the form of a chief information security officer (44%), chief technology officer (43%) and/or chief information officer (42%).
However, Bank Director pointed out that few institutions have a chief data officer or data scientists on staff — despite almost half of survey participants expressing concerns that the bank doesn’t effectively use or aggregate the bank’s data.
Bank Director highlighted six other key findings
—The competitive landscape: 56% of all respondents view local banks and credit unions as their top competitive threat, followed by big and superregional banks at 46%. One-third worry about competition from big tech companies such as Apple, while an equal number are concerned about competition from digital, nonbank business lenders.
—Hit-or-miss on digital applications: Nearly half of respondents say their bank has a fully digital process for opening retail deposit accounts, with larger shares representing banks over $1 billion reporting as much. Far fewer respondents report a fully digital process for retail loans, small business deposits or loans, or commercial loans.
—Generational divides: Just 25% of the directors and executives surveyed say their bank has the tools it needs to effectively serve Generation Z, and half believe their institution can effectively serve millennials. Eighty-five percent say as much about Generation X, and 93% say this of baby boomers.
—All-In on the cloud: 85% say their bank uses cloud technology to generate efficiencies internally; 66% use application programming interfaces (APIs), which allow different applications or systems to exchange data. Robotic process automation (32%) and artificial intelligence or machine learning (19%) are far less commonly used.
—New frontiers: Three-quarters say their board or leadership team has discussed risks or opportunities related to cryptocurrency or digital assets in the past 18 months. Sixty-four percent say the same of banking as a service (BaaS), and 69% say that of environmental, social and governance issues. Cannabis, on the minds of 58%, was more commonly discussed at banks under $5 billion of assets.
—Views on collaboration: More than half of respondents view technology companies as vendors only, as opposed to collaborating with or investing in these firms. Thirty-nine percent, primarily representing banks over $1 billion in assets, say their institution has collaborated with technology providers on specific solutions. Twenty percent have participated in a venture fund that invests in technology companies, and 11% have directly invested in one or more of these companies.
Bank Director noted the survey includes the views of 138 independent directors, chief executives, chief operating officers and senior technology executives of U.S. banks below $100 billion in assets.
Full survey results can be found via this website.
Blinker and Flagship Credit Acceptance now are collaborating to leverage their collective resources to gain more share within auto financing.
The automotive e-commerce technology and services company and auto-finance provider managed by funds controlled by Perella Weinberg Partners Capital Management (PWPCM) and sub-advised by an affiliate of Innovatus Capital Partners (ICP) announced they have completed a Series C capital raise with Flagship as the sole investor.
The companies highlighted Flagship’s direct platform will provide multiple options to manage and improve finances directly to consumers, diversifying Flagship’s offerings through artificial intelligence and digital financing.
Flagship will leverage Blinker’s vertically integrated platform to facilitate the entire digital financing process.
“This partnership supports our mission to improve the lending experience. The investment in Blinker will allow Flagship to provide accessible lending across our expanding product set while adding significant operational efficiencies,” Flagship Credit Acceptance chief executive officer Bob Hurzeler said in a news release.
Blinker executives added that they’re powering the future of automotive e-commerce by providing end-to-end digital transactional transactions that enable finance companies, credit unions and fleet management companies to deliver solutions that streamline the contract origination, aftermarket sales and fleet management disposal process.
Blinker founder and CEO Rod Buscher said, “We are excited for Flagship Credit Acceptance to launch a direct-to-consumer experience that leverages machine learning, vision technology and self-service loan origination powered by Blinker’s technology.”
Blinker president Danny Martinez added, “As we continue to build out our partnership portfolio within the automotive sector, this is a unique opportunity to deploy Blinker’s proprietary loan origination solutions with a trusted partner.”
Tenet recently made progress on multiple financial fronts.
First, the company unveiled a new financial solution intended to lower the cost of ownership for electric vehicles “that rejects standard car depreciation models and values EVs as clean collateral.”
Tenet also plans to expand into zero-emission home upgrades to help consumers better achieve their financial and sustainability goals.
And to make it all possible, the company also announced that it has raised seed funding of $18 million, led by Human Capital and Giant Ventures with participation from Breyer Capital, Global Founders Capital, Firstminute Capital, and prominent angel investors including Michael Tannenbaum, Gokul Rajaram, Michael Ovitz, and more.
Tenet explained in a news release that the company sees traditional auto financing options not accounting for the long-term value that EVs can retain, “resulting in unnecessarily high monthly payments and a disconnect between the smart financial decision and the sustainable one.”
By leveraging EVs’ residual value, Tenet has looked to redefine the terms of a traditional auto installment contract and create an innovative financial solution that will drive even wider adoption of zero-emission technologies.
“With inflation hitting its highest levels in two generations and people paying record prices at the pump, the demand for EVs will continue to grow exponentially,” Tenet co-founder and chief executive officer Alex Liegl said in the news release. “We’ve created a new model for EV financing that incentivizes consumers to adopt new zero-emission technology and will continue expanding our offerings to support sustainable improvements for the entire home.
“We believe in change — putting more change in your wallet and changing the future of climate-positive financing,” Liegl added.
Tenet highlighted that its finance offerings include:
—Monthly savings: Customers can achieve financial goals without sacrificing sustainability goals by saving up to $200 per month.
—API-enabled decisioning within seconds: Tenet’s financing technology allows for immediate underwriting decisioning for consumers and embedded financing options with partners.
