Mortgage-backed securities are only as safe as the loans backing them up, which means they can be particularly risky in economic downturns, when the rate of defaults tends to rise.
Conversely, in good economic times — or periods of low interest rates — more borrowers than normal may pay off their loans early, reducing the income stream flowing to securities holders.
Infima Technologies Inc. is focused on helping investors better assess such risks. The San Mateo startup, which just came out of stealth last week, uses artificial intelligence to analyze and predict the future behaviors of borrowers and the financial and market performance of mortgage-backed securities.
"The massive mortgage market represents an enormous opportunity, as Infima promises to unlock immediate value for asset managers by generating more accurate pricing for credit markets," Parasvil Patel, a partner at Radical Ventures, said in a press release from the startup.
Infima has some new funds to pursue that opportunity. The company announced last week it's raised $5 million in seed funding in a round led by Radical. It plans to use the new money to further develop its service, add climate-related risks to its analyses, market its offering and hire more workers, it said in the news release.
The startup was co-founded by 2020 by Kay Giesecke, a professor of management science at engineering at Stanford University. Giesecke leads the university's Advanced Financial Technologies Laboratory, which helps develop software and algorithms for use by the financial industry.
As part of its funding announcement and public unveiling of its service, Infima also named Hendrik Bartel as its new CEO, replacing Giesecke. Bartel was previously the head of Truvalue Labs Inc., which collected data for investors focused on environmental, social and governance issues at companies, until it was acquired in 2020 by FactSet Research Systems Inc. Giesecke will stay at Infima as its chief scientist and board chairman.
Here's more on Infima's new round, the only Bay Area seed deal announced over the past week:
Infima Technologies Inc., San Mateo, $5 million: Radical Ventures led the round for this provider of a service that helps investors identify risks with mortgage-backed securities. Franklin Templeton and ThirdStream Partners also invested.
