Fuse targets US credit unions with $25M round for AI loan origination

On Monday, the startup Fuse announced that it has raised $25 million in a Series A funding round. The investment was led by venture capital firm Footwork, with participation from Primary Venture Partners, NextView Ventures, and Commerce Ventures. Co-founders Andres Klaric and Marc Escapa started the company after realizing in 2023 that large language models could modernize the loan origination system (LOS). An LOS serves as the primary system of record for lenders, managing the entire loan lifecycle from the initial application and underwriting to final approval and credit disbursement.

Fuse is aiming to displace legacy LOS providers like nCino, a publicly traded company, and MeridianLink, which is owned by private equity. Traditional systems can take up to a year to integrate, according to Klaric, and typically require expensive, multi-year contracts. Fuse offers an AI-native alternative designed to help lenders process loans more efficiently. Klaric noted that US credit unions—which are member-owned financial cooperatives—have the local presence, focus, and member experience required to succeed, but they currently lack the right technology.

To accelerate adoption among these institutions, Fuse is launching a $5 million program it calls a “rescue fund.” The startup, which already has over 100 customers, will use the fund to help credit unions transition to its platform by covering their costs until their existing legacy contracts expire. Klaric insisted that the rescue fund is not merely a marketing tactic, explaining that high legacy software costs often prevent credit unions from breaking their current contracts to switch providers.

The market opportunity is substantial, with over 4,000 credit unions operating in the United States. Nikhil Basu Trivedi, a co-founder and general partner at Footwork, noted that these institutions are eager to adopt AI but lack the technical roadmap to do so. “We know the credit unions are really hurting and want to adopt AI but have no idea how to do it,” Basu Trivedi said. While Fuse faces competition from other startups like Casca and Glide, the founders promise that its platform can be adopted relatively quickly.

Why it matters

Fuse is attempting to modernize the loan origination system (LOS) market for credit unions, which the company claims are currently underserved by expensive, slow-to-integrate legacy software.