Lines of credit are a lucrative product. According to the Consumer Financial Protection Bureau, U.S. consumers alone pay $120 billion in credit card interest and fees each year. Given the revenue opportunity, it’s no surprise that there is continued interest from both startups and established companies in providing credit-based products. But challenges stand in the way, including – but not limited to – complying with local laws and regulations and modeling credit risk.
Enter Noble, an alleged solution in the form of a platform that allows companies to build credit-based products such as credit cards and buy services now and pay later with tools without code. Founded by WeWork veterans, Noble enables customers to connect data sources to create custom credit offers, and provides a rules-based engine to edit and launch credit models.
Emerging from stealth today, Noble announced the closing of a $15 million Series A round led by Insight Partners with participation from Cross River Digital Ventures, Plug & Play Ventures, Y Combinator, Flexport Fund, TLV Partners, Operator Partners , Verissimo Ventures, Interplay Ventures and the George Kaiser Family Foundation. The new money brings the company’s total raised amount to $18 million, prompting CEO Tomer Biger to tell ukbusinessupdates.com will open a new office and expand Noble’s portfolio to support additional use cases.
Biger and Noble’s CTO, Moran Mishan, collaborated at WeWork to build an insurance infrastructure to screen and assess tenants’ creditworthiness. Prior to WeWork, Biger was the product manager responsible for the insurance infrastructure of business-to-business (B2B) lender Behalf, while Mishan was a software engineer at Woo.io, an applicant sourcing platform.
“From these first-hand experiences, [we] saw how complicated it is for companies to build underwriting infrastructure and launch new credit-based products, Noble wants to change that,” Biger told ukbusinessupdates.com in an email interview. “[We allow] companies to launch additional products that their end customers want – access to credit.”
With Noble, businesses can access credit bureaus, banks, and income verification providers to decide which customers to extend credit lines to (e.g., loans and cash advances). The platform’s interface allows businesses to implement workflows that automatically approve, reject, or flag users for manual reviews, while at the back end tailoring the experience to a brand and reviewing underwriting data from a single view.
“This increases lifetime value, increases customer retention and could ultimately be a whole new revenue stream for businesses,” Biger claimed. “Noble enables … companies to do this quickly and efficiently without using a lot of internal engineering or product resources.”
Daniel Aronovitz, principal at Insight Partners, sees Noble’s primary customers as fintechs, software-as-a-service companies with financial offerings, and B2B marketplaces and wholesalers. It’s still early days, but he claims the company already has “dozens” of customers, including major fintechs, with “millions of dollars” in loans obtained through the Noble platform.
“With its strong product offering and impressive founding team, Noble has already acquired B2B and business-to-consumer customers across a variety of use cases,” Aronovitz said in an emailed statement. “Noble has created a platform for a credit underwriting infrastructure as a service, allowing any company to build its own credit products.”
But Noble is not unique in providing credit infrastructure. Fintech startup Alloy, which raised $100 million last year at a valuation of $1.35 billion, recently expanded into automated credit underwriting. Stilt raised $114 million in March to expand his credit offering. There are also companies like Final, which focus on credit products for small and medium-sized businesses.
For his part, Biger believes that the market is robust enough so that Noble does not risk being squeezed out. He’s not necessarily wrong — credit coming from the point of sale in the US is expected to grow from about 7% of unsecured credit balances (i.e., unsecured) in 2019 to about 13% to 15% of balances in 2023, according to to a McKinsey report. By 2023, the report expects players “pay in four” — that is, vendors like Klarna and Afterpay — to generate about $90 billion annually and generate about $4 billion to $6 billion in revenue.
Of course credit products don’t guarantee a profit – especially the ‘Buy now, pay later’ sector has suffered steep losses and recently lowered valuations. But Noble’s small but growing customer base proves that some companies are at least buying the sales pitch — and perhaps achieving some success.
“There are just too many challenges companies face when looking to build credit products, including compliance, debt financing and underwriting,” Biger said. “Noble’s mission is to remove these barriers and enable the inevitable shift of lending experiences from offline to online, in the same way that payment processing platforms have built the new payment rails that enabled the explosive growth of online payments over the past decade. .”