How data platform Ascent leverages CUSO and corporate VC investors to expand into credit unions

In a world where capital is a commodity, specialist financial services investors are able to offer something generalist investors can’t: industry relationships.

Ascent designs and builds data and AI-driven services on Azure. It worked with two sets of investors to leverage their connections to penetrate the credit union space:

1. Reseda Group: which brings credit union industry platforms and solutions to market in collaboration with its wholly owned CUSO partners and its network of strategic investment partners
2. TruStage Ventures: the venture capital arm of TruStage, a credit union partner since 1935 providing financial products and services to 95% of U.S. credit unions

We spoke with Ben Maxim, chief operating officer of Reseda Group, Elizabeth McCluskey, director of the Discovery Fund at TruStage Ventures, and Arjun Sahgal, co-founder and CEO of Ascent, to understand exactly how fintechs, CUSOs, and venture funds can build these innovation ecosystems, combining capital with relationships and existing captured sales channels.

CUSOs + Corporate VC

What have been the biggest challenges in aligning the different priorities and perspectives of a credit union service organization (CUSO) investor like Reseda Group and a corporate venture capital investor like TruStage Ventures? How did you navigate and resolve any differing viewpoints?

Ben Maxim, chief operating officer of Reseda Group: As a strategic investor in CUSOs, Reseda Group discovers and amplifies innovative technologies like those created by Ascent across the entire credit union industry. Our focus is on helping Ascent understand the nuances of selling into and providing services to credit unions. We also only invest in solutions that will be put into use at our parent company, MSU Federal Credit Union (MSUFCU). 

With our commitment to supporting credit unions and TruStage Ventures’ position as the capital arm of a trusted credit union partner for nearly 90 years, we have a shared goal of connecting fintechs with credit unions. In addition to Ascent, we also collaborate on strategic investments to support and grow emerging fintech innovators like Goalsetter and Debbie.

Our teams compare notes on key players in the industry and share our individual perspectives on the various opportunities across the fintech space. We also invest at different stages of in an organization’s development, so it’s important for our investment pipeline to be informed of each other’s work.

Elizabeth McCluskey, director of the Discovery Fund at TruStage Ventures: We have the advantage and disadvantage of investing on behalf of the entire credit union ecosystem. This means that we can support solutions that aren’t necessarily a fit for every credit union, but they have to serve the needs of a large enough segment of them for us to see the potential for scale. Working with the Reseda Group always gives us great perspective on how credit unions like MSUFCU might perceive and utilize a particular technology. 

CUSOs are vehicles that enable credit unions to invest in fintechs. We see this as a positive and necessary condition for credit unions to signal to the rest of the market that they are not just customers of a particular platform, but true partners. They also enable credit unions to share in the success of companies that do the best job of serving them and their peers. However, when a fintech pursues a CUSO designation, it may signal to prospective customers outside of the credit union industry (e.g. community banks) that their primary focus is going to be credit unions. While we believe it’s possible for fintechs (like Ascent) to serve both segments, they may have to overcome perception challenges in doing so.

The investment case in Ascent

Ascent is solving data integration and automation challenges across business lines. What were the key factors that made both the CUSO and corporate VC investors confident that Ascent could execute this complex value proposition?

Ben Maxim, chief operating officer of Reseda Group: Ascent provides a platform that allows for easy integrations and workflows without the need to do deep integrations or update technology stacks. Credit unions are looking for solutions that improve operational efficiency and improve member experience and Ascent is able to do both for multiple business lines including mortgages, internal audit, commercial lending, consumer lending and more. The founding team of Ascent worked at multiple startups and have had success in their previous ventures. They have taken an active role in learning about the credit union industry and have shown that they can create a product that meets the needs of this industry having refined their product into a permissioned data platform. 

Elizabeth McCluskey, director of the Discovery Fund at TruStage Ventures: Credit unions have numerous existing systems and complex needs, and we believe the fintechs who are willing to serve the entire enterprise are some of the most necessary solutions for the success of credit unions going forward. It often requires more groundwork and relationship building on the part of the fintech, not just with credit unions but with existing vendors and service providers who need to be willing to work with the fintech. Ascent has put in the time and effort to understand both credit unions and their core providers, loan origination systems, etc. The messaging of Ascent’s solution has evolved over the last year as their leadership has listened and learned from credit unions about their biggest pain points and how fintechs can help solve them.

Tech firms working with CUSO and CVC investors

For established fintechs looking to drive innovation, what advice would you give on effectively leveraging relationships with different investor types like CUSOs and corporate VCs? How can they optimize the expertise and resources each side brings? 

Ben Maxim, chief operating officer of Reseda Group: When working with a strategic investor, choose one who wants to actively mentor your company into becoming a successful industry partner. Ensure they provide guidance on building a solution they would actually purchase.

