This column series has recently looked at a number of target sectors that were popular with SPACs during the 2020-2021 boom that are now coming back into favor.
Fintech is one of the industries that SPACs were most smitten with during that period, and, five years on, the results for those de-SPACs have not been sterling overall. This was due to a number of macro factors, but, most of these companies were also at their core software companies. So, even as the market has come back for tech, it has not done so uniformly for the SaaS and payments space.
Instead, the market is now hungry for companies with proprietary AI capabilities that replace whole portions of the financial services infrastructure rather than simply enhance its processing speeds. That dynamic has put an entirely new type of fintech company into the forefront as the likely next generation of SPAC target.
HighRadius
HighRadius got into this game early, integrating AI and machine-learning technologies well before they were mainstream.
CEO Sashi Narahari founded the company in 2006 and brought his own background in mechanical engineering to the question of how to replace and automate whole company structures. In particular, HighRadius has essentially looked to take the whole accounts payable, credit management and financial reporting departments off the board.
It has done this with a particular focus on the automating the order-to-cash and record-to-report processes that traditionally would require whole teams of people in a large organization. Instead, HighRadius’ agents take over, handling all of the follow-up on orders and making cash available instantly.
It estimates that its services, largely run by AI agents, produce on average a -50% reduction in idle cash and a +40% improvement in overall productivity. HighRadius also believes in itself enough to charge its customers zero upfront onboarding or recurring fees, but rather custom compensation based on whatever KPIs that business seeks to improve. But, the proof in the pudding isn’t really the company’s claims, but in its client book.
It has built up a customer base of about 1500 corporations including some of the world’s largest like Adobe (NASDAQ:ADBE), 3M (NYSE:MMM) and Unilever (NYSE:UL), comprising overall about 10% of the Fortune 2000.
HighRadius last raised outside capital in 2021 in a $300 million Series C that valued the company overall at $3.1 billion. As recently as February 2024, it still had enough cash on hand itself to be acquisitive, buying out peer Cforia Software, largely for its client book. But, a SPAC raise and access to public capital could make more moves like that even more seamless
Auquan
Auquan has kept an even lower profile in the private funding space, having only raised a series of small seed rounds. But, its use in the financial services space may be even broader.
It claims to serve about 40% of the globe’s top 50 finance institutions, using its agentic AI to automate credit risk profiles, valuation and other analysis. Auquan boasts it can compress a five-day credit portfolio analysis into one hour and regular monitoring work like covenant compliance into a single-hour monthly process.
These AI agents leave their work open and fully audible for the institution’s own double-checking and compliance. But the it estimates its tools still save finance professionals about 30 hours per week and allow them to evaluate three times as many credit opportunities. So far, Auquan estimates that it has analyzed over $1 trillion in credit assets and returned hundreds of thousands of valuable workhours to its time-strapped users.
Auquan also has tools evaluating ESG and sustainability claims, which can be another time-sucking task for a large financial institution. It claims it can turn the normal hunts for regulatory compliance evidence and impact measurement that would normally also require days into hours as well.
For now, it has remained focused on these two buckets. But, one could see how the company could easy begin tacking on adjacencies after applying a bit of capital to further R&D and M&A. After all, it has already developed its model and it has an admirable client stack to cross-sell to in place.
Scientapic AI
But, while Auquan has positioned itself largely as an informational tool for institutions, Scientapic AI has carved out a position for itself as a nexus of decision-making for lenders.
This is particularly key for Scientapic AI clients because it has focused on serving local and regional credit unions that often lack the manpower to evaluate enough personal loan applications to actually generate business growth. About 160 of these organizations are currently running on its system.
Scientapic AI’s tools can carry a credit union’s services all the way from a pre-qualification through onboarding, underwriting, risk-adjusted pricing all the way to cross-selling on the broader market on its own in a single string.
At this somewhat smaller rung of the market, its platform has nonetheless executed on about $160 billion in loans, and a study found that its clients have grown their credit portfolios about nine times faster than credit unions using competing AI systems.
Most importantly, Scientapic AI’s results have been clean, with its fraud-detection features catching up to 93% of bad applications that passed through legacy systems. This is in part because Scientapic AI has trained its model on about 500 million lending records as well as the latest bot and credit washing tactics. And, so far, its clients have aced their NCUA audits 100% of the time.
All three of these companies stand to be stickier in the financial world than a SaaS service once they have replaced a critical company function. And, all three seem poised to embed themselves into an even greater chuck of the financial world.
