🦄 Unicorner Startup of the Week:

Casca

✍️ Notes from the Editors

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When 2024 began, we discussed our goal to identify legacy industries ripe for disruption through automation.

While banking initially seems like a scary world to automate with AI, companies like Casca have pinpointed aspects of banking requiring little to no financial evaluation. For example, a lot of time spent by loan evaluators involves collecting information from prospective borrowers. By automating these processes, banks can handle significantly more loans.

- Ethan and Arek 🦄

Processing 10x more loans with an AI Assistant

Casca is a loan origination system that helps banks and lenders automate their loan application process, leading to higher conversion rates and less work. Once a bank onboards with Casca, its customers can begin and manage their loan applications by answering questions and securely uploading financial documents through the platform’s application portal. Casca also offers Sarah, an AI loan assistant that applicants can text or email to answer any questions about their application, send documents, or get reminders about required actions. Casca’s platform compiles the applications and business data into a dashboard, allowing loan officers to underwrite loans faster by automating their credit checks and necessary know-your-business checks to understand the applicant’s business history.

🔗 Check it out: cascading.ai

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💰 Business Model

Casca sells its software to banks, credit unions, and non-bank lenders, through a pay-as-you-go SaaS model. The company onboards new lenders and initially integrates its platform for free, and generates revenue by charging for application processing. Casca charges banks a flat fee for every application processed and a percentage of the loan amount for approved applications, along with some smaller platform fees.

📈 Traction and Fundraising

• Raised a $3.9 million pre-seed round, led by Peterson Ventures

• Participated in Y Combinator’s S23 cohort

• Won the “Best of Show” award for a demo at Finovate Spring 2024

• Increases conversion in customers opening an application to submitting for a loan from 5% to 70%

• Saves loan officers 20 hours of time per week otherwise spent following up with applicants

👫 Founders

• Lukas Haffer, CEO: Previously VC Scout @ Peterson Ventures, VC Fellow @ Bee Partners, Chief of Staff @ Avaloq, Banking IT Consultant @ Senacor Technologies, Co-Founder @ Enactus, MBA @ Stanford, Business @ University of Cologne

• Isaiah Williams, CTO: Previously Senior ML Engineer @ EliseAI, ML Engineer @ EdgeTheory, Co-Founder @ Hyperluxe Gaming, AI @ Stanford

📖 Founder Story

Lukas Haffer and Isaiah Williams, although both technical, have diverse past experiences. Haffer comes from the world of banking software, while Williams is talented at building with Machine Learning and AI. When they met at Stanford, they realized that Lukas’ understanding of core banking infrastructure, combined with Williams’ cutting-edge ML experiences, enabled them to set out to use AI to revolutionize the stale banking sector. Upon founding the company, Haffer and Williams rapidly began hiring deeply technical talent from their peers at Stanford to continue revolutionizing financial services.

💼 Opportunities

No job opportunities are currently open at Casca, but if you’re interested in connecting with the team, reply to this email!

🔮 Our Analysis

Banking is a legacy, incumbent sector, and one that has remained relatively unchanged for decades—Casca, however, is challenging that narrative. Casca aims to automate many processes that financial institutions face since, although the primary value of these institutions is the capital they allocate, the vast majority of their costs come from the work of evaluating and executing allocations. In other words, automating these operations using technology presents a massive opportunity for Casca to slash the massive operational costs banks face without detracting from their core value proposition.

On average, loan officers at banks spend 20 hours a week following up with applicants to upload financial documents and complete their applications as, traditionally, only 5% of applicants ever submit their applications. Casca automates this process by regularly following up with applicants, thereby increasing conversion rates, while saving massive amounts of human time. Furthermore, Casca’s AI Agent, Sarah, serves as a substitute for traditional customer service roles at a bank, answering questions not only with far lower costs than human workers but also around the clock. Casca’s loan officer dashboard also streamlines the underwriting process, cutting costs and saving time by automating checks on borrowers after their applications are submitted.

For borrowers, Casca’s all-in-one platform addresses the problem with traditional, community banking: the time to gain a loan is extremely long. With these banks, borrowers often have to go in person, engage in a highly manual application process, and wait as much as 6 months for certain loan types. Although alternative, online banks exist, they have sky-high interest rates due to their business model. Casca’s online application platform and automation allow banks to modernize, cutting the wait time for borrowers down to as little as 24 hours for approval.

Although Casca enables banks to modernize, most banks are late on the technology adoption curve, and the vital nature of their business makes it difficult for them to modify their existing infrastructure. Casca, however, addresses this by making the switching costs for their customers $0—this strategy allows them to effectively acquire customers that are traditionally hesitant to convert while making a consistent lifetime value through their high-margin pay-as-you-go offerings. The consistent and negligible variable costs complement Casca’s high annual contract values of six figures, even for the smallest banks they work with.

Ultimately, the core of Casca’s business revolves around technology—specifically, it relies heavily on AI to power everything from its customer experiences with Sarah to automated underwriting assistance. With the continued development of LLMs and other AI technologies, Casca’s product stands to only improve on its journey to revolutionize banking.

📚 Further reading

• Cascading AI Secures $3.9 Million in Pre-Seed Funding to Revolutionize the Banking Industry with its AI-native Loan Origination System [PR Newswire]

• Bankwell Bank pilots generative AI in small-business lending [American Banker]

• Gauging Generative AI x Financial Services [Andreessen-Horowitz]

• FIs Explore GenAI Potential in Small Business Lending Despite Customer Concerns [PYMNTS]

Written by Rohan Desai

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