Arjun Sahgal, co-founder and CEO of Ascent: To successfully engage with CUSOs and corporate VCs, follow these guidelines:

1. Be Precise in Your Requests

• Identify specific resources or expertise you need. For example, “We need introductions to potential banking partners with a focus on digital payment solutions.
• Detail specific roles or individuals you want to connect with, such as “We are looking to collaborate with your Chief Lending Officer for an upcoming project.

2. Understand Their Strategic Role

• Recognize that their role is strategic and not sales oriented. Their credibility and long-term relationships are paramount, which is why they carefully select who to support.
• They leverage their networks and insights to provide strategic value, so ensure your asks align with their ability to influence and guide.

3. Provide Regular Updates

• Keep them informed with consistent updates about your progress, milestones, and changes in your strategy.
• Share relevant tools and messaging that they can use in their communications, making it easy for them to advocate for you within their networks.

4. Equip Them with Necessary Tools

• Provide them with clear, concise, and compelling messaging that aligns with their strategic objectives.

5. Stay Aligned with Their Strategic Developments

• Continuously monitor their evolving strategies and priorities. This ensures your proposals and updates remain relevant to their current focus areas.
• Engage in regular discussions to understand their new initiatives and how you can align your goals with theirs.

6. Explore Hidden Opportunities

• Be proactive in identifying potential opportunities that may not be immediately apparent. For example, if they are exploring new fintech solutions, pitch how your product can complement these efforts.
• Stay informed about industry trends and their specific activities, allowing you to anticipate needs and propose timely solutions.

By maintaining a proactive and strategic approach, you can effectively leverage the expertise and networks of CUSOs and corporate VCs to drive your fintech’s growth and success.

Evolving ecosystem approach

Given the economic turbulence of the last year, how has your approach to working with investors and deploying innovation changed or evolved? What learnings from this experience would you pass along?

Arjun Sahgal, co-founder and CEO of Ascent: The economic turbulence of the past year has necessitated a shift in how we work with investors and deploy innovation. We’ve increased the frequency and depth of communication with investors, ensuring transparency about our financial health and strategic pivots to foster trust. Resource allocation has become more strategic, prioritizing high-return projects and pausing non-essential ones to ensure efficient capital use. We’ve strengthened partnerships, focusing on co-innovation and leveraging complementary strengths to share risks and accelerate development. The key learnings highlight the importance of agility, transparent communication, and strategic resource allocation in navigating economic uncertainty.

Beyond just capital

Beyond just capital, what have been the most valuable non-financial contributions the CUSO and corporate VC have provided to help drive Ascent’s success at MSU Federal Credit Union so far? 

Arjun Sahgal, co-founder and CEO of Ascent: Beyond capital, the most valuable non-financial contributions from CUSO and corporate VC that have driven Ascent’s success at MSUFCU include strategic guidance, industry expertise, and extensive networks. Their strategic guidance has helped us navigate market complexities and refine our business model to align with industry best practices. They have provided invaluable industry expertise, offering insights into regulatory landscapes, emerging trends, and technological advancements, enabling us to stay ahead of the curve. Additionally, their extensive networks have facilitated key introductions to potential partners, customers, and talent, accelerating our growth and market penetration. The collaborative innovation efforts and mentorship from experienced professionals within their networks have also played a crucial role in refining our product offerings and go-to-market strategies.

Ben Maxim, chief operating officer of Reseda Group: Over the past two years, the Ascent team has been meeting with MSUFCU leaders and staff across numerous departments to gain insights and advise on how to build-out their product to meet the needs of the Credit Union and its members. As Ascent’s first credit union client, MSUFCU is currently testing Ascent’s solution and we’re excited to see how it will enhance the member experience and drive growth. 

In addition to the pilot partnership with MSUFCU, Ascent and their founding team have been active members of the Reseda Group ecosystem, regularly attending events with Reseda Group and other partners as well as contributing to our portfolio company quarterly meetups.

Helping CUs wrangle data

What were the key capability gaps or pain points at financial institutions that Ascent specifically aimed to solve with its data platform? How does the solution architecture deliver value in these areas?

Arjun Sahgal, co-founder and CEO of Ascent: Ascent targeted critical capability gaps at financial institutions, emphasizing enhanced member experience through horizontal thinking and vertical execution. Financial institutions often contend with fragmented data systems that impede a holistic understanding of their members. This lack of visibility restricts their ability to offer personalized services, diminishing member satisfaction and loyalty.

Additionally, insufficient data integration and analytics further complicate these challenges. Ascent’s solution unifies disparate data sources using a no-code platform and incorporates AI to create a comprehensive 360-degree view of each member. This real-time insight allows institutions to tailor experiences to individual needs, significantly improving personalization and engagement. Credit unions can easily deploy Ascent’s solution with minimal technical resources due to its no-code interface, reducing the need for extensive IT involvement and accelerating implementation. By empowering institutions with advanced analytics and AI, Ascent’s solution enables smarter, data-driven decision-making, fostering long-term growth, and transforming them into more responsive and member-centric organizations.