Heron Raises $16 Million for Lending Automation Offering

Heron Data, a company that automates document-based workflows for financial firms, has raised $16 million.

The company’s Series A funding round, announced Tuesday (July 15), will let Heron expand its presence in sectors such as insurance, equipment finance and small and medium-sized business (SMB) lending.

“Heron’s mission is to free up humans to focus on judgment-based work and complex edge cases while software handles the repetitive, monotonous work,” the company said in a news release. “Heron focuses on serving companies without large engineering departments, enabling more businesses to reap the rewards of the rapid advances in AI.”

Heron says its system can automate time-consuming manual workflows, such as the intake work SMB lenders’ underwriting analysts might do. This includes things like scanning email inboxes for submissions, downloading and renaming files, and running eligibility checks, things that might take hours but which Heron says its tools can perform in seconds.

“Anyone who tells you they use AI to automate work with 100% accuracy is probably lying to you. Instead of chasing accuracy, we focus on clearly understanding where our software is successful and where humans still need to review,” said Johannes Jaeckle, co-founder and CEO of Heron.

“This allows customers to use Heron in situations where millions of dollars are at stake and reap the rewards of the AI revolution in a reliable fashion that drives business outcomes.”

The company’s new funding follows a season in which earnings reports from lending and insurance platforms provided “evidence that the loan underwriting via automation has expanded credit access and sharpened the identification of credit-worthy customers,” as PYMNTS wrote in May.

For example, Upstart — which operates an AI-underpinned lending platform, with banks and institutions on the lenders’ side issuing personal loans to borrowers — had reported that 92% of its loans were fully automated. The company wrote in its earnings materials that with those loans there was “no human intervention by Upstart.”

CEO Dave Girouard said on an earnings call that new algorithms are successful at “clustering data that have meaningful relationships, allowing seemingly random data to become valuable to predicting credit performance.”

“Our credit continues to perform well,” he added. “All else being equal, we believe a faster automated process selects for better borrowers.”

Likewise, insurance platform Lemonade said that its vehicle insurance operations were growing, as “proprietary AI (LTV & telematics) pinpoints our target customer — young, safe drivers — with precision, offering unbeatable pricing.”