There were nearly 50 million immigrants living in the US in 2021, according to the US Census Bureau. In addition, the US will grow its population by another 50 million over the next 30 years with nearly all of that growth coming from immigration, according to the Congressional Budget Office.
Plus, the Immigration and Naturalization Act (INA) allows the US to grant up to 675,000 permanent immigrant visas each year across various visa categories.
Most of the many legally admitted new arrivals each year are what Experian calls “credit invisible,” making it nearly impossible to get approved for loans and other forms of credit, making it challenging to rent property or even obtain a cellphone or utility services, even if they had a perfect credit score in their home country.
It’s a big problem, even for highly educated and wealthy immigrants. Think of all the engineers that come to the US to work in the technology industry, for example. Misha Esipov set off to solve this challenge. He’s the founder and CEO of Nova Credit, which provides credit information for immigrants. This founder’s journey is based on my interview with Esipov.
Nova Credit Founder and CEO Misha Esipov.
The idea for Nova Credit began to take shape when Esipov left his well-paying job at Goldman Sachs to rethink his career path by going back to get his MBA at Stanford. While taking some startup classes, he became interested in researching how students make financial decisions, asking students if they had a student loan, a credit card or auto loan.
“If you go and speak with 100 graduate students, half of them are going to be international students, 100% of that half will will tell you some version of the same story that that we've now solved. And that story goes something along the lines of, ‘I can't get a credit card, I can't open a bank account, I can't get a student loan. And it was very indicative of a systemic problem faced by millions of people that have the means to move here and come here to do great work and come here for opportunity or education, or love, and yet, the industry had never really rallied the focus or the resources to go out and solve it,” says Esipov.
After getting his MBA, Esipov had short stints at private equity firm Apollo Global Management and Google before deciding to act on solving immigrant credit problem with the founding of Nova Credit in 2016. His challenge was to solve what the three big credit bureaus had not, namely the ability to transfer credit information from other countries.
The credit bureaus in the US also exist around the world. They are the backbone for how lenders make decisions all over the globe. And the credit bureau landscape grew from about 30 credit bureaus 30 years ago to well over 300. These credit companies exist in most countries, with very few exceptions. And yet, they don't talk to one another. For example, there’s no way for credit information from say, Canada or Mexico, to make its way into the US. “What we've done and we've now spent the better part of a decade building Nova credit, is we have physically flown around the world. We've met with these credit bureaus, we've met with their regulators, to the extent it was deemed needed. We've got partnerships around the globe, we built data integrations around the globe,” says Esipov.
Today, San Francisco-based Nova Credit has those credit information connections with over 20 countries, with the ability to access data on more than 2 billion consumers around the globe. “We have more credit data than any company in the world to our knowledge, which allows us to now serve 70% of the annual flows of people into United States,” says Esipov. The 100 person company has now more than tripled the business, according to Esipov.
The company’s growth trajectory and market opportunity has allowed the firm to attract $79.4 million in funding over eight rounds to date. Their latest funding was $10 million raised in September 2022 through HSBC, which followed its $50 million Series B round led by Kleiner Perkins. Additional investors include General Catalyst, Index Ventures, Pear Accelerator, YCombinator and others.
Esipov was born in the former Soviet Union. In 1990 at the age of 3, his family left the Soviet Union for the US. “My parents were scientists, and we moved as part of the broader trend that's typically referred to as ‘the brain drain’, when many in academia left the former Soviet Union and moved to the US and other parts of Europe,” says Esipov.
The family first lived in Syracuse, New York, then moved to Urbana Champaign, Illinois where his parent became professors at the University of Illinois, and later to Madison, Wisconsin for the University of Wisconsin. Esipov would later graduate from New York University with a degree in mathematics and finance, which led him to his job at Goldman Sachs before his desire to change directions, get his MBA and start Nova Credit in 2016.
Where does the desire to be an entrepreneur come from? “I’m a competitor. I have a chip on my shoulder. I think the immigrant journey is a very humbling experience, constantly seeing your parents, friends and extended family members, having to take a meaningful step back in terms of their careers and in terms of their sense of self in many ways,” says Esipov, who is on the board of World Education Services which focuses on helping people bring their credentials into the United States and be more effectively employed faster. His journey from the Soviet Union to various cities in the US forced him to grow up faster and take on more responsibility and challenges. “I let my competitive spirit draw me into one of the most competitive fields [finance] there is which eventually readied me to become an entrepreneur,” says Esipov.
As for the future? “The whole credit reporting space is ripe for innovation and change. And so we've got a suite of products that we're working on that we think can ultimately help consumers paint a more complete picture of who they are, and in doing so, enable lenders to make more fair and informed decisions,” concludes Esipov.
