Consumer finance technology company, Kreditech, has raised EUR 82.5 million in Series C financing to fuel the company’s growth. The round was led by J.C. Flowers & Co. LLC, a leading private investment firm dedicated to investing in the financial services industry globally. Peter Thiel and Amadeus Capital Partners (Amadeus) invested earlier this year in a bridge loan that has now fully converted into Series C equity. Existing shareholders Värde Partners, HPE Growth Capital and Blumberg Capital also participated in the round. The company is in advanced discussions for a final closing that could increase the Series C round to over EUR 100 million.

“We are excited to bring these world-class investors on board who will support us in strengthening our integrated financial services platform, bringing us closer to our vision of becoming the ‘digital bank for the underbanked’,” said Kreditech’s Co-Founder and CEO Sebastian Diemer. “We are a technology company, but also a provider of consumer financial services, and we are fortunate to have a sophisticated shareholder group whose experience and network spans both areas.”

“We view the addition of J.C. Flowers, Peter Thiel and Amadeus as a major validation of our business model. They are important partners in building our capital markets story,” added Kreditech’s CFO Rene Griemens. “The company has now raised cumulative equity and debt funds of more than EUR 300 million, of which EUR 160 million are unused debt facilities available to finance further growth.”

Loren Felsman of J.C. Flowers, who will join the company’s board, said, “There are people without access to fair and affordable credit in every market we have analyzed, and technology is enabling new and better ways of offering credit to these customers. Kreditech has developed a remarkably sophisticated approach to real-time consumer banking, and focuses on markets that are relatively less well-served by traditional credit bureaus and financial services providers. Most lenders, including those built on modern technology, may not crack these markets for years.”

“We are very impressed by Kreditech’s speed of execution; its business model, in combination with its innovative scoring and underwriting technologies, has enormous potential to overtake traditional banking models in the future,” said Andrea Traversone, Partner of Amadeus.

Take a look at our interview with CTO Alexander Graubner-Müller to find out more about what Kreditech is doing.

As the founder and CTO of Kreditech, Alexander strongly believes that algorithms and statistical data are the building blocks for the next Industrial Revolution. Kreditech, one of Germany’s most data-driven FinTech companies, is a testament to that belief. Before founding Kreditech alongside Sebastian Diemer, Alexander managed engineering and product development at Rocket Internet and worked in the investment and banking sectors.

We are proud to have Alexander presenting at Data Natives 2015!

5 years ago your career shifted focus from finance to technology – what was the motivation at the time?

I have always been very passionate about technology and have been coding since high school. During the same time I discovered my interest for the stock markets and started experimenting with algorithmic trading approaches. My academic career was mainly driven by collecting all the skills to do that on a professional basis: economics, statistics, financial engineering, IT. During research I also learned to use the power of web-data in that domain, for instance how to build aggregated indicators based Twitter or Google news to predict the economy.

Unfortunately, the financial crisis was in full swing when I was about to start my career. Job opportunities in banking hence were constrained at the time. So instead I decided to become entrepreneur and commercialize the technologies developed during my research. Together with Sebastian Diemer I co-founded a company called PredictX – a prediction-market engine – which we later sold to a financial institution.

Can you describe the journey that led to you co-founding Kreditech, and your major influences along the way?

PredictX brought us into the startup scene and we were hired by Rocket Internet for a venture development project in China. We also started to brainstorm other areas where we can apply our skillsets in predictive analytics based on information which has been collected from the web. Forecast recessions, forecast elections, forecast sovereign default etc. We also looked into the personal context – e.g. recommendations based on algorithms. Predicting credit risk was also on the list but only caught our full attention when we coincidentally witnessed how cumbersome it really is to apply for a loan in a bank. There was not yet a technical solution to make this process fast and efficient. We realized that this is a huge opportunity to innovate a whole industry and were confident that we can build an algorithmic solution. Our goal was to make a loan application as easy as purchasing something on Amazon, an “Amazon for Consumer Finance”. Combining our knowledge, passion and willingness to create something new and amazing, we came up with what then became Kreditech.

What kind problem are aiming to tackle at Kreditech?

In first step it is about solving the inefficiencies of consumer credit scoring. The current approach used by banks is outdated and highly inconvenient for the customer. Just think of branch-visits, physical documents, several days for the loan decision and many more complicated processes.

