Disruptive lending platform puts credit unions in competitive position to dominate local markets

DES MOINES, IA (April 17, 2018) — Fintech startup LenderClose today announced it has secured the funding it needs to add 25 employees to the fast-growing company. A credit union service organization (CUSO), LenderClose launched in 2016 when lending technology pioneer Omar Jordan saw an opportunity to upend the underwriting process.

Since its launch in March 2016, LenderClose has added 100 lenders to its client list. February 2018 marked a record month of revenue for the startup, followed by another record month in March. That same month, the startup became a CUSO with direct investment from two Iowa credit unions, Collins Community Credit Union and Serve Credit Union. It also added two key executives to its team: Chief Operating Officer Ben Rempe and Vice President of Business Development Brian Storey. The pair brings a combined 30 years of financial services experience to LenderClose.

LenderClose’s latest round of funding was led by Next Level Ventures, which is a venture capital firm that invests in growing companies based in Iowa. Its portfolio includes fintech firm Dwolla, which also counts credit unions and CUSOs among its early investors.

“This team has done some pretty impressive things with limited resources,” said Scott Hoekman, co-founder and principal of Next Level Ventures. “This investment is gas in the tank that will allow LenderClose to do much more. LenderClose has a product that works, clients who have validated the solution and a growing team supporting the vision for rapid scale. You put more money alongside that momentum, and you’ve got something pretty exciting.”

“The digital transformation of the credit union industry hinges on the availability of technology that streamlines all those behind-the-scenes processes that can get in the way of exceptional member service,” said Scott Frost, chief lending officer of Collins Community Credit Union. “Megabanks see the opportunity, too, and are snatching up fintechs and digital platforms, vertically integrating them in a way that makes them completely inaccessible to community lenders. Because we are a part of a collaborative movement, we feel a calling to help make this technology accessible to as many other community lenders as possible. That’s why we’ve chosen to invest in, support and advocate for LenderClose, which we see as a digital game changer for community lenders.”

The LenderClose platform is a loan officer’s digital hub. With API connections to every vendor it takes to originate a mortgage or HELOC, LenderClose gives credit unions immediate access to a comprehensive suite of reports and services – from credit scores and flood determinations to notary signing and county recorder services. The result is a streamlined and vastly accelerated underwriting process, which is, according to Jordan, an increasingly essential capability for credit unions.

“Borrowers have always wanted a fast ‘yes’ from lenders,” said Jordan, who consistently led the nation in mortgage originations while serving as AVP, sales branch manager for Household Finance, now HSBC. He has since built and sold two lending technologies companies. “But that demand for urgency has been cranked to 11 today.”

Rempe added, “Consumers are used to getting what they want, how they want it, right now. Starbucks has your custom-ordered coffee ready before you even get there; Indochino has a made-to-measure suit on your doorstep in a couple days. Lenders understand expectations are changing, and they want to give borrowers that ‘yes’ right away. But, they have massive checklists that have to be addressed first. The LenderClose platform helps loan officers drive through the checklist, so they can deliver ‘yes’ faster than ever before.”

A positive and fast borrower experience is critical as market pressures increase. In Fannie Mae’s Q1 2018 Mortgage Lender Sentiment Survey, “competition from other lenders” set a new survey high for the fifth consecutive quarter as the key reason cited for lenders’ lower profit margin outlook.

Credit unions that have added LenderClose to their lending programs report significant improvements in their operations. Some even credit the platform with launching entirely new products for their institution’s lending effort.

“Our home equity program was essentially nonexistent prior to joining LenderClose,” said Billy Hernandez, chief lending officer of California Bear Credit Union. “Our core system wasn’t set up to take on home loan applications, and we were getting frustrated trying to satisfy a growing demand for these products from our members. Since adding LenderClose, we’ve had a tremendous amount of success with our home equity program. We’ve even hired a loan officer to keep up with the demand.”

Credit union leaders can see LenderClose up close at the NACUSO Network Conference on April 18 in Anaheim, Calif. Jordan and Rempe will demonstrate the platform to attendees of the event’s 2018 Next Big Idea Competition.

Dwolla, the Des Moines-based financial tech startup, announced the closure of a $12 million funding round, according to a blog post Monday morning.

According to the post, the round was led by Foundry Group, with participation from Union Square Ventures, Next Level Ventures, Ludlow Ventures, High Alpha and Firebrand.

In total, Dwolla has raised more than $50 million since launching in 2010.

Ben Milne, CEO and founder of Dwolla, said the funds will be used to meet growing capital requirements as a financial platform as well as expanding the team at Dwolla.

Milne said Dwolla has more than 40 openings to fill this year.

“As we build our team, we do so knowing that the best teams are built by the inclusion of diverse ideas, experiences, and people,” Milne writes.

An Eastern Iowa pharmacy business has raised $2.5 million in investment funding to push forward its prescription delivery and management system.

SmartScripts, based in Washington, announced the investment, its first large round of fundraising, on Monday. The retail pharmacy has worked to develop a better way to package prescriptions for customers who need to take more than one type of drug a day.

“Our goal is to really simplify the process of people taking prescriptions,” company CEO and co-founder Todd Thompson told The Gazette.

Thompson, who has been in the pharmacy business for 20 years, said customers who take more than one prescription can face complicated schedules with restrictions on when and how patients need to take their medication.

“No one gets that right by the time they get home. It just ends up costing the system money, costs (the patients) issues with their health,” he said.

Instead of sending patients home with multiple pill bottles, Thompson said SmartScripts uses an automated process to package prescriptions in individual pouches based on when patients need to them. SmartScripts then delivers those packages directly to customers.

“Instead of you making four, five, six, 10 trips to the pharmacy, we synchronize them so everything is filled on the same day, once a month, and then we package them in that system through automation,” he said.

Rural Vitality Funds, an investment fund under the Iowa Farm Bureau Federation, was SmartScripts’s lead investor.

“We could not be more excited to being working with SmartScripts as they continue to tackle the large problem of prescription medication adherence,” Adam Koppes, Iowa Farm Bureau investment manager, said in a statement.

Des Moines-based venture capital fund Next Level Ventures and the Cedar Rapids-based Iowa Startup Accelerator also invested.

Thompson said SmartScripts also has joined the Startup Accelerator program.

SmartScripts will use the funding to hire sales staff and build software to better connect with customers. The company also plans to open a new office in Iowa City with three full-time employees, Thompson said.

SmartScripts currently has 10 full- and part-time employees. During the next 12 to 18 months, Thompson said the company expects to have more than 50.

The nation’s retail pharmacy industry is dominated by a few giants, such as Walgreen’s and CVS. Thompson said his company can compete, in part, because it deliver prescriptions and doesn’t rely on in-store sales.

“Our model isn’t necessarily to bring people into a store. My thought is, when you don’t feel well, the last thing you need is to go out and drive to a pharmacy to pick something up,” he said.

Amazon.com has looked at getting into the prescription delivery business. The Wall Street Journal reported in October Amazon was exploring whether to do so.

“It takes a piece of the market share, but the beauty of this business is, there’s always room for people who offer a superior product and service,” Thompson said of his own company.

Retail pharmacies in the United States sold more than $379 billion worth of prescription drugs in 2016, according to the Kaiser Family Foundation. In Iowa, those sales were more than $3.6 billion last year.

The pharmacy business runs in Thompson’s family. Thompson is the stepdad of Roby Miller, founder of telepharmacy company Telepharm, which was acquired by Cardinal Health last year. Miller does not have an official role with SmartScripts, Thompson said.