The Thrive team at Startup Virginia. (Images courtesy Thrive Financial)
A local startup geared at being the middleman between homeowners and home improvement contractors has just closed on its latest capital infusion.
Thrive Financial raised roughly $7 million from investors.
It’s the company’s single biggest capital raise since its founding, though Thrive has raised around $15 million to $18 million in venture capital to date.
Co-founder Ryan Cannon, who is based in Richmond and works out of an office at incubator Startup Virginia, told BizSense that much of the round will go toward making sure the company has “adequate capital” for its services and expanding its staff.
Thrive Financial is an online system for loan servicing that works solely in the home improvement sector. The company connects home and property owners with banks and lenders to finance large home improvement projects like pool and spa installations, roofing and HVAC work, among others.
Thrive charges a fee for home improvement contractors to join the platform, and the company bills itself as helping contractors “close more deals faster, and close bigger deals,” Cannon said.
Ryan Cannon
Thrive handles services like payment processing and approvals for loans taken out by homeowners. Plans vary, with credit limits up to $200,000 for certain services, and fixed interest rates as low as around 7%.
Cannon said much of the company’s business revolves around working with pool and HVAC contractors to provide payment plans for their customers. The company has around 850 active contractors using the platform, and has originated about 1,300 loans for roughly $118 million total since its launch three years ago, he said.
“It’s about to hit summer in Richmond … you need air conditioning here, particularly if you’re older. But if your credit’s poor, you can’t swing $15,000, period. This gives folks a way to buy that for $200 per month,” he said. “For luxury purchases that aren’t needs, it lets you do a little bit more or do it at all, and then for necessities, it lets you do it at all.”
If a homeowner who has hired a contractor active on Thrive wants to finance, the owner can apply through Thrive’s platform. If approved, Thrive finances the contractor’s project, and the homeowner pays Thrive back through whatever payment plan has been chosen.
Cannon co-founded Thrive Financial in 2023 with friend and fellow UVA alum Jasjeev Sawhney. Cannon had previously held roles at Capital One and lending company GreenSky, and most recently as vice president, head of risk at California-based fintech company Cherry.
Sawhney also held roles at Capital One and GreenSky. He and Cannon ran GreenSky’s credit risk department for around three years together. Sawhney, who is based in Chicago, worked at fintech lender Dividend Finance for around three years before co-founding Thrive.
Cannon said the two began brainstorming business ideas a few years ago before landing on the home improvement loan servicing idea.
“Starting a fintech lending business in 2023 was particularly risky and terrifying,” Cannon said. “At that point, nobody really wanted to be in fintech lending. During (COVID-19), all the valuations for companies like Affirm and Upgrade and Upstart went through the roof, and then things changed once interest rates started going up in 2022.”
The duo stuck with the idea and, after plenty of rejections, raised much of its initial capital from investors in Richmond and Virginia. Cannon noted that around three-fourths of the company’s initial $1 million in raised funds came from in-state investors.
“Once we got $1 million, the VCs were sort of intrigued,” Cannon said.
The company eventually received a $25 million line of credit from Australia-founded Macquarie Bank to get going, and has grown from there, with other financial institutions providing financing to customers, like TPG and Hatch Bank.
Cannon said that after getting some credibility and backers, and growing the team to its current number of almost 50 employees, the goal is to continue to expand.
“We’re starting to transition from being this tiny startup into a bigger, more complicated company,” he said.
The Thrive Financial app works with homeowners and home improvement contractors.
The company’s recent $7 million round was led by Tysons, Virginia-based Flintlock Capital. Other participants include Citi and 1st & Main Growth Partners, as well as swimming pool contractor Premier Pools & Spas, which participated in the round while also being on Thrive’s platform.
Cannon noted that about $5 million of that $7 million will likely “just sit around” to help keep the company adequately capitalized for the work it does, while the other $2 million will go toward increasing the company’s engineering, sales and customer service teams.
He noted that while AI continues as a growing force in the startup world, it is important for Thrive to keep an ample team to respond to customer concerns and inquiries.
“As much as you can automate a lot, if a merchant has a mistake … they want to get somebody on the phone and get it rectified in two minutes, because they want to close their sale. It’s investing in customer support and merchant support,” Cannon said.
He added that the company is weighing where AI use is appropriate and is testing its usability with things like screening potential contractors the startup might work with.
Thrive is not yet profitable. Cannon said he anticipates it will reach profitability sometime later this year.
“I’m really excited about that, because it gives us a lot more leverage as we continue fundraising, if we choose to,” he said.
Thrive’s team is located across the U.S., though Cannon remains based in Richmond, co-running the company out of Startup Virginia, with a few other employees in Richmond.
Cannon said the company could look for more office space in Richmond or in the Washington, D.C., area in the future.
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