Banks also fail in another way: Large groups of people, the so called underbanked, are completely excluded from credit given that banks are unable to rate their credit risk. Our technology solves both problems: It enables to handle loan applications completely online in minutes, get a credit decision in seconds and receive a loan payment directly afterwards. Also, it creates a service available for traditionally underbanked customers as well. It is about making credit consumer-friendly and suitable for the 21st century and our broader vision is to build a full digital bank in line with this thinking.

What major milestones changes you’ve seen in the financial sector with the rise of FinTech? What do you think is going to happen next?

In the consumer space most fintech companies have been growing on opportunities where banks have traditionally offer very poor service – online payments or remittances are great examples. Then a wave of companies developed from the fact that banks did not manage to provide viable online versions of their services, such as in the fields of consumer lending, wealth management and banking accounts for the next-generation. The next big step the industry will undertake is context-driven consumer understanding by providing smart, personal and data-driven recommendations for instance.

[bctt tweet=”The next big step is context-driven consumer understanding. #Fintech”]

If you could choose a different problem to tackle, or perhaps the project that will come next, what would it be?

I would think of other areas to use machine learning for building better consumer services. Algorithmic personalization and recommendation services are very interesting. This could be a personalized, digital newspaper or similar.

Of your achievements so far, of which are you most proud?

Many! Building the heart of the company: Kreditech’s unique scoring algorithm is definitely one of them.

Anything you would have done differently?

No regrets.

Which companies individuals inspire you, and keep you motivated to achieve great things?

I am a big fan of people who have continuously excelled in their field as entrepreneurs and innovators: Elon Musk and Steve Jobs are leading examples for sure.

Data Natives, a first-of-its-kind conference for the data-driven generation, is set to bring together the brightest minds in data science and related technologies for a 2-day event in Berlin November 19-20.

What’s on the agenda

Data Natives features a packed agenda designed for those looking to push the boundaries of their ideas and work in data science and beyond. With 40+ industry talks and unlimited networking opportunities, the conference aims to break down barriers in the industry and forge lasting relationships among its participants. Talks will focus on three buzzing areas of data science – Machine Learning, Internet of Things and FinTech.

The conference will also host a Startup Battle, showcasing some of the most exciting companies poised to do big things in big data. Young startups will have the chance to pitch to influencers and investors in the tech community and compete for the prize of Best Big Data Startup in 2015.

Confirmed Speakers

Alexandra D-S, Director Designswarm Industries

Named #2 in the Top 100 Internet of Things Thought Leaders, Alexandra Deschamps-Sonsino brings a wealth of experience in building consumer-facing internet of things products, services and communities for clients such as BBC R&D, Nokia, British Gas, EDF and British Telecom. She’s altogether an interaction & product designer, entrepreneur, speaker & curator focused on the limitless potential of IoT.

Nasir Zubairi, Venture Partner FinLeap

With 17 years of Financial Services experience under his belt in places such as London, New York, Tokyo, and Singapore, Nasir Zubairi has brought his own touch of innovation and value to numerous organizations and startups. His current role at FinLeap sees him advising and building the next generation of FinTech companies to ultimately change the face of the financial industry.

Yuval Dvir, Global Product Operations Google

Yuval Dvir utilizes years of international consulting experience gained in large multinationals and startups to head up Global Strategy & Product Operations at Google. With a background in corporate development and transformation at Skype and Microsoft, Yuval is a leading expert in guiding teams through challenges involving digital transformations, innovation and scaling.

Alexander Graubner-Müller, CTO Kreditech

As the founder and CTO of Kreditech, Alexander strongly believes that algorithms and statistical data are the building blocks for the next Industrial Revolution. Kreditech, now one of Germany’s most data-driven FinTech companies, is a testament to that belief. Before founding Kreditech alongside Sebastian Diemer, Alexander managed engineering and product development at Rocket Internet and worked in the investment and banking sectors.

Interested in sponsoring opportunities? Please get in touch at info@datanatives.io

Are you game for the Big Data event of the year? Mark your calendars now, and snag your earlybird tickets here!

What’s is Kreditech’s mission statement?

Kreditech uses a unique, proprietary big data credit scoring technology based on 20,000 data points per application to provide financial services to the four billion individuals who do not have access to consumer finance. Our vision is to provide “better banking for everyone”.

Where are you headquartered?

