December 2, 2015
Lending-as-a-service provider Mirador has landed $7 million in its Series A round of financing. The investment was led by Core Innovation Capital, with participation from Nyca Partners and Jump Capital. Initial seed investors Collaborative Fund, Wicklow Capital and Crosslink Capital also followed on in this round. The year-and-a-half-old FinTech company intends to aggressively add more financial institutions to their online lending platform and expand the Oregon-based product development team.
OnDeck Capital Inc., Kabbage Inc., Lending Club Inc. and other lending startups have launched products that not only help borrowers but also help in lowering operating costs through the use of technology. This model fits borrowers who want quick access to cash at good interest rates.
All of these startups have developed technology that pulls digital exhaust like customer reviews from Facebook & Twitter along with bank statements, credit scores and other traditional financial records into an algorithm that quickly and more accurately examines applicants and other data points for assessing the risk of a loan to an institution.
Mirador Financial Inc. has developed similar technology, but has a different strategy; its customers are the very banks, credit unions and nonprofit lenders its competitors are seeking to disrupt.
Trevor Dryer, Co-founder & CEO of Mirador Financial, estimates that MPLs approve about 30% of the loan applications they receive while CUs and banks approve 18% to 19%.
The Joint Small Business Credit Survey Report cited that in 2014, about 18% of small businesses stated they applied for credit from online lenders and that this figure is projected to keep increasing in the coming years.
Dryer suggested that the best way CUs could respond to any potential threat posed by MPLs would be to aggressively upgrade their technological and software capabilities.
Founded in 2014, Mirador is a cloud-based borrower application that does not require integration with a lender’s legacy systems. A custom branded online experience streamlines the way borrowers get started and can deliver instant pre-approvals to those that meet an institution’s specific lending qualifications. Credit reports, tax transcripts, account statements and financial records are all collected directly from electronic information services, the borrower’s bank and online accounting systems. The platform generates a complete loan file, including a detailed credit memo plus a unique risk summary generated from thousands of rich data points from non-traditional sources to further inform a lender’s underwriting. A platform API provides for optional integration with a lender’s core systems. The digital workflow eliminates paperwork, reduces costs and drastically shortens the entire time required to make a loan.
Small businesses in the United States carry nearly $700 billion of small-dollar loans, borrowing over $200 billion each year. But even in a year that saw the US Small Business Administration set an all-time record for lending and the entrance of dozens of new online lenders and alternative finance companies focused on lending to SMBs, it is estimated that at least a $70-billion funding gap remains in small business financing. Mirador aims its services at these small businesses.
Mirador is not a direct lender. Instead, they partner with traditional financial institutions to provide the technology necessary to compete against online marketplace lenders without a heavy investment in software development or additional infrastructure.
Fifteen financial institutions currently use Mirador's software. Recent lenders to select the company’s solution include Sno Falls Credit Union, NY Business Development Corporation, and Pacific Continental Bank. The company is also endorsed by the Oregon Bankers Association and is an innovation partner of the Northwest Credit Union Association.