- UK fintechs partner to reduce risk for investors funding COVID-19 recovery efforts for SMEs reopening after lockdown
- Wiserfunding SME Z-Score to enhance Crowdz SMARTSCORE credit scores so investors can better deploy urgent invoice financing to SMEs via Crowdz, following 5000% growth
LONDON, UK 10 AUGUST, 2020: Invoice financing marketplace Crowdz, has today announced it has partnered with leading business credit score provider, Wiserfunding, to provide its investors with a new element to its credit risk assessment capabilities, as global economies undertake recovery efforts in the wake of COVID-19.
More confidence for investors with the market’s most accurate risk assessment tool
Wiserfunding, the latest venture from renowned NYU Stern professor Edward Altman, builds upon his famous Z-Score model, using cutting edge technologies to source and process structured and unstructured data. Wiserfunding SME Z-Score and Probability of Default will deliver up to 95 per cent default prediction accuracy for Crowdz’ receivable financing investors, 20-30 per cent higher than other industry standards which rely on manual risks assessments to identify high-risk customers. The score is tailored specifically for SMEs with revenue between £500K and £200M.
Wiserfunding will join a number of indicators that comprise Crowdz’ proprietary SMARTSCORE, delivering the market’s most accurate risk assessment, as more small and medium enterprises (SMEs) than ever seek financing.
The Crowdz SMARTSCORE provides a real-time assessment of probability of default, payment, and soon, probability of supply, and ESG (Environmental, Social, and Governance) reputational risk.
Crowdz CEO and founder Payson Johnston said: “The UK market is a high priority for Crowdz and this partnership, alongside our participation in an FCA Sandbox test reiterates our focus on building a responsible and impactful presence in the region as we expand.
“With more UK businesses than ever seeking additional capital to sustain their businesses, the partnership will safeguard Crowdz’ investors in providing financial relief to SMEs and support the broader economy by reducing reliance on government or bank funding.
“Since the start of the COVID-19 crisis, Crowdz has seen a 5000 percent increase in business users globally. Partnering with Wiserfunding is expected to boost this figure significantly by enhancing the comprehensiveness of our SMARTSCORE.
“As an addition to Crowdz SMARTSCORE, the introduction of Wiserfunding will help investors funding Crowdz’ SME community to better allocate funds, and help SMEs hardest hit by COVID-19, get back on their feet. More broadly, by increasing our capacity to fund more SMEs, this partnership makes the market more efficient, mitigates the risk of an SME credit bubble, and will help to rebuild the economy,” he said.
Support for UK businesses during the hardest economic period in decades
The partnership comes as the UK’s debt soars to its highest levels since the Second World War, with borrowing surpassing GDP at a record £103.7bn and economic outlooks bleak.
80 percent of UK small to medium enterprises say their revenues are declining due to the pandemic, with one in four concerned about defaulting on loans. Under current conditions, more than half of the UK’s 5.9 million SMEs would be out of business in less than a year, especially if revenues take a 10-30 percent hit, according to new McKinsey & Co data.
Gabriele Sabato, CEO of Wiserfunding said: “We are absolutely delighted to be able to support Crowdz in their efforts to fund SMEs’ growth. By providing our independent, accurate and credible credit risk assessment for SMEs, Crowdz will be able to attract more institutional investors to their platform and ultimately, benefit the UK economy by funding a larger number of SMEs. In these difficult times, SMEs desperately need smart solutions such as the Crowdz platform and we look forward to playing our role in boosting investors’ confidence”.
Partnerships to build foundation for Crowdz’ UK launch, driven by focus on fintech responsibility
The announcement builds on Crowdz’ and Wiserfunding’s ongoing relationships, both members of the COVID-19 Fintech Taskforce, responding to the urgent need for financial support from UK SMEs impacted by the pandemic. The initiative aims to enable banks, alternative lenders and private debt lenders to digitally deploy funds to businesses during the crisis.
For more information visit www.crowdz.io
Crowdz is modernizing invoice financing and invoicing practices, particularly for small and midsize enterprises, to revolutionize the $9 trillion worldwide receivables market.
Founded in 2014, Crowdz is headed by its co-founder and CEO, Payson E. Johnston, who served for 18 years’ as global B2B supply-chain Senior Manager for Cisco. In 2019, Crowdz closed a $5.5M Series A led by Barclays Bank and BOLD Capital Partners. Crowdz’s technologies are covered by seven pending patents.
Crowdz is a graduate of the world-renowned Techstars, 500 Startups, and Plug & Play accelerator programs. Investors in Crowdz include; Barclays, Bold, Techstars, Augment, TFX. Angel investors in Crowdz include; Chris Adelsbach, Managing Director of Techstars; Susan Standiford, Chief Technology Officer for IKEA; and Dr. Jürgen Wolff, Founder and Former Chief Executive Officer of Mercedes Pay.
About Crowdz SMARTSCORE:
The Crowdz SMARTSCORE looks at probability of default, probability of payment and in the future will look at probability of supply, and probability of ESG reputational risk. The SMARTSCORE enables funders, banks, and enterprises to track the risk of buying receivables as well as monitoring real-time risks in supply chains. The Crowdz SMARTSCORE is addressing the unique needs of tracking buyers and sellers in the global supply chain. We have also seen important trends kicking off in Europe, but expanding globally, to track the performance of companies around ESG (Environmental, Social, and Governance) and be able to make investment, purchasing, and sourcing decisions based on this information.
Wiserfunding enables traditional and alternative lenders to better allocate funds to SMEs, helping them to build their assets, lend money in a risk-managed way, and reduce the cost of acquiring new customers. By accessing more comprehensive data to show which companies will likely generate long term value, lenders can achieve their mandate of lending funds to UK small businesses whilst not over-leveraging themselves.
Building on the Z-Score model, which has stood as the industry standard for 50 years, Wiserfunding uses Artificial Intelligence to assess intangible factors such as corporate governance, management capacity and macroeconomic outlook. Wiserfunding’s platform requires just a company number to get started and is managed by a team of risk experts. The platform provides a 12 month probability of default and uses a proprietary Bond Rating Equivalent method to ensure that risk assessments are comparable across industries and markets.
By informing better lending decisions, Wiserfunding helps lenders support the backbone of the UK economy and mitigate the risk of a credit bubble by reducing default rates. Alternative lenders, whose lending practices are under close scrutiny, can build their loan books and generate credibility with their own investors through mature risk management. SMEs themselves can better understand their risk profile and take decisions that will help secure funding for their business.
Wiserfunding is co-founded by Edward Altman, Professor of Finance at New York University’s Stern School of Business and a leading academic in distressed debt markets; and Gabriele Sabato, former Head of Risk Appetite Portfolio Decisioning at RBS.