Our headquarter is in Hamburg, Germany. The living quality is very high, it is easy to attract talent as Hamburg has high-profile universities and is multinational and the infrastructure is extremely good: Within 90 minutes you can travel to Berlin, London, Frankfurt – all the European hot spots for FinTech. As a disadvantage in general I would name the German bureaucracy – while in Berlin there is a special arrangement for immigrants, we have to fight for every single employee from abroad in order to get a bluecard / visa.

Who do you think will be the most influential figures (or companies) in FinTech, in 2015?

A lot of evolvements are happening in the industry at the moment. Most fast-growing innovators though are not European based. Lendingclub, Transferwise, Stripe and ANT Financial are pointing in the right direction.

What kind of year do you foresee for your company, and the industry as a whole?

2015 will be a big year for Kreditech. We are launching several exciting new products, including our innovative revolving credit line, and a fully integrated personal finance platform.

What are your key targets for 2015?

We are continuing on our mission to bring innovative banking products to the 4 billion underbanked consumers worldwide.

What will be the most important opportunities for FinTech in 2015?

At the moment, smaller players still have the chance to catch up. While a lot of established business are starting to gain momentum at the market, in the end of the year it will be clearer who’s the winner. Kreditech is in a strong position to play a leading role.

What are the key hurdles for growing your business this year?

We have to find the right talent to grow our business. With an easier process in obtaining  blue card visa for our foreign employees we could accelerate our growth.

What are your thoughts on the current state of Fintech?

FinTech is still evolving – however, FinTech is more and more becoming a real challenger for established banks. This is a positive development for clients around the globe.

In 2014, we witnessed the first IPOs of fintech companies, setting parameters of other fintech deals and finally uprising the status of fintech to a serious venture industry. The first to undertake IPO was the largest P2P-lending platform LendingClub, which raised $870M at $5.42B valuation. It was followed by Ondeck, SME lending service, which became listed on stock exchanges, raised $200M and was valued at $1.3B. Another evidence of the serious attitude of investors to fintech startups is the increasing number of companies which this year exceeded the valuation of $1B – Lending Club, Stripe and Square were joined by Transferwise, Kreditech, Credit Karma, Wonga, and the abovementioned Ondeck.

Leading sectors in terms of the funds raised in 2014:

• Online lending ($1.8B)
• Online acquiring and mWallets ($1.649)
• PFM/PFP-services ($959M)
• Services for small and medium business ($783M)
• Mobile acquiring ($491M)

Largest venture rounds of 2014:

• Dutch online payment platform Adyen ($250M)
• US mobile payment service Mozida ($185М)
• Chinese P2P-lending platform Renrendai ($130M)
• New rounds of global mPOS-leader Square in the amount of $150M, and Swedish online payment service Klarna, which raised $122M.

The largest number of investments still account for the US ($4.04B), but it is worth noting that this year Asia for the first time joined the top five most funded regions with $0.79B raised in investments. The most popular fintech startups in Asia are online lending and scoring platforms, PFM/PFP-services, trading, and crowdinvesting services, as well as SME services. The largest venture rounds are investments in online lending platforms:  the abovementioned P2P-lending service Renrendai raised $130M from TrustBridge Partners, online lending service Fenqile raised $100М from a group of investors, the same amount was raised from BlueRun Ventures by a similar service called Qufenqi. The regional leaders in terms of fintech startups development and funding raised are China, Japan, Hong Kong, Singapore, Malaysia, and Thailand.

For the first time this year Life.SREDA VC made some calculations of mPOS-market: at the end of 2014 the total volume of transactions processed through mobile dongles was $55B, meaning that mPOS-technologies are serious competition to traditional POS-solutions, especially in countries where the penetration of POS-terminals is low. The most highly competitive markets for mPOS players are the United States ($4B) and Canada ($1B), where Square takes the lead, as well as the United Kingdom with the volume of transactions amounting to $1.5B and its market leaders are PayPal Here, iZettle, and Groupon. Life.SREDA puts special emphasis on East Asia and South America as new markets with low competition, but a large number of SMEs, large emission of bank cards and weak infrastructure for their acceptance. The most promising markets for new players are China with a turnover of mPOS transactions at $7B (leaders – local companies Qiandaibao and QFPay), Brazil with a turnover of $1B (leaders iZettle, Payleven, SumUp), Southeast Asia with a turnover of $70М (Plug’n’Play, AEON Easy Pay, iBox), and Russia with a turnover of $73M (key market players: LifePay and 2can).

