It’s not often we report on acquisitions in fintech. From my perspective this is because the industry is still relatively young despite some of the interesting innovation happening. A vast majority of traditional financial services companies are still figuring out their strategy to infuse tech into their businesses. More often, we see the successful companies continuing to raise rounds of financing. Today’s acquisition announcement though didn’t come from a traditional financial services firm, it was a fintech acquiring another fintech.
LendingPoint is a balance sheet lender serving the near prime segment. They have been around since 2015 and in a relatively short time they have established themselves as one of the leading players. They now have acquired LoanHero, a company operating in the point of sale space. LoanHero first came on our radar when they were selected as a finalist for PitchIt at LendIt in 2015.
Last year when we checked in with a number of PitchIt finalists, we learned that the company was in talks with national and regional banks which would be the key to scaling the business. According to the press release, LoanHero signed with hundreds of merchants across medical, dental, and home improvement. With the acquisition LendingPoint plans to accelerate their expansion into point-of-need and point-of-sale financing.
Tom Burnside, co-founder and CEO of LendingPoint stated:
LoanHero’s merchant platform is the perfect complement to our consumer portfolio. The combination of the two companies doubles our origination channels and current customer base and triples the number of consumers we can serve, with credit and payment solutions for folks with credit scores from 450 all the way to 850. We’ve been so impressed by the energy and talent of the LoanHero team, and we look forward to working with them to dramatically improve access to credit for a large and underserved segment of consumers and merchants, whenever they need it.
Combined the companies have issued almost 70,000 loans totaling $500 million.
The point of sale space is fascinating and is a vertical that has led to some very interesting businesses. One concern for many online lenders is high customer acquisition costs and in point of sale finance that challenge can be mitigated since acquisition of customers is primarily through partnerships with merchants. It’s going to be interesting to see where LendingPoint goes from here as they expand their product offerings.