Ken Chenault, the former head of American Express, is throwing his weight behind a startup that gives credit scores to immigrants who have a hard time renting an apartment and getting other services when they land in the U.S.
According to a report in the Financial Times, Nova Credit is one of a new crop of Silicon Valley companies that want to overhaul the financial system and fill the holes in it. When people overseas come to the U.S., they have a hard time getting credit cards and loans because they don't have a credit history. Even those that have high incomes and strong credit histories from their countries have a hard time renting an apartment or getting a mobile phone in the U.S.
The Financial Times reported that Nova Credit has received funding from General Catalyst, the venture capital firm Chenault became chairman and managing director of in 2017. Other investors in Nova Credit include Index Ventures. Combined the two are investing $16 million, giving the startup a valuation of around $80 million. In order to give credit scores to immigrants, Nova Credit pulls the credit from the country of origin and then transfers the information into a U.S.-based credit score that lenders can utilize, noted the report. “The company has the potential to bring millions of new consumers to the financial services industry and to create new banking and credit opportunities for people who, up until now, have been left out of the system,” Chenault said in the report. Businesses that use Nova Credit already include MPower, which is a student lender, and First Advantage, which does background checks for businesses.
Nova Credit isn’t the only startup going after foreigners. A startup in the United Kingdom called Marshmallow has raised $1.2 million in seed funding as it tries to use digital technology to lower auto insurance costs for foreign-born drivers there. The new capital comes amid a wider push in Europe to bring more standardization to the vehicle insurance industry. Marshmallow, its funding from Passion Capital and Investec, will launch later this year, according to recent reports (June 7). The goal of the company is to build “a product for immigrants/expats who are poorly served by the car insurance market,” the report said. Those products aim to “use better data and technology to provide more fairly priced insurance coverage to non-U.K. nationals. To that end, the startup is starting out with car insurance for foreign-born drivers.”