“Last year we noted fold growth in FinTech VC investment, causes and consequences of which were increase of market confidence in the sector and expansion of the circle of investors, betting on FinTech. We witnessed explosive development of Asian markets, prospects of which Life.SREDA had repeatedly stated in “Money of the Future” survey. 2014 had a big significance for FinTech market – mature sector players started to pay attention to emerging competitors, while taking measures aimed to provide their future leadership, at the same time new wave of competitors, the FinTech itself, began to play a significant role in the market, facilitating shift from valuation against future potential to valuation on the basis of current multipliers and margins. Sensational IPO of 2014 aided much to sector transparency and perception on the part of analysts, investment bankers and policy makers. A whole pleiad of FinTech-dedicated funds, private and public, emerged last year, and one can hear recognized investors saying aloud what has definitely become a buzz phrase of the season: “FinTech is the next big thing!”. We expect to see yet larger volume of investments, splashy IPOs and truly disruptive technologies in forthcoming 2015.” says Vladislav Solodkiy, managing partner Life.SREDA VC.

Read the full report here.

(image credit: J R)

Press Release: The Kreditech Group, a leading consumer finance technology group, announced today the completion of a USD 200 million credit facility from Victory Park Capital, an asset management firm focused on middle market debt and equity investments based in the United States. The investment reflects investors’ confidence in its big data credit-scoring technology and its data platform to serve the four billion unbanked and underbanked individuals worldwide. It is the largest credit facility in B2C fintech outside the US to date.

The funding strengthens Kreditech’s position as a leader in the consumer finance technology market. The Group will use the new financing to continue its rapid growth at 60 to 80 percent per quarter. With a focus on the geographic rollout and expansion of its product portfolio, Kreditech expects the financing to deliver scale, lower cost and provide flexibility. The Group’s unique technology uses big data gathered from 20,000 data points to feed its proprietary, self-learning, credit-scoring algorithm.

“We look forward to helping support the company’s future growth and success in the consumer finance technology space,” said Gordon Watson, principal at Victory Park Capital. “Kreditech’s credit-scoring model is impressive and has the ability to identify target customers in any market, even underbanked customers in emerging markets.”

“This record transaction is our next step toward becoming the market-leading digital consumer lender. It helps us address the growing demand for loans of longer durations at fair prices,” said Rene Griemens, chief financial officer of Kreditech. “Setting the stage for our upcoming Series C financing round, the credit facility will reaccelerate our growth well beyond the 500 percent per year mark.”

Since its launch in February 2012, Kreditech’s innovative technology has served two million consumers in nine countries. It is one of the fastest-growing companies in consumer finance technology in Europe with a lending run rate of USD 130 million. In June 2014, the Group closed a USD 40 million equity investment by Värde Partners at a USD 190 million valuation. Other institutional investors include Blumberg Capital, HPE Growth Capital and Point Nine Capital.

(Image credit: The Kreditech Group)

Kreditech, the consumer finance technology group, announced yesterday the 100% acquisition of Polish financial tech outfit Kontomierz for a seven digit amount and Kreditech shares.

Founded in 2009, Kontomierz has net revenues of €1 million at positive EBIT, and three-digit annual growth. This is especially impressive considering Kontomierz’s staff is only 16-strong; this elite team will continue to work as an independent section with The Kreditech Group. KontoX- a Kontomierz offering- helps to verify client identity and gain read-only access to bank accounts providing a missing API to bank systems that can sync with any bank globally using sophisticated financial technology.

Kontomierz’s CEO and founder Marcin Truszel believes that this new partnership will help accelerate and diversify the growth of Kontomierz: “Kreditech has a unique big data credit scoring technology,” he says. “We are now part of its vision to serve the 4 billion unbanked and underbanked individuals worldwide. This is the ideal platform for our international expansion and further profitability.”

Sebastian Diemer, founder and CEO of the Kreditech Group, is similarly enthusiastic about their shared future. “With its technology Kontomierz enables us to get unique data in real-time,” he states. “Our subsidiary companies will hence provide an even better banking service to a bigger target group,” he adds, hinting at the strategic rationale to strengthen the Group’s position worldwide.

With this union, Kontomierz can now expect outreach into Brazil, Mexico, Russia and Spain in 2015, whilst Kontomierz will help to fuel Kreditech Group’s growth of 500% percent per annum. Kreditech’s technology, which uses machine learning algorithms to build credit profiles based on 15,000 data points, has already proved extremely popular. Since its launch two years ago, Kreditech has served 2 million customers in nine countries, and is the fastest-growing European technology in the consumer finance space. With such an impressive track record and eye for lucrative acquisitions, the future certainly looks bright for The Kreditech Group.

