Ex McKinsey, Goldman alumni raise $3m for fintech start-up

“This sounds pretty straightforward, but on the back end, it’s a whole series of complex lender credit policies and pricing criteria that we’ve had to price in,” Mr Montarello said.

The company launched at the start of 2020 and 30,000 users retrieved their loan options in a strong opening year, which Mr Montarello put down, partly, to Australians spending their money on cars and roadtrips in the absence of the possibility of any overseas travel.

The overall trend in the fintech sector is towards increased transparency, value for money and choice for consumers.

— James Synge, Carthona Capital

Standing out from heavily marketed rivals, which all appear ahead of Driva if someone searches Google for “best car loan deals”, is a challenge that needs to be addressed, but Mr Brown said the company based much of its business model on a partnership model with both traditional and online dealerships.

Beyond the marketing, he said there were lots of ways to differentiate Driva from other online comparison services.

“The key difference between Driva and those types of sites is that Driva will actually provide personalised rates for the customers based on things like credit score, the vehicle they’re looking at and their employment data,” Mr Brown said.

“Whereas the comparison sites will lead with starting rates of 4 per cent, and then as soon as you click through to the provider and apply for a loan, you pretty quickly find out that the rate you’re actually eligible for is more like 10 per cent because you’re buying an older vehicle.”

Driva also employed staff to assess applications and advise customers on whether they had selected policies they were actually eligible for.

Regulatory shift

Aside from the broader move to online shopping in the last year, Mr Brown said, a regulatory shift in the industry meant its partnership model, where Driva’s software can be “white-labelled” and used on a dealer’s website, had very strong growth potential.

He said dealers had traditionally looked to sell financing, operating under a point of sale exemption, meaning they don’t need a credit license to sell finance to consumers.

“What we saw from the royal commission was that point of sale exemption was recommended to be removed, which has left a few dealers a little bit uncertain about what their regulatory requirements are,” Mr Brown said.

“So dealers, who historically might have been quite comfortable offering finance, are looking to third parties to handle the compliance burden and everything that comes with it.”

Money from the funding round will be put towards developing the platform, getting on more staff to seal partnership deals and on marketing and customer acquisition plans.

Mr Brown said this was unlikely to mean TV commercials or the Driva logo appearing on sports jerseys, but would involve work with online affiliates, dealership and some search engine optimisation work.

“These behemoths like Finder and Canstar have been pumping out content and making sure they’re up to speed with the latest Google algorithms to make sure they rank on page one for the last 15 years, but I think Google is getting better at rewarding genuine content,” he said.

“I think over time we will be rewarded for the genuine insights we can provide around lenders and providing customers their personalised rates. Given that we actually work with lenders day in day out, our lender review section is going to be significantly more valuable than a Canstar that is just sort of gleaning the web for what they can find online.”

Carthona partner James Synge said he had backed the company due to the impressive traction it had gained in a relatively short period of time.

“The overall trend in the fintech sector is towards increased transparency, value for money and choice for consumers, and we see Driva as directly addressing these needs in the car financing space which is particularly untouched compared to other financing verticals,” Mr Synge said.