Borrowell is a leading financial technology (fintech) company in Canada that offers a range of financial products and services to help consumers manage their finances more effectively. The company’s mission is to help Canadians make great decisions about credit and borrowing by providing them with free credit scores, credit reports, and personalized recommendations on how to improve their credit health.
But how does Borrowell make money? In this blog post, we will explore Borrowell’s business model and revenue streams.
Borrowell’s Business Model
Borrowell’s business model is based on providing free credit scores and credit reports to its users. To get access to this information, users are required to provide personal and financial information, such as their name, address, and social insurance number. Borrowell uses this information to retrieve the user’s credit report and credit score from Equifax, one of Canada’s leading credit bureaus. Borrowell then provides the user with a comprehensive view of their credit profile, including any outstanding debts, credit utilization, and payment history.
In addition to providing free credit scores and reports, Borrowell also offers a range of other financial products and services, such as personal loans, credit cards, and mortgage services. These products and services are offered to users based on their credit profile and borrowing needs. Borrowell partners with leading financial institutions to offer these products and services to its users.
History of Borrowell
Borrowell was founded in 2014 by Andrew Graham and Eva Wong, with the mission of providing Canadians with a better way to manage their finances. The idea for Borrowell came about when Andrew Graham, a former consultant, was looking to borrow money to start a business.
He found the process of applying for a loan to be time-consuming and frustrating, and he realized that many Canadians faced similar challenges when it came to accessing credit.
Andrew teamed up with Eva Wong, a seasoned entrepreneur and former COO of an online mortgage broker, to create Borrowell. The company’s initial focus was on providing Canadians with free credit scores and credit reports, which would help them better understand their credit health and make informed decisions about borrowing.
In 2015, Borrowell partnered with Equifax, one of Canada’s leading credit bureaus, to provide users with free credit scores and credit reports. This was a significant milestone for the company, as it allowed Borrowell to offer users a comprehensive view of their credit profile.
Borrowell quickly gained traction with Canadian consumers, and in 2016, the company raised $6.4 million in a Series A funding round led by Portag3 Ventures LP. This funding allowed Borrowell to expand its product offerings and launch its personal loan product, which offered competitive interest rates and flexible repayment terms.
In 2017, Borrowell became the first company in Canada to offer free credit monitoring alerts to its users. This feature allowed users to receive notifications when there were changes to their credit report, such as a new account being opened or a missed payment.
Borrowell continued to expand its product offerings in the following years, launching a credit card recommendation engine in 2018 and a mortgage platform in 2020. The company also expanded its partnership network, working with a range of leading financial institutions to offer users access to a variety of financial products and services.
Today, Borrowell is one of the leading fintech companies in Canada, with over a million users and a wide range of products and services. The company’s mission remains the same as it was when it was founded: to help Canadians make great decisions about credit and borrowing.
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How does Borrowell Work
Borrowell is a fintech company that offers a range of financial products and services to help Canadians manage their finances more effectively.
Here’s how Borrowell works:
- Free Credit Score and Report: Borrowell offers users free access to their credit score and credit report. Users simply sign up for an account, provide some personal and financial information, and Borrowell retrieves their credit information from Equifax. Borrowell provides users with a comprehensive view of their credit profile, including their credit score, outstanding debts, credit utilization, and payment history.
- Personalized Recommendations: Based on a user’s credit profile, Borrowell provides personalized recommendations on how to improve their credit health. These recommendations may include suggestions on how to pay down debt, ways to reduce credit utilization, and tips on how to build a positive credit history.
- Financial Products and Services: Borrowell partners with leading financial institutions to offer users a range of financial products and services, such as personal loans, credit cards, and mortgages. These products and services are offered to users based on their credit profile and borrowing needs.
- Easy Application Process: Applying for a financial product or service through Borrowell is easy and convenient. Users simply choose the product or service they are interested in, and Borrowell connects them with the appropriate partner. The application process can be completed online, and many products and services can be approved and funded within a few days.
- Competitive Rates: Borrowell offers competitive rates on its personal loans and credit products, making it an attractive option for Canadians looking to borrow money or manage their credit.
- Security and Privacy: Borrowell takes security and privacy very seriously. The company uses industry-standard encryption to protect user data, and it does not share or sell user information to third parties.
