American startup ‘Vouch’ which takes help of a person’s social network connections to advance credit to them, has raised $6 million in series A round of funding.
The new round of funding has been raised from Core Innovation Capital, Data Collective, Stanford StartX Fund and Cooley along with existing investors First Round Capital, Greylock, IDG Ventures and AngelList.
In order to advance credit Vouch uses a predictive model for loan underwriting based on trust, whereby prospective borrowers leverage their personal network of friends and family to act as loan sponsors. People sponsor a borrower by choosing an amount of money and agreeing to pay back that amount if the borrower defaults on their loan.
Sponsorships by people on the borrower’s social network are used alongside standard financial data to gain a more complete picture of creditworthiness, which can help the borrower get a larger loan, lower their interest rate, or both.
The company was officially launched in April this year and has already raised a sum of $9.6 million in total including this round of funding.