From 10,000 data points to a credit score – the startup that just raised $2m

Photo credit: Thomas Leuthard.

CreditVidya, a startup that analyzes data to get credit scores, announced a series A round of US$2 million from Kalaari Capital today.

Founded by Abhishek Agarwal and Rajiv Raj, it operates on a simple thesis: it’s impossible to sustainably lend to those who have no financial history. Instead of taking major risks – or not lending at all – those with money should be able to analyze different data to figure out if a borrower is trustworthy.

CreditVidya claims to collect and analyze over 10,000 data points, from the way people top up their phones to what they do on social networks.

The other part of its pitch is that not all of those without credit scores are unreliable.

In fact, some are even like Abhishek. Although he’s worked and studied across the globe, he had trouble taking out a loan when he returned to India.

“I had a near perfect credit score while in the United States,” he says matter-of-factly, “but when I got to India and wanted to buy a phone on monthly installments, my loan got rejected.”

Of course, Abhishek is not CreditVidya’s target customer – it’s the 800 million Indians that still can’t use banks.

That’s a big number, but they’re all individuals to the startup. “A customer is a lot more than the money they spend on their card,” Abhishek says.

Others

The big-data-for-credit-scores business model has gained popularity in other emerging markets.

InVenture has a similar thesis. It’s a US$11.2 million-funded company that claims to reach borrowers anywhere in Africa in less than five seconds. Another is Branch, which focuses on Kenya and Tanzania and takes data from SMSes and call logs. Others, like Lenddo, analyze social networks.

CreditVidya is one of the few to claim to use all of those data sources – as well as one of the few to try and tap into India. It’s also one of the few to shy away from dictating loan size. Most startups that help unbanked borrowers stick to microloans, but CreditVidya makes no distinction.

Its clients include IDFC Bank, Tata Capital, and Bajaj Finserv.

Abhishek lists three points that make it the perfect time for CreditVidya to operate: smartphones, internet access, and advancements in artificial intelligence tech.