Lama AI raises $10M to accelerate automated loan originations

Artificial intelligence-native loan origination startup Lama AI Inc. said today it has closed on a $10 million capital infusion, bringing its total amount raised to date to more than $20 million after growing its revenue over threefold in the last year.

The Series A round was led by EJF Ventures and saw participation from new investors Fin Capital and 1st & Main, plus existing investors Viola Ventures, Hetz Ventures and SixThirty, with additional participation from a number of banking industry veterans.

The startup has developed an AI-native loan origination platform that’s aimed at helping smaller community and regional-sized banks digitize their loan operations in an effort to be more competitive with their larger rivals. For many of these banks, it’s a big challenge to be able to grow their capacity to lend money and improve their borrower’s experience without raising their headcounts and compromising their credit discipline. Yet their leaders often face pressure to expand their lending operations as a means of achieving new growth.

One of the best opportunities for such banks lies in the small-business lending industry, including government-guaranteed loans. Lama AI says these kinds of loans are attractive for banks and credit unions and also the small, local businesses they serve, but the economics can be difficult.

The challenge is that underwriting smaller loans costs as much as it does to underwrite a much larger one. Because of this, most community and regional banks can only support a limited number of loans in this segment.

However, borrower demand is much bigger than what most banks will offer, and Lama AI thinks it’s possible to get around the economics of these kinds of loans by using AI to enhance the efficiency of the origination process. Existing tools, such as static forms, rigid workflows and professional-services heavy implementations cannot easily account for the unique circumstances of each borrower, the policy nuances, document exceptions and other differences that characterize small business lending.

Lama AI gets around these intricacies with its AI-native loan origination platform, which helps banks to automate and accelerate lending workflows. Autonomous AI agents handle everything, including customer intake, document collection, spreading, underwriting, decision-making, approvals closing and portfolio monitoring, so there’s no need for human managers to oversee each step.

The modular nature of its platform means it can quickly be swapped in to replace legacy banking infrastructure. Its AI agents can even automate borrower assistance, answering their questions and helping them through the loan application process. Moreover, the platform can be set up to account for each bank’s individual policies, credit standards, compliance requirements and approval processes, all while humans remain in the loop.

According to co-founder and Chief Executive Omri Yacubovich (pictured, left, alongside co-founder and Chief Technology Officer Ran Magen), it’s about helping banks to scale loan originations without having to replace human judgment. “Community and regional banks should not have to choose between speed and discipline,” he said. “They know their customers, understand local credit and have relationships borrowers trust. Lama AI gives them the infrastructure to move faster while preserving the judgment, oversight and compliance standards that make them strong partners.”

Lama AI’s platform is already being used by dozens of community and regional banking organizations, including SouthState Bank, Colony BankCorp. Inc., Capital Community Bank Inc., First Bank & Trust Co., Gate City Bank and Luminate Bank, helping them to process billions of dollars in loan volume since it launched in late 2022. “If you are going to employ AI, then credit underwriting is one of the most impactful places to start,” said Chris Nichols, SouthState Bank’s president of institutional banking. “Lama AI should be in the conversation.”

In the last year, Lama AI has looked to expand its loan origination capabilities to support lending operations in areas such as industrial, construction, small business administration and commercial real estate industries. The startup is now seeking hypergrowth, and going forward it will use the money from today’s round primarily to expand its go-to-market and customer success teams in order to scale adoption of its platform. It will also continue to invest in its AI automation capabilities for the regulated financial sector.

Fin Capital Principal Jake Fuchs said community and regional banks have been underserved by legacy lending infrastructure for decades. Many of the platforms they use were developed with far bigger banks and loans in mind. “Lama AI is one of the few companies we’ve seen that’s built a platform designed for how these institutions actually operate,” he said. “The market traction it’s seeing reflects that.”

Photo: Lama AI