Rising Fintech LoanStar Secures US$28m in Growth Equity

LoanStar Technologies, a rising fintech firm focusing on embedded lending, has reached an agreement to raise around US$28 million in growth equity from a group of strategic investors.

The funding comes in the form of approximately US$20m from Sageview Capital, with the remainder from a mix of new and existing partners including Launch Credit Union, TruMark Financial Credit Union, Ben Franklin Technology Partners and Monarch Strategic Advisors.

LoanStar plans to use US$12m of the funding round—which closed in January—to expand its sales and marketing organisation, continue investment into its market-leading technology platform, deepen strategic partnerships and strengthen its balance sheet in anticipation of future growth opportunities. 

The company expects to close on the remaining amount, which will be used to repurchase shares from early investors, in the next two months.

“This is an exciting milestone for LoanStar and allows us to take advantage of the current state of the lending market, where the unique characteristics of our technology offer a differentiated value proposition to both the lenders and merchants on our platform,” says Andy Turner, CEO at LoanStar.

“We are beyond excited to partner with an experienced fintech investor like Sageview Capital, which recognises the value we’ve built and can help us execute our next phase of growth. We also appreciate the continued support from our existing investors, several of which are great business partners on our mission to re-intermediate financial institutions into the digital lending process at the point-of-sale.”

LoanStar: A pioneering force

Established by founders Andy Turner and Craig Haynes in 2015, LoanStar stands out as a pioneering force in banking technology, focusing on embedded lending services.

The business provides a comprehensive suite of proprietary software, APIs and LOS integrations that enable embedded lending by connecting lenders and merchants to accelerate the adoption of digital lending at the point-of-consumption.  

Its MerchantLinQ platform empowers lenders to provide instant point-of-sale finance through local merchants, offering control over loan underwriting and branded products. 

The recent rise in interest rates has made lending challenging for many non-depository fintech companies. By partnering with banks and credit unions, LoanStar is uniquely positioned to drive volume in the current and any future cyclical environments with a broad portfolio of lending products that re-intermediate financial institutions into digital lending.

Powering business growth

This latest funding for LoanStar comes at a time of significant momentum.

In 2023, the company reached US$1 billion in total funded loan volume and added more than 1,000 active merchants and 13 new lenders, taking the total number of merchants partnered lenders on the platform to 7,000 and 55 respectively. 

LoanStar is enabling lenders and merchants of every size to elevate their brand, expand their customer base and power new business growth through embedded lending and point-of-sale financing.

The vast majority (92%) of loans created through the LoanStar channel have resulted in a new customer for financial institutions, which have reported around US$10 of expanded revenue for every US$1 in lending activity through cross-sales of products to the consumer and merchant.

“Sageview partners with proven companies that leverage disruptive technologies and have an intimate understanding of their customers’ business challenges and objectives,” adds Scott Stuart, Founding Partner at Sageview. 

“LoanStar clearly excels in all these regards as a unique software provider in the embedded lending market. We were drawn to the unique product design and go-to-market approach of LoanStar, and believe that Andy and Craig have put together the right team to develop this business into an industry powerhouse.”

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