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How AltFi’s latest ‘One To Watch’ award winner Nova Credit got on in 2023

The CEO of Nova Credit Misha Esipov tells AltFi the company's international expansion is working well and that big fintech ideas are still worth pursuing.

Misha Esipov

Misha Esipov/Nova Credit

Big, bold ideas are the essence of a successful fintech startup. 

It’s true execution, access to the right amount of capital and top tech talent are crucial too but the kernel of success among the most successful names is a common one: thinking big to solve existing global financial problems. 

One of the most hotly contested trophies in the annual AltFi Awards is the ‘One To Watch’ category, which celebrates fintech companies poised for exciting times ahead, and where we recognise such ambition.  

A bold vision is unlikely to win the category alone though, but it’s a common factor among previous winners such as Lightyear and Freetrade. 

It doesn't always go to plan, 2019’s winner was Railsbank (later Railsr) which collapsed at the start of 2022, but finding the most promising fintech leaders of tomorrow is no easy task.

Nova Credit, a US-based challenger credit bureau that provides on-ramps for those often cut out from the financial system, won last year’s category. 

The company has clocked up some impressive gains since winning the award at the end of 2022.

Fresh from a $10m strategic investment from HSBC, the company launched in the UK in January after getting the green light from the Financial Conduct Authority to operate its ‘credit passport product. 

Misha Esipov, CEO and co-founder of Nova Credit in an interview with AltFi says 2023 has been a standout good year for the company but adds it wasn’t always so. 

The company, founded in 2016 by Esipov, himself a child immigrant to the US from the former USSR and later a Goldman Sachs banker, saw the opportunity in tackling the huge problem of stitching together global credit bureau data to help immigrants around the world access financial services in their new countries. 

This required a long, arduous infrastructure and logistical build that took the company four years to complete.

Then the pandemic hit.

“We got hit really hard during early covid in 2020 and 2021. I can't think of a business within fintech, that got hit harder than us by the closure of national borders. Two years were incredibly challenging,” he said. 

“We were fortunate to have gone into that storm well-capitalised as a business. We used that capital to continue to invest in long-term strategic bets across both of our product lines,” he added. 

Esipov is excited about the opportunity in the UK where the company has been steadily winning new customers - several of which have not yet been announced - and growing revenues with its core credit passport product.

Its second core product Cash Atlas, a cash flow-based underwriting platform using open banking data is not yet available outside of the US. 

Higher rates, higher pressure

Talk of bold ideas is all well and good but big fintech challenges typically need funding to match. 

In 2023, amid a venture funding crunch, can long-term ideas that ultimately return money to investors over a longer period of time still get funded appropriately? 

Esipov advises those entering the AltFi Awards 2023's One To Watch category to consider the new macroeconomic environment they are in.

“In a high-rate environment, you don't have as much time to deliver on a big bold idea, because of the way discounting works and interest rates work. You need to be able to prove sustainability and generate cash flow revenue faster than that,” he said. 

“Unlike two years ago when rates were zero in many ways, a big idea like ours that has such a long period of infrastructure building cannot easily be funded in an environment where rates are where they are,” he added.

This creates a tricky capital challenge, to be able to make big bets that might need 5-10 plus years to start to prove themselves and create cash flows in the meantime, he adds.

“In a higher rate environment, you have to bring it to life faster, which means your execution has to be ever more flawless. I think that makes it very difficult to succeed in this environment.”

Nonetheless, Esipov believes “there are still plenty of big ideas, big bets” out there. 

“Revolutionary concepts are huge and there are investors who are excited about them and believe in them. But the challenge always comes down to execution,” he said. 

“I think there are far fewer founders who can actually deliver on the promise of a big bet. Having built this business now for the better part of a decade, execution is really hard, really hard to get right,” he added. 

Esipov says now more than ever companies wishing to build global businesses now need to strike a balance on the longer term, big potential, alongside some near-term achievable, sizable victories that can allow them to continue to move forward. 

“You should have your eye on the prize..but it's like if you wanted to go to Mars. You can't just go and set your sights on Mars, because you, it's going to take you too long to prove that,” he said.

“You first how to figure out how to get into orbit...then embark on a bigger bet.”

Nominations for the AltFi Awards 2023 are free and close at midnight 29 September 2023.

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