The alternative lender Just Cashflow has begun harnessing augmented intelligence (AI) to identify promising startups through their online footprint – including social – and approach them directly.
The company says start-ups are usually caught in Catch-22 situation of being unable to access financial support, because lenders traditionally insist upon two or more years of accounts as a sign of healthy trading.
This means the odds are stacked against such businesses if they can’t access the funding they need to invest and grow.
They estimate that more than half of the UK’s SMEs have been denied bank loans in their early days, a lack of support that has driven two-thirds to dip into their own pockets, with many using savings or even re-mortgaging their homes.1
Just Cashflow’s idea is to use their AI to turn this situation on its head, with promising companies proactively approached with an offer of financial support.
The AI assesses around 16,000 new companies that register with Companies House each week. Thousands of data points are analysed, including directors’ online footprint, incorporating company websites and social media platforms such as LinkedIn.
- AT A GLANCE:
- Augmented intelligence is used to proactively identify new companies that have the greatest potential to be successful
- AI searches online footprint of newly registered companies – including their social media presence – for positive indicators
- Start-ups are often rejected by traditional lenders who require 2+ years’ accounts. Most rely on friends, family or personal borrowing
This produces a so-called ‘Propensity Index’ that shows the businesses that have the greatest potential for success. Underwriters then review this shortlist and the most promising companies are approached.
For example, a new business consultancy focusing on the energy sector wouldn’t usually be able to attract immediate financial support.
But because this system examines associated online materials, it may well find that the lead director once held an extremely senior position with a major oil company and is incredibly well connected.
This would significantly increase the propensity for this new business to be successful in the eyes of the AI. While obvious upon explanation, 16,000 weekly registrations would prove impossible to wade through manually.
“This type of new business and thousands like them are simply invisible to traditional lenders. And if the owners go looking for financial support, they’re almost certain to get a ‘computer says no’ response,” said Just Cashflow Executive Chairman John Davies.
“The innovative use of AI enables us to turn startup business lending on its head by finding these businesses that would otherwise be rejected but are viable lending partners. It would be impossible to do this without harnessing new technology even if you employed hundreds of additional staff.
“AI does the heavy-lifting to find the right targets, and our highly experienced underwriters make the ultimate lending decisions.”
The initial support Just Cashflow is offering includes a £25,000 line of credit, one that works the same as a traditional bank overdraft, alongside a range of free anti-fraud tools to assess customers or suppliers – and access to other services as required, such as foreign exchange for companies trading outside the UK.