Uplinq uses alternative data to improve loan approval for SMEs

• Uplinq uses alt data and artificial intelligence to measure the risk of SME borrowers.
• The startup comes with a score for SMEs that gives the likelihood of a default.
• Here is the deck Uplinq used to raise a $1.8 extension round.

A fintech startup trying to bring alternative data to small business lending is catching the attention and dollars of some of the most notable fintech investors in the area.

Uplinq, a two-year-old startup that provides an alternative risk calculation to credit scores, just secured $1.8 million in a pre-seed expansion round with ATX Venture Partners, which has invested in other back-end fintechs, such as payroll startup Atomic. Other investors in the round include Rex Salisbury, a former A16z investor who launched his own fund, and Daniel Moore, a former chief risk officer at Scotiabank.

The latest round brings Uplinq’s total funding to $5.6 million, with the startup raising its first pre-seed round of $3.5 million in April 2022. The company declined to disclose its valuation.

Uplinq uses alternative data to gauge the risk of small and medium-sized business (SMB) borrowers, a customer segment that the startup’s CEO said is often overlooked by traditional banks.

“Basically, it’s ‘give me three years of financials, let me pull a credit score on you and the business and then let me make a credit decision,'” Ron Benegbi, CEO of Uplinq, told Insider. “Well, in today’s world, Do most small businesses have three years of financials? And if they do, are they going to be accurate? And are credit scores really an accurate reflection of their true creditworthiness?”

The startup uses alternative data, such as foot traffic and cell phone signals in the business’s area, or real estate and tax information obtained from the Department of Commerce, to get a more complete and accurate picture of the business, Benegbi said. Uplinq also pulls in market data to predict how events around the world could affect business, from inflation affecting prices to spillovers from the war in Ukraine, he added.

Uplinq provides its lenders with two statistical scores: the probability that a loan will default and a so-called “confidence score” that the guarantee complies with banking regulations and the models can trace the results back to the underlying data.

Uplinq was launched in autumn 2022 and works with four banks in the US and Canada, Benegbi said. However, in previous pilots with banks, Uplinq was able to increase loan approvals by at least five times without pushing lenders outside their desired credit box or risk exposure, Benegbi said.

“They’re all downs, that’s where we start,” Benegbi said. “Give us all your rejections in the last 24 months, and let us show you why you should have approved at least 50% of them based on your credit criteria.”

Here’s the 14-page pitch deck Uplinq used to raise $1.8 million.