With a pitch to provide utility payment data to lending companies, Atlanta-based Urjanet has managed to raise $20 million in new financing.
Lenders are hungry for new ways to loan money to consumers but are struggling to pick up borrowers among debt-wary millennials who remember the pain of the 2008 financial crisis and are unwilling to take the perceived risk of lending to potential low-income borrowers.
In many cases, these borrowers also haven’t accumulated enough data to be seen as viable candidates for many types of loans. It can help, by providing data on how regularly potential borrowers pay their bills.
That’s where Urjanet comes in, by providing data on how regularly potential borrowers pay their bills.
The opportunity to play in the financial services space was enough to attract the fintech and healthcare-focused investment firm Oak HC/FT. Previous investors Grotech Ventures, and Correlation Ventures, Imlay Investments, and the Georgia Research Alliance also participated in the round.
The $20 million in new financing is yet another indicator of the burgeoning startup scene that’s emerging in the southeast.
Urjanet was actually founded at the Advanced Technology Development Center, a state-financed incubator affiliated with the Georgia Institute of Technology. The company’s technology was initially developed thanks to a grant from the National Science Foundation (whose funding would be likely be cut in any proposed budget from the new administration) and the GRA at the technology development center.
Urjanet’s technology is used to track cost and usage information from 4,000 utilities in 30 countries That data collected from electric, gas, telecommunications, water, and waste providers, is used by small and medium-sized businesses, and multinational companies, to automate accounting and bill processing, manage energy costs, and comply with reporting regulations, the company said.
In many countries where loans are only now becoming available to consumers, data on consumer spending on utilities could prove invaluable in determining loan eligibility.
While it may seem slightly staid, access to loans is a critical component of economic development, according to organizations like the International Monetary Fund.
“The benefits of financial inclusion and inclusive growth are clearly established. Access to financial services opens doors for families, allowing them to smooth out consumption and invest in their futures through education and health,” said Mitsuhiru Furusawa, the deputy managing director of the IMF in an address to West African politicians in September. “Access to credit enables businesses to expand, creating jobs and reducing inequality. Financial inclusion is the bridge between economic opportunity and outcome.”
In the U.S., the Consumer Financial Protection Bureau (also on the chopping block), has joined with private financial services companies to explore the incorporation of alternative consumer payment data in credit and lending decision-making.
“Oak HC/FT’s financing will enable us to broaden our reach to the world’s largest corporations and utility providers, as well as accelerate our launch of new applications using utility data as an alternative source for credit scoring and identity verification,” said Sanjoy Malik, Urjanet’s chief executive, in a statement.