Fuse raises $25M to disrupt loan origination systems used by US unions

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

Frustrated by the limitations of legacy software, Klaric (pictured left), a native of Bolivia, and Escapa (pictured right), a Spanish immigrant, used their business to create Fuse, a native AI-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 serves as the primary system of record for many lenders, managing the entire loan lifecycle: from initial application and underwriting to final approval and loan disbursal. However, traditional programs can take up to a year to put together and often have multi-year, expensive contracts, Klaric said.

Using AI, Fuse says its agents can help lenders process high-value loans, automate underwriting, and significantly reduce operational costs.

Fuse, which already has more than 100 customers, wants to ease the transition to Fuse for credit unions by offering the first 50 qualifying institutions free access to its platform until their current contracts with LOS vendors expire. To support this, the initiative has put 5 million dollars in a program called the ‘rescue fund.

Klaric insists it’s “not just a marketing ploy,” explaining that because the cost of legacy software is high, many credit unions can’t break their current contracts to switch providers.

Nikhil Basu Trivedi, co-founder and general partner at Footwork, told TechCrunch that he supports Fuse because there are more than 4,000 credit unions in the United States, and their technology is long overdue.

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

Basu Trivedi compared LOS to ERP or CRM, noting that they are equally important to the day-to-day operations of a credit union. He said that exchanging one LOS for another has been very difficult. However, as is the case with many AI ERP startups, the founders promise that Fuse can be acquired quickly.

Other valuable LOS systems that Fuse is trying to offload include publicly traded nCino and privately held MeridianLink.

Naturally, Fuse isn’t the only startup building AI-infused LOS. The company’s competitors include Casca and Glide.

Klaric says he strongly believes in helping credit unions cut costs in large part because these institutions serve middle-class Americans.

“Credit unions and microfinance institutions have everything they need to win. They have local presence, local focus, good member experience. They even have branches in the best locations. The only thing is they don’t have the right technology,” he said.