—Tracking financial and CO2 savings: Optimize your EV’s efficiency, track your mileage and battery health, and manage payment settings from anywhere with the Tenet dashboard.
That trio of offerings and the company’s ambitious objectives seemed to have impressed the investment community.
Tenet said the seed funding will be used to accelerate growth, grow its team and roll out additional products to better serve its climate and savings-minded customers.
“We’ve been inspired by Alex’s ambitious vision for building the next generation fintech company that rewards consumers for decarbonizing their lifestyle,” Human Capital co-founder and president Baris Akis said in the news release. “We are thrilled to support Tenet as they build and scale the right team to drive their journey."
Cameron McLain, co-founder and managing partner of Giant Ventures, added, “Tenet is reimagining the financial system to accelerate the adoption of climate-positive products. We are excited to work with Tenet as they unlock scalable access to high-quality ESG assets for their institutional investor partners.”
To learn more, visit www.tenet.com.
Allied Solutions is continuing its investment push into technology firms outside of its organization.
The provider of insurance, lending, risk management and data driven solutions to financial institutions recently announced an investment in Rate Reset, a Washington D.C.-based technology company.
Rate Reset offers a digital selling platform to help financial institutions enhance their customer experience by shifting the power of underwriting decisions into the hands of the consumer, while boosting productivity and efficiency for the finance company.
“This is our fourth technology investment in the last 18 months and a key piece we needed to advance Allied’s aggressive digital growth strategy,” Allied Solutions vice president of digital and data strategy Michael Bryan said in a news release.
Rate Reset’s digital selling platform has demonstrated success in the financial institution space and combined with our data science capabilities and robust product offerings, we can expand the digital solutions we provide to our clients and ultimately grow their business and bottom line,” Bryan continued.
Allied Solutions mentioned the investment officially closed on June 3. It will occupy a seat on the board of directors for Rate Reset.
“Allied Solutions is a proven innovator in financial services. As Rate Reset initiates its next phase of growth, we are pleased to expand our existing strategic relationship,” Rate Reset chief executive officer Keith Kelly said.
“Through this new strategic investment, we will leverage the many strengths that Allied and its affiliates bring to the industry to capitalize on exciting new opportunities and advance a shared vision for Rate Reset’s future,” Kelly went on to say.
In March, FINN expanded its vehicle subscription offering to western Pennsylvania, Massachusetts, Connecticut and Washington D.C., following its initial U.S. rollout in December.
And now the company has additional financial resources to expand more.
Last week, FINN announced it has closed $110 million in Series B funding led by Korelya Capital along with Keen Venture Partners, Climb Ventures, Greentrail Capital and Waterfall Asset Management.
Existing investors such as White Star Capital, HV Capital, Heartcore Capital, UVC Partners, and Picus Capital also participated in the round, according to a news release.
FINN said it plans to use the funding to support its U.S. expansion and to strengthen its leadership position in Europe.
FINN also announced the opening of its U.S. headquarters in New York City. FINN is currently active in New Jersey, Pennsylvania, Massachusetts and Connecticut and will offer its vehicle subscriptions in California and Florida later this year.
The company said it is now valued at more than $500 million.
This financing comes on the heels of up to $200 million in asset-backed security (ABS) funding the company raised for U.S. market expansion from Waterfall Asset Management in March.
With its $520 million EU ABS raised from Credit Suisse and Waterfall Asset Management in December 2021, this new financing brings FINN’s total capital raised to $830 million within the past six months.
Besides supporting its growth, FINN said will use its funding to advance its core technology, and accelerate hiring across its global teams.
“We are honored to welcome such experienced investors on board. With this fundraising, we can bring our all-inclusive car subscriptions to the mass market,” FINN chief executive officer and co-founder Max-Josef Meier said in the news release. “What motivates us further, is that our flexible and easy to book car subscriptions serve as a catalyst for electric vehicles.
“One-third of our fleet is already fully electric, and the share is quickly growing. With the new investment, we bring not only car subscriptions, but also electric vehicles to a large audience,” Meier continued.
Additionally, FINN announced that former French Minister of Digital Economy and Culture, Fleur Pellerin, has joined its board of directors.
Pellerin is the CEO and founder of Korelya Capital and brings to FINN her extensive experience in scaling fast-growing technology companies, vast financial network and significant experience in the automotive industry.
“I was deeply impressed by FINN’s subscription model, as the car industry has yet to be transformed by the e-commerce revolution and subscription economy to become more sustainable. FINN’s positioning to build the global category leader for car subscriptions further intrigued me,” Pellerin said.
“What we as Korelya also liked about FINN was the depth and quality of its team. As Korelya consistently seeks to invest in category leaders that can defend their leadership over a long term, our investment in FINN is a perfect fit,” she added.
FINN said is on track to grow to 30,000 global subscribers this year.
“As consumers shift from offline to online and favor flexibility and ease-of-use over ownership, FINN provides the ideal solution to the evolving automotive customer,” the company said. “Through its strong, direct partnerships with the most popular automotive manufacturers, FINN provides customers the unique ability to subscribe to a broad selection of new cars with no hidden fees and no down-payments — the price online includes insurance, maintenance, roadside assistance, and various term options.
“Its partnership with electric vehicle automakers also helps accelerate the transition to electric cars by allowing new users to test drive them through a subscription before they purchase,” the company went on to say.
Pinsent Masons LLP acted as legal advisor for Korelya Capital for this transaction.
