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Bengaluru: Fintech startup Crediwatch has raised $3.2 million in a Series A funding round, led by ARTIS Labs. Abstract Ventures also participated in this round, Crediwatch said, in a statement on Tuesday.

Prior to this round, the statement added, Crediwatch raised $1.6 million from Modern India Ltd, the family office of Vijay Kumar Jatia, Contrarian Vriddhi Fund, Vaibhav Domkundwar’s Better Capital, Mekin Maheshwari (Flipkart’s former Chief People Officer) and Pithambar Gona (former managing director of Blackstone Pvt Equity Asia), bringing the total funding till date to $5 million.

Crediwatch is building Artificial Intelligence (AI) and Machine Learning (ML) tools to help the financial services industry in India reduce credit risk. The Bengaluru-based startup offers a dynamic ‘Trust Score’ derived from data points that are extracted from several formal and alternative sources, and analysed, to help lenders assess borrowers and monitor them close to real time, the statement added.

Meghna Suryakumar, founder and chief executive officer of Crediwatch told Mint, over the phone, that the funds will be “primarily used to improve and scale up our models for the dynamic ‘Trust Score’ on businesses, especially small and medium enterprises (SMEs)."

The company has 41 employees at present, and will hire 20 more, mainly in Bengaluru. “We plan to hire good resources on the product side as we are doing a lot of research and development," she said. The company also plans to expand its sales team and customer base in India.

Suryakumar added that Crediwatch works with institutions such as State Bank of India (SBI), Karur Vysya Bank, and Aditya Birla Finance Ltd. “If you look at the total outstanding credit in India, 50% of it belongs to the PSUs who have lent to the market, including to SMEs. To solve the problem, in terms of reducing the friction costs of lending, you would need business models that provide good technology solutions and products to the large banks," she said.

Stuart Peterson, General Partner with Artis, said, in the statement, “The increasing digitization of business data against the backdrop of a failure of conventional credit rating and underwriting methods provides a unique opportunity to create a scalable business using AI/ML to provide unprecedented insights. These are massive trends that are just now beginning to play out within India and Crediwatch finds itself ideally positioned to lead this digital revolution."

“We have already seen various algorithm-based lending models trying to address the issues pertaining to digital lending, but the lack of a data utility platform for the industry has created a gap. Crediwatch is one of the few businesses that are committed to addressing this gap and we are delighted to offer our support," Abstract Ventures Partner Ramtin Naimi said, in the statement.

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