credit risk automation platform kaaj raises $3.8m seed from kindred ventures

Kaaj: Automating Credit Risk Analysis for Small Business Loans

Shivi Sharma leveraged a decade of experience in credit risk, gained at institutions such as American Express and Varo Bank, to identify a significant inefficiency in the lending process.

The Problem with Traditional Loan Analysis

Sharma observed that lending teams were dedicating comparable resources to evaluating loans of vastly different sizes – from $100,000 to $5 million. This meant that the assessment of smaller loan applications was often an unprofitable and time-intensive undertaking for lenders.

Recognizing a market opportunity, Sharma and her husband, Utsav Shah, collaborated to develop a solution.

The Genesis of Kaaj

“She witnessed firsthand how a large proportion of small business owners were denied access to necessary capital for growth, simply because the financial calculations didn’t favor banks,” Shah explained to TechCrunch.

“Combining our expertise in building scalable, AI-driven decision-making systems with our deep understanding of credit and fraud risk assessment within the financial services sector, we determined we could utilize advanced AI agent workflows to address this long-standing challenge,” he added.

In 2024, this led to the launch of Kaaj, a company focused on automating credit risk analysis to reduce underwriting timelines from days to mere minutes.

Kaaj's Progress and Funding

To date, Kaaj has processed over $5 billion in loan applications, serving clients like Amur Equipment Finance and Fundr. The company recently announced a $3.8 million seed funding round led by Kindred Ventures and Better Tomorrow Ventures.

How Kaaj Works

The process begins with a small business submitting a loan application along with required documentation – including financial statements, bank records, and tax returns.

Traditionally, underwriters would spend considerable time manually verifying this information and inputting it into their loan origination system (LOS). Kaaj streamlines this process.

Utilizing AI, Kaaj automatically identifies, categorizes, verifies, and organizes the information directly into the LOS.

Furthermore, it conducts assessments to detect document tampering, providing an additional layer of security for the underwriting and fraud prevention teams.

The platform integrates seamlessly with existing customer relationship management (CRM) systems, such as Salesforce, HubSpot, and Microsoft, and even assesses a business’s compliance with a lender’s specific policies.

Increased Efficiency and Loan Accessibility

“This enables a team currently processing 500 applications per month to manage a volume of 20,000 applications with the same staffing levels, making smaller loans financially feasible,” stated Shah, the company’s CEO.

The ultimate goal is to expand access to loans for small businesses by making the investigation process more cost-effective for banks.

Competitive Landscape

Kaaj operates within a market that includes companies like Middesk, Ocrolus, and MoneyThumb.

Sharma believes Kaaj will differentiate itself by offering complete automation of the credit analysis process, rather than focusing on individual components.

“We achieve this through the deployment of agentic AI workflows that emulate the functions of human teams, assisting lenders in analyzing complete loan packages,” she explained.

Future Plans

The newly acquired capital will be allocated to accelerating product development and expanding the company’s reach to independent and small business lenders.

“Our focus is on enhancing our AI agent capabilities, broadening our module offerings, and growing our customer base of lenders and brokers beyond our current market presence,” Shah noted.

A Vision for the Future of Small Business Lending

Shah and Sharma envision Kaaj as a catalyst for “revolutionizing” small business lending by introducing automation to a traditionally paper-intensive process.

“By automating the analytical aspects of credit assessment, we empower human underwriters to concentrate on the more nuanced elements of deal structuring and subjective evaluation – areas where their expertise provides a true competitive advantage,” Shah concluded.