ValidMind, the AI and model risk management platform for financial services, today announced it has raised $8.1 million in a seed funding round led by Point72 Ventures, with participation from Third Prime, New York Life Ventures, AI Fund, Notion Capital, FJ Labs, Angel Invest, and Gaingels.
This funding will advance ValidMind’s go-to-market plans and “establish it as a long-term partner to its customers in financial services.”
With this investment round, ValidMind’s total funds raised are $11.1 million.
This funding arrives as more financial institutions “embrace AI-powered solutions — 43% of executives believe AI will be critical to financial businesses by 2025.”
However, as AI/ML, particularly large language models (LLM), adoption “increases in financial services, adequately managing its unique risks has become crucial for model risk management (MRM) teams, especially amid consumer concerns surrounding AI’s trustworthiness and safety.”
For instance, the Consumer Financial Protection Bureau reports banks “that use chatbots run the risk of providing inaccurate information to customers (which isn’t compliant with federal consumer financial protection laws) and diminishing consumer trust.”
In addition to increased pressure from regulators to comply with existing banking regulations, such as SR 11-7 (U.S.) and SS1-23 (U.K.), MRM teams are “facing new regulatory challenges, such as EU’s AI Act and the recently announced AI Bill of Rights by the U.S. administration, pushing the limits of their current MRM processes and legacy MRM systems.”
These factors demonstrate that today’s financial institutions need “an end-to-end solution that can promote trust and compliance at every step of the MRM lifecycle, which ValidMind provides.”
Jonas Jacobi, CEO and Co-founder of ValidMind, said:
“The MRM teams at financial institutions are struggling to keep up amid increased pressure from the business to deploy more AI solutions faster and from regulators to ensure compliance, relying on an already time-consuming process due to a lack of fit-for-purpose built tools and increased model complexity. This funding strengthens our commitment to help customers increase the speed and efficiency of their MRM processes, reduce time-to-market for new AI solutions, and ensure compliance with global AI and model risk regulations.”
Tripp Shriner, Managing Partner at Point72 Ventures said:
“We back companies that provide new fintech infrastructure to foster innovation, and ValidMind is working to do just that. AI has the potential to truly disrupt financial services, and we believe ValidMind is in a strong position to ensure these models comply with current and future regulations. We’re excited to be part of its growth journey.”
ValidMind offers a fit-for-purpose AI risk management solution and “is the most efficient solution for organizations to automate testing, documentation, and model risk governance for AI and statistical models.”
By automating model documentation and the labor-intensive parts of MRM, ValidMind helps increase developer productivity, “reduce time to market for models, and improve MRM outcomes, enabling organizations to focus on what matters most: deploying AI-backed solutions with integrity, transparency, and trust.”
In addition to its latest funding round, ValidMind has “added a new member to its Advisory Board. Murat Doganaksoy, former Model Risk Officer at First Republic Bank, will share more than 20 years of MRM expertise in this capacity.”