- Fintech company Koyo announced it raised $4.9 million in funding to offer loans to people who have thin credit histories
Koyo — a fintech company that uses open banking for offering loans to people who have thin credit histories — announced it raised $4.9 million in funding, according to TechCrunch. This round of funding is based on a mixture of debt and equity funding. And the funding round was led by Forward Partners with participation from Seedcamp. Christian Faes (founder and CEO of LendInvest) and Charles Delingpole (founder and CEO of ComplyAdvantage) also joined the round.
Koyo was founded by former Frontline Ventures associate Thomas Olszewski. The service is launching later this year. As a service, Koyo helps people who do not have much of a credit history such as migrants or individuals who are not the main bill payers of a household secure loans on more favorable terms. Other services tend to charge high fees or ridiculous interest rates for people who do not have credit histories.
“If someone is new to the country or otherwise has a thin credit file, it can be difficult for that person to access credit,” said Olszewski via TechCrunch. “For example, if you’ve been in the country for a year or two and you’d like to get a personal loan, the types of loans that would be offered to you would be payday loans (1,000%+ APRs) or longer-term loans in the 50-99% APR range that may require a guarantor.”
Since Koyo uses open banking data, it can better assess risk based on the up-to-date transaction history of its users. The majority of lenders typically go through the three main bureaus (Equifax, Experian, and Transunion) for assessing the credit history of consumers. And Olszewski told TechCrunch it is estimated 15-20% of the population are not captured by bureau data. If a user has a regular income, then Koyo would be able to open up eligible loan options.
Koyo has a team of six employees and four are in the management team. Some of the other team members include CTO Guy Evans (former LendInvest CTO), head of risk Kevin Allen (former RateSetter CRO), and head of marketing Peter Kent.
