Inside The Unlikely Turnaround Of A Fintech Helping Immigrants Get Access To Credit

How Nova Credit Weathered the Covid Storm by Discovering a Second Line of Business

In early 2020, Nova Credit, a fintech startup founded in 2016, was on the brink of success. After years of convincing financial institutions and investors of the value of its innovative Credit Passport product, the company had finally gained traction. Credit Passport allowed immigrants from countries like India, Mexico, the U.K., Australia, and Canada to import and convert their home-country credit histories into U.S. terms, helping banks like American Express approve customers who would otherwise be rejected due to thin or nonexistent U.S. credit files. By February 2020, Nova had completed a $50 million funding round, earning a valuation of $300 million. But then the Covid-19 pandemic struck, halting immigration and slashing demand for Nova’s tech. Revenue plummeted from $2 million annually to just $500,000, leaving the company with no market to sell into. Nova’s CEO, Misha Esipov, admitted that part of him wanted to run away, but instead, he led his team on a mission to find new ideas.

That summer, a conversation with a SoFi executive revealed an urgent need for income verification tools, as unemployment soared due to lockdowns. Nova quickly adapted its existing data-transfer technology to create an income verification service, rolling it out for SoFi in just four months. This marked the beginning of Nova’s second line of business: cash flow underwriting. This emerging concept involves assessing consumers’ creditworthiness based on their current bank account inflows and outflows, often in addition to traditional credit scores. While many would have advised a startup to focus on a single product, Esipov defied conventional wisdom, keeping Credit Passport alive while expanding into cash flow underwriting. Over the next year, he also avoided chasing trendy areas like niche digital banking or cryptocurrencies, focusing instead on building a robust second business line.

By 2022, as legal immigration began to rebound and demand for Credit Passport resurgence, Nova’s cash flow underwriting business started to gain momentum. However, the broader fintech market was struggling, and Nova couldn’t escape a down round in 2023, raising $45 million at a reduced valuation of $200 million. But by the following year, Nova’s fortunes began to shift. Its revenue hit an estimated $25 million, doubling from the previous year, with cash flow underwriting emerging as its fastest-growing business line. Credit Passport still accounted for roughly half of its sales, but the company had successfully diversif, positioning itself for long-term growth.

Misha Esipov’s Journey: From Immigrant to Fintech Pioneer

Misha Esipov’s personal story is deeply intertwined with Nova Credit’s mission. Born in 1986 near Moscow, Esipov moved to upstate New York with his parents at the age of two, just before the Soviet Union collapsed. His family had little money and no access to credit, and his parents worked tirelessly to make ends meet. His father, a chemist, and mother, a microbiologist, eventually split up when Esipov was five, leaving him and his mother to navigate financial instability. Over the next nine years, they moved through six different school districts as his mother sought better-paying jobs, even spending summers in Russia to save money.

Esipov’s mother eventually earned an MBA through a sponsorship program at the University of Illinois, which led to a stable job at Gallup in New Jersey. This stability allowed Esipov to attend New York University, where he studied math and finance. After graduating, he worked in investment banking at Goldman Sachs and later in private equity at Apollo before earning his MBA at Stanford. It was there, in 2016, that he and two classmates, Nicky Goulimis and Loek Janssen, founded Nova Credit. The idea came to life after conversations with international students at Stanford who struggled to access credit in the U.S. due to their lack of domestic credit histories.

Esipov’s journey building Nova Credit was far from easy. He spent years flying between countries, meeting with regulators and credit bureaus in Mexico, India, and China to establish data-sharing partnerships. It took a year to develop Credit Passport and another two years to land its first major customer, American Express. The breakthrough came just as the pandemic hit, forcing Nova to pivot. Despite the challenges, Esipov’s personal experiences as an immigrant gave him a unique understanding of the problem Nova aimed to solve, fueling his determination to succeed.

Nova’s Pivotal Pivot to Cash Flow Underwriting

When the pandemic struck, Nova acted quickly to adapt. Recognizing the sudden need for income verification tools, the company leveraged its existing technology to create a new service for lenders like SoFi. This marked the beginning of Nova’s foray into cash flow underwriting, a rapidly growing field that assesses consumers’ financial health based on their current bank account activity. By analyzing trends like cash inflows, outflows, and average balances, Nova’s technology provides lenders with a more holistic view of a borrower’s creditworthiness, complementing traditional credit scores.

