Under the Hood: Auto fintech investments slump in 2022

Venture capitalists pumped $1.2 billion into auto fintechs in 2022, but that investment volume amounted to only half of the prior year’s total, according to an Auto Finance News analysis of public deals. Although the number of fintechs that scored funding grew last year, the average investment size shrank by nearly two-thirds. Last year’s 29 investments averaged $44.3 million each, compared with $112.7 million for the 22 investments recorded in 2021. Creditas Brazilian digital lending platform Creditas bagged the biggest overall investment last year — a $310 capital infusion that it plans to use for technology development. The fintech scored a $260 million series F funding round in January, and a $50 million extension in July. The company operates car marketplace Creditas Auto; buy-now-pay-later e-commerce platform Creditas Store; and electric motorcycle manufacturer Voltz Motors. Last year, Creditas acquired Andbank ’s Brazilian banking license to further diversify its funding sources and grow its portfolio of credit products. Car Capital Technologies Grapevine, Texas-based Car Capital Technologies landed the second-largest capital infusion last year with a $150 million credit line and $20 million series B funding round. Car Capital’s proprietary instant car loan approval technology, dubbed Dealer Electronic Auto Loan System — or DEALS — enables auto dealers to make instant vehicle loans, regardless of a consumer’s credit history. Car Capital intends to use the equity and debt investments to bolster its loan volume. Moove Nigerian mobility fintech Moove , which serves as Uber’s exclusive vehicle financing and vehicle supply partner in sub-Saharan Africa, nabbed $153 million of capital last year. Moove has been using its newfound funds to expand into seven new markets across Asia, MENA and Europe. The mobility fintech embeds its alternative credit scoring technology onto ride-hailing, e-logistics and instant delivery platforms, and uses proprietary analytics to underwrite vehicle loans. Moove’s model entails selling new vehicles to consumers with loan terms between 12 and 48 months. Customers repay their loans using a percentage of their weekly rideshare revenue. Caribou Caribou was propelled to unicorn status with its $115 million series C funding round last year. The auto refinance fintech, formerly known as MotoRefi , intends to use the capital infusion to scale its business operations and expand its product engineering and marketing teams. In the past few years, Caribou has refinanced more than $1.5 billion in loans. The five other fintechs that scored at least $50 million of investments last year were KreditBee , Lentra , Onto , Nexu and Zest AI . KerditBee Indian startup KreditBee closed an $80 million series D round in December. The fintech, which offers personal loans to consumers through partner non-banking financial firms, plans to use the proceeds to provide vehicle loans and digitally enabled financial offerings. Lentra Embedded AI-based finance startup Lentra and electric vehicle subscription service Onto each closed $60 million funding rounds. Lentra’s software-as-a-service platform powers commercial banks’ digital loan services. The tech firm plans to use its new capital to expand operations into Indonesia, Vietnam and the Philippines. Meanwhile, U.K.-based Onto — whose customers are charged a monthly fee that covers the car, insurance and public charging — intends to use its new funding for a European expansion, with a particular focus in Germany. Nexu & Zest AI Nexu, a financing platform for Latin American car dealerships, and Zest AI, a provider of artificial intelligence-based automated underwriting, each nabbed $50 million investments. Nexu, the only Mexican auto fintech to attract investors last year, plans to use its newfound funds to expand across Mexico, bolster product offerings and hone automated risk assessments. Zest AI intends to use its fresh capital to expand access to its underwriting technology. Kavak But 2022’s total investment capital was eclipsed by a single fintech in 2021. Latin American used-car marketplace Kavak reeled in a blockbuster $1.2 billion capital infusion in two funding rounds: a $485 D2 round in April and a $700 million E round in September. The Mexico City-based startup buys used cars, reconditions them, then offers financing through its captive, Kavak Capital. It has grown quickly in Latin America because it provides consumers with access to vehicles they would otherwise not be able to afford in markets fraught with fraud. Last year, Kavak acquired United Arab Emirates-based Carzaty , which opened the door to do business in Oman and Saudi Arabia. How will auto fintech funding shake out in 2023? January investments should be on par with the $440 million scored in January 2022. Full-year investment activity will likely mirror 2022, with smaller deals spread across multiple fintechs. Auto Finance Summit East, Auto Finance News’ new spring event, kicks off May 10-12 at the JW Marriott Nashville featuring a fireside chat with Peter Muriungi, CEO of Chase Auto. Visit autofinance.live.

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