Fuse Secures $25M to Kill Outdated Loan Systems

AI-native fintech startup Fuse secured a $25 million Series A funding round on Monday to replace the outdated, expensive loan origination systems (LOS) currently crippling over 4,000 U.S. credit unions.

Co-founders Andres Klaric, a Bolivian native, and Marc Escapa, an immigrant from Spain, launched the venture after realizing the transformative power of Large Language Models (LLMs). In 2023, after spending three years building an automotive lending startup, the duo recognized that AI could modernize the loan origination system—the absolute backbone of the entire lending industry.

Why Legacy Loan Origination Systems Are Failing Lenders

An LOS acts as the primary system of record for financial institutions, managing every stage of the loan lifecycle, including initial applications, underwriting, final approvals, and credit disbursement. However, legacy software is notoriously rigid. According to Klaric, traditional systems frequently require up to a year to integrate and trap institutions in expensive, multi-year contracts.

Fuse solves this bottleneck by leveraging AI-native agents. The platform enables lenders to process significantly higher loan volumes, automate complex underwriting processes, and drastically lower operational overhead.

A $25 Million Bet on AI-Driven Financial Infrastructure

The newly announced $25 million Series A round was led by Footwork, Primary Venture Partners, NextView Ventures, and Commerce Ventures. The capital injection will help Fuse scale its operations and accelerate product adoption among mid-market financial institutions.

The $5 Million ‘Rescue Fund’ for Credit Unions

To ease the transition for institutions locked into restrictive agreements, Fuse, which already serves over 100 customers, is launching a unique $5 million “rescue fund.” The startup is offering its platform entirely free of charge to the first 50 qualifying credit unions until their existing legacy LOS contracts expire.

Klaric emphasized that this initiative is far from a marketing stunt. Because legacy software contracts carry exorbitant termination fees, many credit unions simply cannot afford to break them to upgrade their technology. The rescue fund removes this financial barrier entirely.

How Fuse Plans to Outpace Legacy Giants and Rivals

Nikhil Basu Trivedi, co-founder and general partner at Footwork, explained his decision to back the startup by pointing to the massive, underserved market. There are currently over 4,000 credit unions in the United States, most of which rely on severely outdated technology.

“We know the credit unions are really hurting and want to adopt AI but have no idea how to do it,” Basu Trivedi said.

Basu Trivedi compared the LOS to an enterprise resource planning (ERP) system or a customer relationship management (CRM) platform, noting its critical role in daily operations. While replacing an LOS has historically been a logistical nightmare, Fuse promises rapid deployment and integration times typical of modern AI-first SaaS platforms.

The startup aims to displace established, multi-billion-dollar legacy players, including the publicly traded nCino and the private-equity-owned MeridianLink. At the same time, Fuse faces competition from emerging AI-native startups like Casca and Glide.

Despite the competition, Klaric remains focused on the social impact of upgrading credit union infrastructure, noting that these local institutions are vital to the American middle class.

“Credit unions and smaller financial institutions have everything required to win,” Klaric said. “They have the local presence, the local focus, great member experience. They even have branches in very good locations. The only thing they don’t really have is the right technology.”