Swarthmore, Pa.-based LoanStar Technologies, which enables so-called “embedded lending,” has raised $28 million in growth equity capital from strategic investors led by Sageview Capital.
Sageview, which has offices in Palo Alto, Calif., and Greenwich, Conn., contributed $20 million of the new funding, with the rest coming from Florida’s Launch Credit Union (via its wholly owned CUSO Holding Company), TruMark Financial Credit Union, Ben Franklin Technology Partners of Southeastern Pennsylvania, and Monarch Strategic Advisors. So far, LoanStar has raised $30.2 million from investors.
Value Proposition
“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,” said LoanStar co-founder and CEO Andy Turner, a former FIS executive. In 2023, Turner was a finalist in EY’s Entrepreneur Of The Year awards for Greater Philadelphia.
Of the new funding, LoanStar plans to use $12 million for expansion and to strengthen its balance sheet in anticipation of growth opportunities. It will use the rest — expected to close in the next two months — to buy back shares from early investors.
The company has developed a platform called MerchantLinQ that helps lenders easily provide instant point-of-sale financing through local merchants, offering control over loan underwriting. In 2023, LoanStar said its volume of loans hit $1 billion, as the company added more than 1,000 active merchants and 13 new lenders. Over 90% of loans created through LoanStar helps financial institutions acquire a new customer, and raise lending 10-fold, the company said.
3 Added to Board
Subsequent to the funding, LoanStar handed board seats to Scott Stuart, Sageview’s founding partner; Launch CUSO Holdings CEO Mark Brewer; and Ronny Chapman, who previously worked at FIS and TruStage. Turner, and co-founder and Chief Innovation Officer Craig Haynes are other members of LoanStar’s board.
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“LoanStar has a great product, proven product-market fit, and a big market to go after, all of which matches our style of investing based on fundamental value,” Stuart, a former partner at KKR, said on LinkedIn.
Lauletta Birnbaum served as legal advisor to LoanStar. Morris, Manning & Martin advised Sageview Capital.
Sageview Capital has over $2 billion in assets under management. Its portfolio investments include 360insights, Aceable, Anitian, CallRail, Demandbase, Drivewyze, Ezoic, MetricStream, Pantheon and XSELL Technologies.
