Credit cards have traditionally been the only option when it came to paying for services that required some form of financing but that’s in the process of changing now that Sunbit has shaken up the status-quo through its fintech platform that transforms the process of financing in-store purchases. Sunbit looks out for the consumer by helping people across the credit spectrum get financed for non-discretionary purchases. In less than 30 seconds, approximately 90% of applicants are approved for financing at competitive rates; introducing a new form of flexibility.
LA TechWatch chatted with founder Arad Levertov about the bigger social cause behind Sunbit and its recent fundraising round, which brings the company’s total funding to $54M across four rounds.
Who were your investors and how much did you raise?
We announced a $26M Series B round of equity funding. The founding partner of Zeev Ventures, Oren Zeev, who is known for investments in Audible, Houzz, Chegg, TripActions, Tipalti, and others led this round, with participation from prior investors Group 11 (formerly SGVC), Chicago Ventures and other existing investors. The investment will be used to accelerate the adoption of Sunbit across a wide range of retail markets, such as automotive service drives, dental, eyewear, and veterinary services.
Tell us about the product or service Sunbit offers.
We have a financial technology platform that transforms the process of financing in-store, in-person purchases for consumers across the credit spectrum. A lot of financial tech companies say they use machine learning, but it’s always for underwriting; we are unusual in that we use it across sales, operations, and underwriting to bring fair financing to 90% of Americans – likely the highest approval rate in the industry – in under 30 seconds.
Our service is offered in more than 1,500 retail locations across the US and focuses on non-discretionary, in-person purchases (such as a car repair, a pair of glasses, or dental work) where credit cards are usually the only options. The rates that customers get through our platform are often the best rates that the customer will ever be offered.
What inspired you to start Sunbit?
I’ve been there; as an immigrant, and like many young people with poor access to credit, I was denied financing at the point of sale. I understand how humiliating it is to be denied in public, after spending time filling out a laborious application, in front of your wife and kids.
I’ve been there; as an immigrant, and like many young people with poor access to credit, I was denied financing at the point of sale. I understand how humiliating it is to be denied in public, after spending time filling out a laborious application, in front of your wife and kids.
That’s why, in part, I founded Sunbit. No one should have to do without necessities. This recent funding round will help us to meet more consumers in critical markets, while helping them access the goods and services that they need.
How is Sunbit different?
Meeting real needs – in-store. Sunbit focuses on unmet needs in bricks and mortar retail – places where financing isn’t usually found, or the options aren’t reasonable: things like paying for an auto repair, an unexpected visit to the veterinary clinic, or a new pair of glasses.
It’s also lightning fast. At the cash register, no one has time to fill out an online application or a cumbersome paper one. All Sunbit requires is a driver’s license, phone number, and email address – and within 30 seconds, application and approval are done.
Cuts out costs. You hear about machine learning everywhere…but we use it not only for underwriting (where our credit model is built specifically for short term, small dollar purchase financing — and not reliant on FICO scores), but across our operations, to eliminate extra cost. And because we’re focused on physical, in-store sales, where merchants have already acquired the customer, our costs are lower than most. All this means that we have extra savings we can pass along to our customers. We strive to provide each customer with his or her best rate compared to his or her alternative
High approvals, fair rates. 90% of customers who apply are approved – likely the highest in the industry – with the total time from application to approval taking 30 seconds. This is the highest approval rate we’ve seen in the industry, and it significantly reduces the elements of awkwardness and embarrassment that can happen at the cash register. Moreover, our rates are often better than anything else being offered to the customer.
What market is Sunbit targeting and how big is it?
90% of purchases happen in the physical world – and we are addressing a $235 billion market of financeable, in-store purchases. We focus on areas where there are no good financing options, such as:
- Auto parts and services
- Vet care
- Eye care / glasses
- Dental
- Health care specialty services
What’s your business model?
Our platform enables customers to get what they need, merchants to make a sale, and lenders to be able to offer the great rates while approving 90% of customers. We designed our business strategically to eliminate consumer acquisition costs that weigh down many companies in the financial technology space. By partnering directly with merchants, who bear the cost of customer acquisition, we’re able to grow our company with substantially lower capital requirements and can pass those savings along to customers.
Who do you consider your biggest competitors?
We don’t see direct competitors focused on the same problems we’re trying to solve – in store, non-discretionary purchases for 90% of consumers. The companies that are innovating in consumer lending tend to be focused online for e-commerce, while our company is focused on in-store, real-world transactions where over 85% of purchases are still made.
What was the funding process like?
We were lucky to meet with incredible investors who, even if they didn’t invest in the company, provided valuable feedback. Raising capital is always a process and we took advantage of the opportunity to learn from everyone we met.
What are the biggest challenges that you faced while raising capital?
We have a contrarian strategy. Go to brick and mortar retail while others go online, approve 90% of applicants with ‘credit card type rates’ while others focus on the top 50% of the population, focus on low loan amounts without ‘pushing customers to borrow more’. We were looking for investors who could believe that this is doable. It took time to find these investors.
We have a contrarian strategy. Go to brick and mortar retail while others go online, approve 90% of applicants with ‘credit card type rates’ while others focus on the top 50% of the population, focus on low loan amounts without ‘pushing customers to borrow more’. We were looking for investors who could believe that this is doable. It took time to find these investors.
What factors about your business led your investors to write the check?
We are focused on solving a significant financing problem for Americans and impacting their lives in a meaningful way. This social element is combined with a business that has developed category-defining technology and has tremendous growth (double digit % growth month over month for the last 12 months).
What are the milestones you plan to achieve in the next six months?
Our goal is to help as many Americans as we can. For 2019 we plan to dominate the car dealership repair market across the country while expanding into more verticals that will scale in 2020
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
Keep at it. Don’t give up. If you have a good business and deliver value to your clients, you will eventually find the right partner to help shepherd your company.
Where do you see the company going now over the near term?
This latest investment allows the company to accelerate its rapid expansion into key brick and mortar retail outlets nationwide.
What is your favorite restaurant in LA?
To me, there’s nothing more satisfying than enjoying a home-cooked meal and exchanging stories with my wife, 4 kids, extended family and friends.
