Startup pins its sights on using AI to disrupt credit markets, raising $100 million

Investment startup Pagaya has raised $100 million to invest in asset-backed securities (ABS), the company has announced in a press release. The New York and Israel-based firm uses machine learning and big data analytics to reshape asset management, focusing particularly on fixed income and alternative credit. Now, it’s turning its eyes towards ABS. Rather than purchasing entire pools of previously assembled assets, Pagaya is planning to buy individual loans and use AI in the selection process for its clients.

“We’re thrilled to provide cutting edge opportunities to our partners, paving the way for practical uses of AI in the ABS market,” said Gal Krubiner, Pagaya’s CEO and co-founder. “We look forward to creating more opportunities like this in the future, and to driving the adoption of AI in traditional finance. We’re just a few years away from all collateralized loan obligations (CLOs), mortgage-backed securities (MBS), and ABSs being managed by AI.”

The company manages $450 million, and Pagaya co-founder Gal Krubiner claims the company is nearing $500 million. In this round, Pagaya concentrated on short-term personal loans, however, in the future, it’s also planning to move to a bigger market—credit card loans and auto loans.