Kaaj Raises $3.8M Seed to Revolutionize Credit Risk Automation

After a decade immersed in credit risk at companies like American Express and Varo Bank, Shivi Sharma noticed a critical inefficiency. Teams were dedicating equal time to analyzing loans of vastly different sizes. This meant that assessing smaller loans, even those worth $100,000, was unprofitable for lenders compared to larger loans of $5 million.

This realization led her and her husband, Utsav Shah, to identify a significant opportunity. “The vast majority of small business owners couldn’t access the capital they needed to grow, simply because the economics didn’t work for banks,” Shah told TechCrunch.

Leveraging their combined skills, they saw the potential to transform the industry. “Between our skills in building AI-powered decision-making systems at scale and our expertise in credit risk and fraud risk assessments in banking in financial services, we realized we could apply next-gen AI agent workflows to solve this decades-old problem,” he continued.

Automating Credit Risk Analysis

In 2024, the couple launched Kaaj, a platform designed to automate credit risk analysis, drastically reducing underwriting time from days to minutes. According to Kaaj, they have already processed over $5 billion in loan applications, with clients like Amur Equipment Finance and Fundr utilizing their services. On Wednesday, the company announced a successful $3.8 million seed round led by Kindred Ventures and Better Tomorrow Ventures.

AI-Powered Efficiency

Here’s a breakdown of the product’s functionality:

When a small business applies for a loan, they submit necessary documents such as financial statements, bank statements, and tax returns. Traditionally, underwriters manually verify this information and log it into their Loan Origination System (LOS), a process that can take days.

Kaaj employs AI to automate this process, enabling the platform to:

• Identify and classify information.
• Verify data accuracy.
• Organize information within the LOS.
• Detect document tampering to support the underwriter’s fraud team.

Kaaj seamlessly integrates with existing Customer Relationship Management (CRM) systems, including Salesforce, HubSpot, and Microsoft. This integration allows lenders to quickly assess whether a business meets their policy criteria.

“This allows a team processing 500 applications monthly to handle 20,000 applications with the same staff, making smaller loans economically viable,” said Shah, Kaaj’s CEO.

Expanding Access to Capital for Small Businesses

Kaaj aims to make it more cost-effective for banks to assess smaller loans, thereby increasing access to capital for small businesses.

Standing Out in a Competitive Market

While companies like Middesk, Ocrolus, and MoneyThumb operate in the same market, Sharma believes that Kaaj differentiates itself by automating the entire credit analysis process.

“We do this by deploying agentic AI workflows that mimic their teams to help lenders analyze end-to-end loan packages,” she explained.

Future Plans

The new funding will accelerate product development and facilitate expansion across independent and small business lenders. “We’re focused on enhancing our AI agent capabilities, expanding our module offerings, and scaling our customer base of lenders and brokers beyond our current footprint,” Sharma stated.