Revenue Streams
Borrowell generates revenue from a variety of sources, including interest on loans, referral fees, and commissions from its partners.
Let’s take a closer look at each of these revenue streams:
Interest on Loans
Borrowell offers personal loans to its users, with interest rates ranging from 5.99% to 29.19% depending on the user’s credit profile and other factors. Borrowell generates revenue by charging interest on these loans. The interest rates charged by Borrowell are generally lower than those charged by traditional banks and other lenders, making Borrowell an attractive option for consumers looking to borrow money.
Referral Fees
Borrowell generates revenue by referring users to its partners, such as credit card companies, mortgage providers, and other financial institutions. Borrowell earns a referral fee for each user who applies for a product or service through one of its partner links. These referral fees can vary depending on the product or service being offered and the partner’s agreement with Borrowell.
Commissions from Partners
Borrowell also generates revenue by earning commissions from its partners. For example, if a user applies for a credit card through one of Borrowell’s partner links, Borrowell may earn a commission based on the user’s application and approval. The commission amount can vary depending on the partner’s agreement with Borrowell.
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Borrowell competitors
Borrowell operates in the Canadian financial services market, which is highly competitive.
Here are some of the main competitors of Borrowell:
- Credit Karma Canada: Credit Karma offers free credit scores and reports, personalized recommendations, and financial product recommendations to Canadians. Like Borrowell, Credit Karma generates revenue by earning referral fees from partner financial institutions.
- Ratehub.ca: Ratehub.ca is a financial comparison site that helps Canadians compare financial products such as credit cards, mortgages, and insurance. Ratehub.ca generates revenue through referral fees from partner financial institutions.
- Mogo: Mogo offers a range of financial products and services, including personal loans, mortgages, and credit cards. Mogo also provides users with access to their credit score and report for free. Mogo generates revenue through interest and fee income.
- Wealthsimple: Wealthsimple is a robo-advisor that offers investment management services to Canadians. Wealthsimple has expanded into other financial services, such as high-interest savings accounts and low-fee trading platforms. Wealthsimple generates revenue through management fees and interest income.
- KOHO: KOHO offers a mobile app and prepaid Visa card that allows users to manage their finances and earn cash back rewards. KOHO generates revenue through interchange fees and interest income.
Borrowell Funding, Revenue & Valuation
Borrowell has successfully raised funding from a variety of sources since its founding in 2014.
Here is a breakdown of Borrowell’s funding rounds:
- Seed Round (2014): Borrowell raised an undisclosed amount of funding from a group of angel investors, including John Ruffolo, CEO of OMERS Ventures.
- Series A Round (2016): Borrowell raised $6.4 million in a funding round led by Portag3 Ventures LP, with participation from other investors such as Equitable Bank and White Star Capital.
- Series B Round (2018): Borrowell raised $20 million in a funding round led by White Star Capital, with participation from other investors such as National Bank of Canada and FirstOntario Credit Union.
- Series C Round (2020): Borrowell raised $25 million in a funding round led by Kensington Capital Partners, with participation from other investors such as BDC Capital and iA Financial Group.
Borrowell has not disclosed its revenue figures, but the company generates revenue through a variety of channels, including:
- Loan Origination Fees: Borrowell charges origination fees on its personal loans, which are paid by borrowers at the time of loan disbursement. These fees range from 1% to 5%, depending on the loan amount and term.
- Referral Fees: Borrowell earns referral fees from its partner financial institutions for each user who is approved for a financial product or service through Borrowell’s platform.
- Data Analytics: Borrowell leverages the data it collects from users to provide insights to its partner financial institutions. This data can be used to improve underwriting models and identify new market opportunities.
As a privately held company, Borrowell’s valuation is not publicly disclosed. However, the company has been recognized as one of Canada’s leading fintech companies and is likely valued in the hundreds of millions of dollars.
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Conclusion
In summary, Borrowell’s business model is based on providing free credit scores and reports to its users and offering a range of financial products and services, such as personal loans, credit cards, and mortgage services. Borrowell generates revenue by charging interest on loans, earning referral fees, and earning commissions from its partners.
By offering its users a comprehensive view of their credit profile and personalized recommendations on how to improve their credit health, Borrowell has become a trusted and valuable resource for Canadians looking to manage their finances more effectively.