We offer our view of Pave because it is part of the total ARK Venture Fund portfolio. To see the most updated portfolio, please click here.
Pave.dev is a credit-scoring and attribute platform that lenders and debt facilities can use to underwrite decisions and risk analytics. The firm gained traction as a cashflow underwriting analytics tool designed to identify healthy borrowers, optimize credit limits, and improve collections outcomes. While Pave currently offers a cashflow[1] application programming interface (API) and two scores for cash advance, the company aims to provide scores for all types of credit (personal loans, installment loans, Buy Now Pay Later, credit card, auto) in order to lower manual underwriting costs, score users on their ability to pay, optimize loan pricing, and detect early signs of delinquency.
Founded by Raymond Rouf and Ema Rouf, Pave operates within a nascent market, and its primary competitors are legacy underwriting metrics (FICO and the credit bureaus that support it) and financial institutions that insist on creating scores and attributes in-house. Raymond and Ema now have co-founded three companies within the analytics space: (1) Pave.dev, founded in 2020; (2) GraphScience, founded in 2008, a Facebook Ads optimization platform acquired by Centro in 2015; and (3) Adazza, founded in 2014, a consumer finance analytics platform for telecoms and mobile money operators in Africa. Learning from Adazza, Raymond and Ema seek to deliver a similar value proposition with Pave in the United States.
In our view, the current credit risk model involving FICO and opaque credit bureaus is ripe for disruption. Using FICO scores to underwrite all consumers across all types of credit is archaic and monolithic, cutting access from consumers who have the ability to pay but have inadequate credit scores. As fintechs and financial institutions collect vast amounts of heterogenous data, underwriters can benefit from incorporating such data into their credit risk models—data that are not reflected in FICO scores, including balance trends, income trends, and behavior, shocks, and saving and investing trends.
Pave aims to operate as the analytics layer within the next-gen credit underwriting ecosystem, facilitating the analysis of financial data at scale, which requires significant capital and engineering talent. Customers can combine their own proprietary data with various alternative data streams across loan performance data, core banking data, aggregator data, and credit bureaus to keep their credit risk models up to date. Because Pave combines customers’ financial data in an anonymized way, the company can provide dynamic credit scores and customer profiles by leveraging aggregated customer data—a significant advantage over traditional credit bureaus that must purchase all available data from various sources. With its compelling partner ecosystem that includes Snowflake and Alloy, we believe Pave has significant potential to disrupt the credit-scoring industry.
Disclosures
We offer our view of Pave because it is part of the total ARK Venture Fund portfolio. To see the most updated portfolio, please click here. Holdings subject to change. Not a recommendation to buy, sell, or hold any specific security.
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Cashflow is the total amount of money being transferred into and out of a business, especially as affecting liquidity.
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