Live Oak Bancshares is quickly expanding both sides of its business announcing a partnership with Fidelity that will give its namesake SBA lender access to fresh investment advisor borrowers, and a $9 million round for its cloud-computing tech offshoot, nCino.
The news signals growth for the Wilmington, N.C. holding company, which prides itself on its community banking approach.
Live Oak made the statements simultaneously.
nCino (a play on the Spanish word for Live Oak) sells cloud-computing software that works inside Salesforce.com's platform and helps banks digitally manage their loan documents.
Its Series A round of funding is comprised of cash from past investors John Mack, the former chairman and CEO of Morgan Stanley, and Promontory Financial Group chief executive Gene Ludwig.
The company said the investment which includes money from Live Oak Chairman and Chief Executive Chip Mahan and nCino employees will be used to enhance nCino's "Bank Operating System.'
"I am impressed with the leadership team and board of directors at nCino and what they have achieved since its inception," said Mack, in a press release. "The structure and strategy that are in place position the company for continued growth."
As part of the deal, investor William Ruh, a managing principal of Castle Creek Capital LLC, will become an nCino board member. The startup previously raised $7.5 million from the likes of Ludwig and Mack.
In the meantime, Live Oak's banking operations lend government-backed cash to vets, dentists, death care professionals, such as funeral home owners, and most recently independent investment advisors.
That narrow focus was appealing to Fidelity, said David Canter, Fidelity's executive vice president of practice management.
The roughly 3,000 advisors that custody their clients assets on Fidelity's technology platform will now get a discount on the SBA fees Live Oak collects on loans up to $5 million.
"A lot of lenders are quite frankly not in this marketplace; a lot of lenders are not open to [lending to] smaller professional service businesses when what's being sold is a service and not a product," said Canter. "What attracted us to Live Oak is they understand professional services, they understand small businesses and they understand that there are different credit analyses that" pertain to investment advisors.
Previously, he said, advisors were going to traditional lenders for personal loans to fund M&A deals or just not doing them. Fidelity released two white papers Tuesday outlining M&A for independent money managers.