• Estonian fintech Mifundo secures a EUR 2.5 grant from EIC and EUR 6.3 of Seed funding
• The startup’s data platform allows bank clients to share their credit scores across the European countries
• The funding will fuel Mifundo’s integration of EU countries’ credit organization and further development of the data model

This July, European Innovation Council (EIC) announced 69 companies that would receive a total of EUR 411M in grants and equity as part of its EIC Accelerator program. Mifundo – the Estonian AI-powered platform for passporting credit histories across the EU – became the first fintech startup in the program receiving a EUR 2.5 grant, followed by a Seed round of EUR 6.3M. The investors include the well-known Estonian VC fund Tera Ventures (invested in CARÁ Health, among others), the startup’s loyal supporters Opus11 VC, and business angels including Sergei Anikin of Camber Partners, Mihkel Karu of Krokodilli Kapital, Kaido Kepp of IIZI Group AS, and Jüri Laur of Bolt.

Seasoned Experts on a Mission

Founded in 2018, Mifundo can boast about a highly experienced founding team. Kaido Saar (CEO) spent 15 years as a CEO of Bigbank Group which operates in nine European countries. He also chairs FinanceEstonia – the largest industry organization in the financial sector of Estonia, uniting fintech companies and banks. Keiu Kalaus (CPO) also worked for Bigbank as Country Manager Spain, and Marko Käis (technical architect) has 20 years experience in a number of IT companies, including Arvato Financial Solutions.

‘Mifundo’s mission is to build a world where people have freedom to move, freedom to be trusted. Not only encouraging banks to accept the expats and multi-country people but also empowering the users to take care about their own data, their own funds. For example, in the US people know their credit score and care about it. In Europe it is currently not a part of the financial knowledge base,’ Mr Saar tells ITKeyMedia.

While the EU has a single market and free movement of people, products, services, and capital, this freedom doesn’t extend to financial services, at least for credit products. One might have a brilliant credit history in their country, but if they move to another country they become nobody and can no longer enjoy the banks’ trust.

‘The root cause of the problem is extremely high fragmentation of credit data collection in Europe – 27 member states, over 50 credit bureaus, each of them operating in their own country silo, no common data pool or data sharing in place. This is why people can move but their data is not moving along. Unlike in the US where people can easily relocate from New York to California, buy a new house, ask for a mortgage, without problems and hassles. Why can’t such simple things be possible in Europe? In the US, they have an integrated credit scoring system trusted by banks. Mifundo builds the European peer to solve the problem we have in Europe,’ Mr Saar explains.

Cross-Border Data Model for Credit Scores

Mifundo developed cross-border data technology that enables banks to serve clients from different European countries more effectively. By leveraging this technology, banks benefit from enhanced data quality, more precise credit assessments, and expanded opportunities to offer financial services to clients who move across Europe. According to the startup, its solution helps banks reduce the credit risk of foreign customers up to 7x while boosting their business volume by 15%.

‘Our AI engine unifies the credit data from different countries, standardizes and analyzes it, and calculates pan-EU credit score. With a single click, consumers can share with the banks. It is important to note the AI is xAI (explainable A), in accordance with the regulations, including EU AI Act, and good ethics it is the explainable AI system. It was developed in-house in cooperation with experts from STACC and scientists from the University of Tartu. The development of the engine is ongoing as more data sources are getting integrated and geographical coverage grows,’ Mr Saar adds.

Success with EIC and VCs

EIC kindly shared its experts’ evaluation report specifying the reasons why Mifundo successfully qualified for the grant. The key excerpts are:

• Proposed innovation presents a significant level of novelty that can be considered disruptive to the corresponding market, in line with EU principles. The value proposition is very much in line with the foundation principles of the European Union: free circulation of people, goods and capitals.
• There is no European cross-border solution for individual credit checks available at present making life difficult for Europeans of one country to live in another.
• Now is a good opportunity window to further launch this solution.

‘While open banking has transformed payments, FX, and investment services, credit remains stuck in outdated, fragmented systems. Even major multinational banks struggle with this. Mifundo’s creation of universal cross-border credit rails aims to break through these limitations, bringing long-overdue innovation and better access to credit across the EU,’ Tera Ventures’ founding partner Stanislav Ivanov agrees.

Milestones and Further Plans

Mifundo received the FSA license in 2018. In 2023, the startup released its pilot product working with 4 banks in 3 countries with 10,000 customers, received the Europe Fintech Award 2023 and the Banking Technology Award 2023 – Fintech Startup of the Year nominations, and Mastercard Lighthouse listed Mifundo among fintech companies with high potential in Northern Europe. The startup dedicated 2024 to scaling across Europe, covering 12 countries, including the Baltics, Denmark, Norway, Germany, Spain, etc. The company also acquired ISO 27001:2022 certificate before EIC’s breakthrough funding decision.

Olga Voloshyna, Chairperson of the Committee on IT and Cyber Security of the German-Ukrainian Chamber of Industry and Commerce reminds that obtaining the mentioned ISO international compliance certificate following an external certification audit demonstrates the successful implementation of the informational security management system in an organization. This could only result from a costly and complicated project that could only succeed with tightly-knit teamwork and full support of the company management.

Mifundo currently works with the banks in EU countries, consumer data is available from EU credit bureaus and Norway, and the startup is in discussions with more banks in other European countries too.

With the received funding, Mifundo plans to integrate more European countries, develop its pan-European data model further, and expand the coverage of its data service in the European Union. This will require significant growth of the team, product development to integrate additional countries, and broadening the communication with banks.

Mr Saar shares that Mifundo’s additional ambition is to educate wider audiences, including expats, which is essential for the startup’s further scaling. These audiences’ voice will definitely help encourage banks to pay more attention to clients whose credit data is in other countries.