According to Pagaya’s announcement on Thursday, the round is co-led by a venture capital fund Oak HC/FT and American Express’s former chairman and CEO Harvey Golub. Other investors include New York-based family office GF Investments, Israel’s insurance firm Clal Insurance Ltd and its seed investor Viola Ventures.
The company said, the Series-B funding will fuel its scalable, tech-driven approach to asset management and help further develop its proprietary algorithm to enter new data-rich asset classes. Additionally, it will also grow its team particularly data scientists and AI specialists and launch new investment strategies next year.
As part of the investment, Golub will join the company’s board. Dan Petrozzo, venture partner at Oak HC/FT, former Partner and Global Head of Investment Management Technology at Goldman Sacks, and former chief information officer of Fidelity Investments, will also be inducted into the company’s board.
With offices in New York and Tel Aviv, Pagaya was co-founded by Yahav Yulzari, Avital Pardo and its chief executive Gal Krubiner in 2016. Pagaya focuses on deploying machine learning algorithms and big data analytics to deliver measurably higher profits across the fixed income and alternative credit spectrum.
“AI will be a massive part of institutional finance in the future, and the top-notch team at Pagaya has developed the most advanced approach to implementing AI in investment management,” said Petrozzo.
Its algorithm analyzes millions of data points to assess risk in different financial instruments, identify emerging alternative asset classes and generate an excess return in those sectors such as the multitrillion-dollar consumer credit lending market for institutional investors.
“Even today with an increase in the use of technology in underwriting, there’s a gap between institutions and good borrowers which limits consumer access to the right capital. Pagaya is closing that gap with their AI,” said Golub.
Pagaya closed a $75 million debt-financing deal with Citi in February, and hired Ed Mallon, a 20-year BlackRock veteran, as its chief investment officer. Pagaya manages $250 million in capital, principally from institutional investors including banks, insurance companies, pension funds, asset managers and high net worth investors.