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(Image credit: Kreditech)

2014 Has been a massive year for Big Data, as it transitioned from an emerging and exciting technology to a somewhat overused buzzword for any application of data science. This was reflected earlier in the year by Gartner’s always insightful ‘hype cycle‘, where we saw the term drop off the ‘Peak of Inflated Expectations’, and begin its descent into the ‘Trough of Disillusionment’.

While companies all over the world have scrambled to add some data science magic to their mix, an increasingly significant knowledge gap developed between the old school business minds and the new data driven youngsters. Lessons that Eric Ries started teaching the startup world in 2011 about validating ideas and quick iteration with evidence based decisions became appropriate across the board. A downpour of new tracking, analytics and visualisation tools has given businesses the opportunity to bring the build-measure-learn cycle into the very heart of their operations, regardless of size or scale.

Let’s take this opportunity to see which were the most exciting Big Data news stories and articles from 2014, based on the amount of engagement across Facebook, Twitter, LinkedIn and Google+:

5. How Ford Uses Data Science: Past, Present and Future

Earlier in the year Eileen McNulty wrote a case study on Ford’s use of Big Data to turn their business around from a $12.6 billion loss in 2006. In November she followed up with Ford’s Chief Data Scientist, Mike Cavaretta, to find out more about the technology and some of their learnings.

4. Indian Government Using Big Data to Revolutionise Democracy

Another follow up post, this time to Furhaad Shah’s article on Narendra Modi’s use of Big Data in the 2014 election in India. Eileen McNulty looked at how Modi’s party was continuing to build their big data strategy into the governance of the country, helping to provide better representation for India’s immense population.

3. The Data Science Skills Network

Throughout 2014 we were very lucky to have Ferris Jumah, one of LinkedIn’s immensely talented data scientist, give talks at our events around Europe. He also shared with us some of his personal research into exactly what makes up the skill set of a data scientist. A fascinating read for anyone with a professional interest in the field.

2. Kreditech Raises $40 Million at $190 Million Valuation

Fintech came kicking from the gate in 2014, with automated credit scoring company Kreditech raising $40 million at an incredible $190 million valuation. It was a record for the German fintech scene, and a strong indication of a very promising growth area for the country. Of all the exciting funding stories this year, this one spread the fastest.

1. 60 Seconds With Mark Cuban: Cyber Dust and Data Security

Tech mogul Mark Cuban is now well known for his super secure messaging app Cyber Dust. He spent a little time talking to us about the other potential for Cyber Dust: Licensing out the technology into the Internet of Things market, to keep your notifications and sensor data private and secure. It’s a fascinating move, and we’re excited to see where it gets picked up.

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(image credit: Eric Fischer)

When it comes to this years big data funding stories, the first thing that probably comes to your mind is Intel’s $740 million investment in Cloudera, or MapR’s $110 million financing round led by Google Capital. You’ll also probably recall funding rounds of companies like Hotonworks, MongoDB, and DataStax too. But aside from these popular Hadoop and database vendors, there has been a lot of interesting funding activity in the big data space.

Take Alteryx, for example, who raised a whopping $60 million in funding last month; or ContextRelevant who went and raised $28 million in just 28 months. Undoubtedly, 2013 was an extremely busy year when it came VC activity in the big data space. This year, however, has been equally exciting!

Below are 7 significant funding stories you may have missed so far this year:

1) InsideSales.com Raises $100M to Predict Sales

InsideSales.com, a company specialising in could-based sales acceleration technology, announced in April this year that it has raised $100 million in series C funding. Polaris Partners and Kleiner Perkins Caufield & Byers led the funding round, with participation from Salesforce, Acadia Woods, EPIC Ventures, Hummer Winbald, U.S. Venture Partners and Zetta Venture Partners.

InsideSales.com provides software-as-a-service (SaaS) to more than 1,000 customers, including large enterprises like Microsoft, Fidelity, Groupon and Marketo. The company sits in between marketing automation services like Eloqua and Marketo and CRM vendors like Salesforce and Microsoft. The aim of InsideSales.com is to use resources from both of these fields to help sales teams become more effective in their operations.

