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An online loan provider that offers Canadians free credit-score reports has raised an additional $20-million in equity and venture debt funding, co-led by Power Financial’s Portag3 Ventures.

Borrowell, which launched in 2015, will announce Monday it received a second round of funding co-led by existing investors Portag3 and White Star Capital. The group also included new investors Clocktower Ventures, Argo Ventures and Silicon Valley Bank. The fintech provider says it has surpassed more than a million users on its platform.

Toronto-based Borrowell’s funding and consumer base growth comes at a time when the uptake of financial technology services among Canadians is lagging compared with other countries, mainly owing to a lack of consumer awareness of the alternative options available in the market.

“Canada has seen a lag in the adoption rate of fintech services, so seeing this many Canadians – a million of them – using a fintech product in their lives on a day to day basis is an important milestone not just for us, but for the broader fintech sector as a whole,” Borrowell chief executive Andrew Graham said in an interview.

The company first entered the financial-services industry offering personal loans for Canadians with good credit scores looking to refinance their debt. They were seen as disruptors to the banks and large credit card companies as they began to offer competitive and transparent rates on loans. The company quickly caught the eye of investors Paul Desmarais Jr., CEO of Power Financial Corp., and David Chilton, former panelist on the popular CBC TV show Dragons’ Den and author of The Wealthy Barber.

In 2016, Power Financial, through its subsidiary Portag3, joined Equitable Bank and Hedgewood Inc. in a $6.4-million investment in Borrowell.

To date, Borrowell has raised $36.7-million in equity.

“Fintech is a hard space to be successful because it is costly to acquire customers,” said Jean-Francois Marcoux, managing partner with White Star Capital, in an interview. “But Borrowell has a profitable business model because they have been able to demonstrate a highly predictable customer acquisition strategy.”

That strategy was introduced in 2018, offering free credit-score reports for online users, and providing them tips on what they can do to improve their score.

While the company still offers personal loans, Mr. Graham says the bigger opportunity was clear after seeing how many consumers were unaware of their financial situation because it was “traditionally hard to access a credit score for free in Canada.”

The company now partners with more than 50 financial institutions – including the six major Canadian banks, American Express, MBNA and Wealthsimple. After receiving a credit-score report, Borrowell clients are provided with advice on which products best suit their financial situation, including credit cards, mortgages, loans, investing, insurance and banking.

“Financial services is complex and complicated and we know there are many people who are looking for help when it comes to making good choices on how to reach their financial goals,” Mr. Graham says.

Product recommendations and referrals are done through artificial-intelligence technology. Big data and machine learning are areas that Mr. Graham says the company has invested heavily in and will continue to do so. For example, last month the company released a financial-health app where members can get real time access to their credit score and product recommendations that will help them improve scores.

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