The success of this new product line was swift. By 2023, Nova’s cash flow underwriting business was booming, and Credit Passport was regaining traction as immigration rebounded. Today, Nova serves five of the top ten banks in North America, including JPMorgan Chase and the Royal Bank of Canada, as well as four of the top five telecommunications companies in North America, such as Verizon. These partners use Nova’s technology to evaluate creditworthiness for everything from loans and credit cards to mortgages and apartment rentals.

The Rise of Cash Flow Underwriting and Nova’s Competitive Edge

Cash flow underwriting has become a game-changer in lending, offering a more accurate and forward-looking assessment of a borrower’s financial stability. Research from the Consumer Financial Protection Bureau (CFPB) in 2023 confirmed that cash flow data is a strong predictor of delinquency, even for individuals with similar traditional credit scores. Nova’s platform analyzes over 1,000 attributes, including cash flow patterns and trends, to generate a credit score ranging from 300 to 850, the same scale used by FICO. This approach has proven particularly effective in identifying risky borrowers, such as those prone to overdrafts, while also highlighting responsible financial behavior, like maintaining a stable cash balance.

Nova’s technology is supported by a multi-aggregator approach, pulling bank data through providers like Plaid, Finicity, and Akoya. Once the data is retrieved, Nova applies its proprietary credit-risk analytics, developed by Sarah Davies, a former chief data officer who previously led credit modeling for VantageScore. This combination of comprehensive data access and advanced analytics sets Nova apart in the competitive cash flow underwriting market. The company’s designation as a credit reporting agency (CRA) further enhances its credibility and capabilities, allowing it to provide up-to-date credit reports and handle disputes directly with consumers.

Despite its success, Nova faces intense competition from deep-pocketed players like Mastercard, Experian, and Plaid, which have also entered the cash flow underwriting space. However, Nova’s focus on this niche and its unique multi-aggregator model give it a competitive edge. As Nichole Mustard, a Credit Karma cofounder and Nova board member, notes, Nova’s singular focus on cash flow underwriting allows it to deliver a superior product, while larger competitors like Plaid are juggling multiple priorities.

Looking Ahead: Challenges and Opportunities for Nova Credit

As Nova Credit continues to grow, it faces several challenges. The cash flow underwriting market is becoming increasingly crowded, with competitors ranging from established giants like Equifax and Mastercard to smaller fintechs like Envestnet Yodlee and New York-based Prism. Plaid, which became a CRA in late 2023, has also expanded into cash flow underwriting, leveraging its integrations with over 10,000 financial institutions to streamline adoption for lenders. Nova must remain agile and innovative to avoid being overshadowed by these rivals.

Another major challenge is the broader economic environment. With interest rates staying higher for longer than expected, banks have slowed their lending activity, limiting the growth potential of the cash flow underwriting market. Additionally, geopolitical uncertainties, such as potential changes to U.S. immigration policies under a second Trump administration, could impact Nova’s core customer base. While Esipov notes that Nova’s products focus on serving documented immigrants, the future of skilled immigration remains uncertain.

Despite these obstacles, Nova is well-positioned for continued growth. Its multi-aggregator approach and CRA designation give it a unique advantage, and its focus on cash flow underwriting has allowed it to expand into new areas, such as mortgage and apartment rental underwriting. Esipov envisions a future where bank data is used alongside traditional credit bureau data for every major credit decision, and he is aiming for 100% revenue growth in 2025 to push Nova’s annual revenue above $50 million.

Misha Esipov’s Leadership Philosophy: Focus and Resilience

Through it all, Esipov’s leadership philosophy has been a driving force behind Nova’s resilience. He often quotes management gurus, and one of his favorites is Peter Drucker’s “First things first, second things not at all.” For Esipov, this means maintaining a laser-like focus on the areas where Nova can truly excel, even as the company expands into new markets. He admits that deciding where to focus is a constant challenge, one that keeps him up at night. For now, Nova is prioritizing its core markets in the U.S., U.K., Canada, and the United Arab Emirates, while cautiously eyeing opportunities in Australia and beyond.

Esipov’s ability to balance ambition with pragmatism has been key to Nova’s survival and growth. By refusing to chase every fintech trend and instead doubling down on its strengths, Nova has built a robust foundation for the future. As the company continues to navigate an uncertain economic landscape, Esipov’s focus and resilience will remain essential in steering Nova toward long-term success.

In the end, Nova Credit’s story is one of adaptation and innovation in the face of adversity. From its origins as a solution for immigrants to its expansion into cash flow underwriting, Nova has proven that even in the toughest times, there is always room for growth and reinvention.