2) Kreditech Raises $40 Million at $190 Million Valuation

The big data finance company Kreditech secured $40 million Series B investment from new and existing global investors in June. It was the largest funding round ever for a German financial services technology company and one of the largest rounds in Germany in 2014. The lead investor is Värde Partners, a global investment manager with fund assets in excess of 8.5 billion USD. Co-lead investor is existing shareholder Blumberg Capital. Other shareholders, including Point Nine Capital, also participated in the round.

Based on automated big data and machine learning credit scoring, Kreditech extends loans to individual customers across the globe in real-time using a fully automated credit scoring system and banking backend infrastructure. The company operates independently from credit bureaus and traditional banking infrastructure. In just 20 months, Kreditech has scored more than 1.5 million individual loans – using a current average of 15,000 data points per application.

3) Big Data Ecommerce Outfit Qubit Scoops Up $26m in Series B

E-commerce analytics startup Qubit secured $26 million in Series B funding in late September, with Accel Partners leading the round. Original investors Salesforce Ventures and Balderton Capital, also participated.

Qubit specialises in tools which assist online retailers to monitor and optimize sales through A/B testing and user centric personalization of content. TechCrunch reports that, with approximately 150 customers in the U.K. and the U.S., including Hilton Hotel, Jimmy Choo, Staples, Farfetch, Topshop and Uniqlo, the company revealed a 260% year on year growth in sales in the six months to June 2014.

4) Sumo Logic Plan to Globalise, Following $30 Million Funding Round

Sumo Logic, whose software manages and analyses IT log files, raised $30 million in its latest round of funding (May this year), bringing their total funding to $80.5 million. The funding round was led by Sequoia Capital, with exisiting investors Greylock Partners, Sutter Hill Ventures, and Accel Partners also participating.

Sumo Logic is a cloud-based software solution which mangages system log files to give companies a greater insight into the functioning of their IT systems. The software offers an insight across a company’s IT infrastructure, including the company’s apps, servers and network. Sumo Logic also uses machine learning in its LogReduce feature to sort log file data into patterns, meaning anomalies and errors and can be identified before the become major issues.

5) GoodData’s BI Platform Rakes in $25.7M in Series E Funding

GoodData, a Cloud based Business Intelligence startup, landed $25.7 million in Series E funding just last month, led by Intel Capital and existing investors Andreessen Horowitz, General Catalyst, Tenaya Capital, TOTVS, Next World Capital, Windcrest, and Pharus Capital. The total funding received so far has now gone up to $101.2 million.

According to Ben Kepes, contributor at Forbes, their analytics platform “allows companies to manage, analyze and visualize all from one environment. He adds that “this approach really democratizes data, allowing managers and business people to generate their own insights rather than having to wait for IT departments and data scientists to run queries for them”

6) SiSense Gains Momentum with $30m Series C Funding

SiSense, a business intelligence startup based in Tel Aviv, announced in June that it had raised $30 million in Series C funding. The round was led by DFJ Growth and included participation from existing backers Battery Ventures, Genesis Partners and Opus Capital.

The company’s software is designed to make big data analytics easier for ordinary, non-technical business users. Workers can combine data from multiple sources for analysis, create visualisations and web-based dashboards, and gain insights through both mobile and desktop devices.

Among the 500 customers of SiSense are eBay, Target, Samsung Electronics and ESPN. The company said that the money from the funding round would be used to grow its workforce, expand into new markets and build its customer base.

7) Marketing Intelligence Startup Radius Picks Up $54.7M in a Bid to Change Conventional Marketing

It was announced in September that Radius, a marketing intelligence platform, secured $54.7 million in series C funding. The funding came from companies and individuals such as Founders Fund, Glynn Capital Management, John Mack formerly of Morgan Stanley, Charles Songhurst formerly of Microsoft, and actor and entrepreneur Jared Leto.

Radius provides sales and marketing teams with access to accurate, updated business information on 30+ million small-and-medium-sized businesses, with a team of more than 50, working out of San Francisco. The new funding will be used to expand its data science initiatives with intentions to remodel market and customer engagement strategies used by companies.

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(Image Credit: FamZoo Staff)

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Hamburg, Germany, 24 June 2014 – The big data finance company Kreditech has closed a Series B round that raised 40 million USD in primary investment from new and existing global investors. This is the largest funding round ever for a German financial services technology company and one of the largest rounds in Germany in 2014. The lead investor is Värde Partners, a global investment manager with fund assets in excess of 8.5 billion USD. Co-lead investor is existing shareholder Blumberg Capital. Other shareholders, including Point Nine Capital, also participated in the round.

