Canapi Ventures, co-led by Live Oak Bancshares’ CEO James “Chip” Mahan, announced it has participated in a $50 million equity financing round by San Francisco-based Nova Credit.

Although Canapi was described in an announcement by Nova Credit as a “major participant” in the capital raise, the amount of Canapi’s investment was not disclosed.
 
Nova Credit would seem to fit Canapi’s investment mission, which is to provide funding to early- to growth-stage financial technology companies that offer innovative alternatives to what Canapi terms “outdated business models and technologies.”

Founded in 2016 to address the need to help immigrant entrepreneurs get access to sources of financing in the U.S., Nova Credit works to make credit portable across borders.

With the permission of a customer, the company will buy that person’s credit report from foreign credit bureaus and translate the data into a U.S.-equivalent score. The information is then formatted through Nova’s proprietary CreditPassport.

The new round of financing will be used to “significantly expand Nova's global reach and mission to support newcomers from around the world,” company officials said in the release.

Nova Credit had raised $4 million in seed money and an additional $16 million in its Round A financing round in prior years.

In October, Nova announced a partnership with American Express, according to the release. American Express uses Nova Credit to obtain credit reports from Australia, the U.K., Mexico, Canada and India.

In a blog post on Canapi Ventures’ website, officials explained their decision to invest in the young fintech company.
 
“Immigrants are a vibrant part of today’s economy and play a significant role in fostering innovation globally,” the post states. “In fact, more than 40% of Fortune 500 companies and more than 50% of $1B+ startups were founded by first-generation immigrants or their children.

“Unfortunately, many newcomers face a common barrier that many of us take for granted – access to basic financial products, cell phones or utilities. At its core, the issue is a data problem. In a world where automated credit scoring systems like those developed by FICO have become a fundamental determinant of financial success, these newcomers can be locked out.”

Even if an immigrant entrepreneur has significant credit and assets in his or her home market, that data is hard to transfer to financial institutions in this country, the officials wrote, adding that cross-border data transfer problems are global.

Canapi Ventures officials call Nova’s solution to the problem “elegant.”

Canapi’s investment comes a month after it announced a recent capital raise of $545 million. This is its second investment since the venture fund’s inception; the first, announced last April, was in Built Technologies, a fintech company focused on construction lending.  

Canapi Ventures is advised by Canapi Advisors LLC, a wholly-owned subsidiary of Live Oak Bancshares. In addition to Mahan, it is led by Gene Ludwig of Promontory Interfinancial Network.