Fuse will raise $25M to disrupt the aging loan origination process used by US corporations

In 2023, after three years of building a car rental startup, Fuse founders Andres Klaric and Marc Escapa realized that LLMs could revolutionize the most important thing: the loan origination system (LOS), which is the backbone of the rental industry.

Frustrated by the failure of such software, Klaric (pictured left), a native of Bolivia, and Escapa (pictured above), a Spanish immigrant, chose their business to build Fuse, an AI version of LOS.

On Monday, Fuse announced that it has raised a $25 million Series A round led by Footwork, Primary Venture Partners, NextView Ventures, and Commerce Ventures.

LOS is the first system of writing for many borrowers, managing the entire loan process: from the initial application and writing to the final approval and repayment of the loan. However, traditional systems can take a long time to align and have multi-year, expensive contracts, Klaric said.

Using AI, Fuse says its agents can help lenders process more loans, automate underwriting, and significantly reduce operating costs.

The company, which already has more than 100 customers, aims to ease credit unions’ transition to Fuse by offering the first 50 eligible credit unions access to its platform until their current contracts with legacy LOS vendors expire. In order to support this, the founders have donated 5 million dollars to a program that they call a “saving fund.”

Klaric insists it’s “not just a marketing gimmick,” explaining that because legacy program fees are high, many credit unions can’t afford to break their current contracts to switch providers.

Nikhil Basu Trivedi, co-founder and senior partner at Footwork, told TechCrunch that he supports Fuse because it’s over. 4,000 credit unions in the United States, and their technical skills were slow to improve.

“We know credit unions are hurting and want to adopt AI but we don’t know how to do it,” he said.

Basu Trivedi compared LOS to ERP or CRM, noting that it is very important in the day-to-day operations of a credit union. He also said that exchanging LOS with another has become very difficult. However, as is the case with many AI ERP-starters, developers promise that Fuse can be adopted quickly.

Some of the LOS assets that Fuse is trying to divest from include publicly traded nCino and publicly owned MeridianLink.

Naturally, Fuse isn’t the first AI to introduce LOS. Competitors include Casca and Glide.

Klaric says he strongly believes in helping credit unions cut costs because they serve middle-class Americans.

“Credit unions and small financial institutions have everything they need to succeed. They have a local presence, a local focus, a great knowledge of members. They have branches in the best places. The only thing they don’t really have is technology,” he said.