Kreditech will use the investment funds to broaden its existing product portfolio and accelerate geographical expansion. Kreditech is one of the fastest growing European tech focused financial services companies offering global online and mobile lending services based on automated big data and machine learning credit scoring. The company is growing at 80 percent per quarter with a current revenue run rate of 25 million USD.

Based on automated big data and machine learning credit scoring, Kreditech extends loans to individual customers across the globe in real-time using a fully automated credit scoring system and banking backend infrastructure. The company operates independently from credit bureaus and traditional banking infrastructure. In just 20 months, Kreditech has scored more than 1.5 million individual loans – using a current average of 15,000 data points per application.

“Kreditech is at the forefront of the rapidly changing consumer finance market and we are excited about the opportunity to invest at an early stage in the tech focused lending sector” says Rick Noel, Partner at Värde Partners.

Sebastian Diemer, Founder and CEO of Kreditech states: “We are pioneers in digital banking.  Our global customers never need to wait in lines at physical bank branches nor depend on the rigid models or obsolete data of traditional credit bureaus. Kreditech enables real time banking for individuals worldwide, including the 5 billion people with no credit score.”

Founded in 2012, Kreditech has grown to more than 140 employees from over 30 countries, managing 11 financial services products in seven countries. Its unique technology uses big data gathered from thousands of sources through real time APIs to fuel its credit scoring algorithm. The self-learning credit scoring model continuously adjusts the scoring factors to encompass and adapt to new products or new countries without any manual involvement.

About Värde Partners, Inc.

Värde Partners, Inc. is an 8.5 billion USD global alternative investment firm that employs a credit-oriented, value-based approach to investing across a broad array of segments and asset types, including stressed and distressed corporate credit, structured products, residential mortgages, real estate, specialty finance, transportation and infrastructure. Founded in 1993, the firm employs over 170 people with offices in Minneapolis, London and Singapore.

About Blumberg Capital

Blumberg Capital is an early-stage venture capital firm that invests in exceptional entrepreneurs with transformative ideas to build innovative and successful companies across domains of Enterprise Software, Digital and Social Media, Mobile and Consumer Internet, Financial Services, AdTech, and Security, among others. Blumberg Capital is headquartered in San Francisco with team members and advisors in Tel Aviv and New York.

About Kreditech

Kreditech uses big data and complex machine-learning algorithms to serve a simple mission: make faster, better, more sustainable credit decisions. The technology is fully automated and identifies and scores individuals online in seconds based on up to 15,000 different data points. Via its platforms Kredito24 and Zaimo, the customer is able to complete the application process paperless in seconds online, mobile or via SMS and receive the funds in their bank account, a credit card  or directly at an ATM in under 15 minutes. Customers can currently apply for short or long-term loans and other financial products in seven countries worldwide, including Poland, Spain, Czech Republic, Russia, Mexico, Australia and Peru. A team of more than 140 passionate people from over 30 different nations works to lead the future in digital banking.

Press Contact

Anna Friedrich

anna.friedrich@kreditech.com

f. +49 (0)40 – 605 905 621

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(Image Credit: Kreditech)

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We caught up with Laurent Schüller, Head of Brand Management at Kreditech, to discuss innovations in the personal finance market and Kreditech’s plan for the future. Kreditech is a BIG DATA infrastructure that allows for credit bureau independent acquisition, identification, scoring, retention management in consumer lending.

Can you tell us a little bit about Kreditech?

The company was founded two years ago in Hamburg. The basic concept was to create a new credit score system. The Schufa credit bureau in Germany provides a credit score for individuals based on data collected over many years. This is an established system but it does not exist in consumer finance emerging markets, or even emerging markets in general. Our idea was to create a credit score that is country- and credit bureau-independent, which can quickly be applied to any market globally.

For example, suppose someone came to our website to apply for a loan. First, we collect up to 10,000 data points and use this to generate a credit score. The score reflects this person’s credit worthiness, and we use this to calculate the risk of default. We then decide as to whether or not a loan would be extended.

We started with short-term microloans. We have since extended our product range to installments and larger loans. We are about to launch additional financial products based on this score, which can be applied to all countries without a large-scale setup.

How did the idea come about?

Well, suppose a private consumer wanted to get a loan in Russia. He can’t get one because he is not rated, and the bank doesn’t know the risk of extending a loan. This highlights two problems. On one side, the bank is not able to evaluate the default risk. On the other, the consumer is not able to prove how trustworthy or creditworthy he is.

