Many facets of the finance industry, a highly regulated sector of the economy, are still reworking the tools used to move around money so that they fit a digital world.
Digital mortgage lenders, for example, are having a field day, pulling in millions from investors who see opportunities to make money by speeding up the historically tedious process of getting a home loan. One such lender, Better.com, raised a $160 million Series C financing round Monday.
Other companies, including a new San Diego startup called Blooma, are—instead of working to disrupt traditional lenders—offering services that promise to digitize aspects of the jobs that lenders already do.
Blooma was started in July of 2018 by Shayne Skaff, whose career has been in the software industry, and Michael Persall, founder of financing company ABP Capital, who wanted to try and use software to automate the origination process for commercial loans at ABP.
The startup’s software automates the process that leads up to the decision whether to make a commercial loan. By making that process quicker and more efficient, lenders can speed up the rate at which they make revenue, Blooma says. Persall’s ABP tested the software as it was being developed; the company, including its Austin, TX-based chief technology officer, Shy Blick, worked with a team of programmers in Tel Aviv, Israel, to build the platform.
The software screens incoming deals, scraping information about borrowers and assets from across the web, then spits out a score based on how important the lender considers the different factors at play. Skaff said more advanced analytics come into play as its software pulls in data from sources the lender doesn’t normally use to vet such deals, such as news articles and social media, and factors that into the ranking it provides. Lenders that license the software can customize it to reflect their level of risk and other preferences.
Two other banks are also using the platform now, Skaff said, both with commercial real estate assets of more than $1 billion, which is the company’s target market.
“It really takes data to get the full benefit,” he said. “If I’m going into a lender that is evaluating potentially lending to 100 potential different borrowers, I could do that in literally seconds or minutes what would in some cases take underwriters a week or more.”
Blooma is one of six startups at the Sandbox, a tech incubator Skaff opened last June in Sorrento Valley to provide space and resources for companies focused on machine learning and artificial intelligence technologies. Companies in the incubator give up about 5 percent equity in exchange. Skaff opened the business with backing from Mooring Ventures, a venture fund he started in 2015 with Scott Heron; some businesses in the Sandbox, including Blooma, have gotten funding from Mooring. Blooma is the first startup to spin out of the Sandbox.
Mooring and ABP financed the company until its first outside financing, a round totaling $2.75 million announced Tuesday. Floodgate, a seed-stage firm based in Silicon Valley, led the financing round. Skaff, who took on the CEO role at Blooma about four months ago, knew the Floodgate team through Mooring, which had previously invested alongside the firm. Floodgate partner Arjun Chopra joins the Blooma board as part of the deal.
Abstract Ventures, Crescent Ridge Partners, and Serra Ventures also invested in the round. Crescent Ridge was started by San Diego investor and entrepreneur Allison Long Pettine, who is also a member of the board of directors at the Sandbox. Serra is based in Champaign, IL, but one of its founders and managing partners, Steve Beck, is based in San Diego.
The money Blooma raised will go toward building the company’s engineering, operations, product, marketing and sales infrastructure, including doubling its nine-person team in the next 12 months, according to Skaff.
