Thought Leaders in Artificial Intelligence: Prashant Fuloria, Chief Product Officer at Fundbox (Part 4)

Sramana Mitra: You explained what data you’re drawing from. Based on that data, what kind of conclusions are you drawing? Of course, you are drawing conclusions about the health of the business. Is there any kind of correlation? Are you trying to score them?

Prashant Fuloria: Absolutely. When we run our AI on the data that we have, we essentially build our own credit rating. Based on that, we place customers in different risk buckets. Based on that rating, we decide whether to approve a customer right away. If so, how much credit would they have access to? Very often when we are not able to approve the customer, we give them the option to remain connected with us.

As they grow and as their businesses evolve, we could help them eventually. That’s how we work. The moment a customer starts working with us and starts using our working capital, that gives us a much deeper relationship with the customer and access to a lot more insight about the customer as well. Now there’s a lot more information about how they’re coming to Fundbox and how they’re using the funds.

Sramana Mitra: What are the denominations we are talking about?

Prashant Fuloria: For our typical customer, the amount of capital that we extend starts from a few thousand dollars to well over a hundred thousand dollars. We’re not setting up million-dollar lines of credit today. That’s not the current focus of the company.

We recognize that there is a very large number of underserved businesses who are too small to be profitably handled or underwritten by traditional financial services institutions. From a business standpoint, you can imagine on the smaller end, we have a sole proprietor who’s making $50,000 a year in revenue all the way up to a company that has 50 to 100 employees that’s making $5 million to $ 10 million in revenue. That’s the range of the customers that we work with.

Sramana Mitra: Very interesting. Lift yourself out of your specific job and specific company. Since you are steeped in the FinTech world, talk to me about what are the trends of the FinTech world vis a vis AI? What are some interesting white spaces where you would encourage people to look for new business opportunities?

Prashant Fuloria: You asked about trends. It might help with a little bit of a picture of what we see out there in the market today. We’re a mission-driven company. Our customers are small to medium-sized businesses. There are about 30 million small businesses in the country today. They’re important without a doubt. The small business sector is really important. It provides employment. About 50% of the private sector employment in the country is from small businesses.

The majority of these are SMB to B. This is where the traditional way of working with your customers and vendors, sending out invoices, and then waiting to hear back is a real drain on individual businesses and also on the economy. Our research shows that 64% of small businesses are waiting on late payments. If you look at the dollar value, the average amount of payments that are delayed for any small business is $84,000.

On an average, a business at any point in time has $84,000 of unpaid invoices. If we extrapolate this across all the small businesses, that’s over $800 billion in unpaid invoices. There is this big amount of capital that’s locked up in the industry today that’s not available for use by small businesses. That’s just some macro data.

This segment is part 4 in the series : Thought Leaders in Artificial Intelligence: Prashant Fuloria, Chief Product Officer at Fundbox
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