Upstart Holdings, Inc. (NASDAQ: UPST), a leading artificial intelligence (AI) lending platform, today announced it has entered into a definitive agreement to acquire Prodigy Software, Inc., a provider of cloud-based automotive retail software.
Each year, approximately $1 trillion of cars are sold in the US, and most of them are financed.1 Yet purchasing a car consistently ranks among the worst consumer experiences, with less than 1% of buyers satisfied with the current process.
“While Amazon and Shopify have modernized the online shopping experience, the auto industry has been left behind. Upstart is on a path to reduce the cost of auto financing, and we can accelerate this opportunity with a modern multi-channel purchase experience,” said Dave Girouard, co-founder and CEO of Upstart. “Auto retail is among the largest buy-now-pay-later opportunities, and together with Prodigy, we aim to help dealers create a seamless and inclusive experience worthy of 2021.”
Michia Rohrssen, CEO of Prodigy, said, “Our mission has always been to build the world’s best car buying experience, and for the majority of buyers today, that experience includes financing their vehicle. Upstart’s demonstrably better lending technology will enable us to deliver more affordable and transparent auto loans to millions of consumers through our dealer network.”
Since 2014, more than $9 billion in personal loans have been originated by Upstart’s bank partners. Incorporating more than 1,000 variables2 and trained on more than 10.5 million repayment events, Upstart’s AI-powered lending model can provide banks with up to 75% fewer defaults at the same approval rate.3
In September 2020, the first AI-enabled auto loan was originated on Upstart’s platform. In this initial phase, Upstart is enabling consumers to refinance expensive and mispriced auto loans, saving borrowers an average of $72 per month. Following the initial launch, Upstart continues to roll this program out in states across the country.
With the acquisition of Prodigy, Upstart will accelerate its efforts to offer AI-enabled auto loans through the tens of thousands of auto dealers nationwide where the majority of auto loans are originated.
Prodigy is the first end-to-end sales software that bridges the gap between how dealerships operate and the new way that people are shopping for cars. More than $2 billion in vehicle sales have been powered by Prodigy at franchised dealers from top brands such as Toyota, Honda, and Ford.
The transaction is expected to close in the second quarter of calendar year 2021, subject to customary closing conditions.