'Thin file' loans startup Koyo closes $50M Series A led by Force Over Mass

Koyo, a fintech startup using open banking to offer loans to people with poor credit histories, has closed a Series A funding round of $50 million in debt and equity led by Force Over Mass, with participation from existing investors Forward Partners, Frontline Ventures and Seedcamp. New investors in Koyo include Force Over Mass, Matt Robinson (founder of GoCardless, co-founder of Nested), and angel investors from the banking and lending sectors. It last raised $4.9 million in 2019. With many sectors of the population having racked up debts during the pandemic, Koyo is likely to benefit from this underclass of consumer, normally rejected by the main loans companies.

The startup says it uses Open Banking data (bank transactions), rather than credit agency scores to underwrite risk for lending to consumers. In other words, it looks at how customers spend their money on a day-to-day basis, rather than what a credit agency says about them. The idea is to offer attractive rates and cheaper borrowing to a usually underserved market, usually known as "thin file" customers (short or no credit history) or "near prime" customers. The near-prime market equates to 13-15 million people in the U.K.

Thomas Olszewski, Koyo’s founder and a former VC with Frontline Ventures in London and Cavalry Ventures in Berlin, said in a statement:

Koyo launched at the start of the … pandemic and has proven that innovative use of open banking data results in better risk decisioning and ultimately has enabled us to grow the business during one of the toughest economic times the U.K. has faced. I’m proud to have continued to give many people in the U.K. access to competitively priced credit, during a time where most traditional lenders were quick to scale back their lending.

Filip Coen, Force Over Mass partner, said, “We invest in companies that combine transformational technology with strong business models, and Koyo indexed strongly in both of those departments. Koyo has built a first-class foundation over the last 18 months of operation, and we’re excited to be part of its future.”

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