We try to help exactly this guy. We provide the credit score for the bank and the loan for the consumer. This is why we are only focused on the so-called consumer finance emerging markets. We are not focusing on Germany, the UK or the US because these are established markets. We are focusing on markets where there is a financial need.

Who is on your founding team and how many people do you have altogether?

The founding team consists of Sebastian Diemer and Alexander Graubner-Müller. Sebastian took on the CEO position, while Alexander covers the technical side as our CTO. They started in January 2012 and the company now has about 120 people in total. Due to strong growth, we expect to triple this number by the end of 2014.

We launched Australia recently. In 2012-2013 we launched in Poland, Czech Republic, Russia, Spain, Mexico and Australia. We plan to get into Peru and Dominican Republic in the next couple weeks. We also expect to be in Brazil towards the end of the year.

How are you different from your competitors?

We decided a couple months back not to focus on B2B anymore, we are now focusing solely on B2C. We want to provide only B2C services because this is what we do best right now. We are developing new technologies to create innovative financial products online. The big idea is to create the ‘Amazon of consumer lending’, a term we use to describe our vision and our strategy.

We have built a unique new platform, Zaimo, that was launched recently. The platform enables us to determine a person’s creditworthiness, evaluate the risk and deliver the right product to the right customer. For instance, you have car insurance but we can offer you something cheaper. If you have a credit card, we can offer a better credit card that is more applicable to your financial needs.

We plan to launch prepaid credit cards and Flexi Credits very soon. We recently launched risk-based pricing. This allows us to offer different interest rates to different customers. For example, a credit-worthy customer will get a loan for better conditions than a person where we’re unable to determine if he is creditworthy or not.

Moving forward, what do you feel the company needs the most?

The customer is important, naturally, but we are quite well-positioned in many different countries due to our online marketing efforts. We have been increasing our market shares in a number of areas, which is a great experience.

Funding is also an important factor. We are currently in a major fund-raising round, which we expect to close in the next month or two. When we finalize this, we expect to move on to the next step of launching new products and into new markets.

The problem is always human resources, especially when you’re talking about data scientists or developers. It is difficult to find a person with innovative ideas on data analytics and a basic understanding of business. It is hard not only for us but for nearly every company in Germany or Europe. There is a bottleneck when it comes to getting the right people on board with a deep understanding of data analytics and statistical modeling. This is the resource that we need.

What is your revenue model?

Our revenue model is making a profit from decreasing the rate of default. We are already profitable in Poland and Spain, which is a big leap because we only launched in these countries about six months ago.

We have to come up with a sophisticated model in each country. Before it reaches a certain stage, we don’t make any money because we are lending our own money. We don’t work with banks, we do it completely on our own. This means we have to improve our technology to decrease the default rate. When we are able to decrease the default rate below a certain stage, say below 10 percent like in Spain and Poland, then we are profitable.

Do you also offer your scoring engines through an API or through other partners? Or do you only use it only for your own lending?

We only use it for our own lending. A couple months ago, we thought about doing this alongside a B2B service. However, we then decided to focus only on B2C. For B2B you would miss the chance to improve your functional model, especially in the US and European markets.

We want to prove that our own platform is functioning, our models are functioning, our technologies are functioning, that our business is functioning. That is why we chose to go into the Australian market, for example. It’s a highly-competitive, highly-established market and if we can do it there, we can do it anywhere. We delivered in Australia to prove to ourselves and our partners that we are able to capture market share in a highly competitive market.

If you look at one year from now, where is Kreditech going to be?

We are growing and moving forward so fast right now. We sometimes set goals one year ahead, but reach this goal between six and eight months. We really hope to launch successfully 4 to 5 new markets in the next 12 months, and to reach a stage where we see connections to what is happening internationally. This is one factor to show that we are successful with what we are doing.

Having a broader international presence is the important part here. We would like to be able to grow our international presence even more, while being able to prove that customers still continue to have a need for our services.

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Kreditech uses BIG DATA and complex machine-learning algorithms to serve a simple mission: make faster, better credit decisions. The technology identifies and scores individuals online in seconds and decides over an instantly paid out loans based on 15,000 dynamic data points. Kreditech uses this technology to provide banking products to customers in emerging markets, where established banks lack traditional, historical credit bureau data. Kreditech is headquartered in Hafencity, Hamburg.

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(Image credit: Kreditech )