#StartupsEverywhere Profile: Kenneth Salas, Co-Founder & COO, Camino Financial
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Funding underserved entrepreneurs through Artificial Intelligence
Los Angeles-based Camino Financial supports entrepreneurs and small business owners from disadvantaged communities through its AI-powered direct lending platform. We sat down with Co-Founder and COO, Kenneth Salas, to learn more about the work his company is doing. He also spoke with us about the use of artificial intelligence, the importance of support for local startup ecosystems, and the benefits of a policy landscape that incentivizes investment in new, innovative companies.
Tell us about your background. What led to the creation of Camino Financial?
I co-founded Camino financial with my twin brother, Sean Salas. We spent a significant portion of our childhood growing up in Mexico, reimmersing ourselves in American culture when we studied at UC Berkeley. Sean and I cut our teeth on Wall Street and in private equity, until we had our “aha” moment while working at companies owned by African American, Hispanic, and Cuban American people with the mission of supporting their own communities. While they were doing amazing work supporting very successful Latinos and African Americans, we realized only a very small percentage of Black and Brown entrepreneurs and small business owners ever make it to that level of institutional investment. That’s when we found our mission—to create a financing vehicle that would enable overlooked entrepreneurs to access capital.
We started Camino Financial in 2014 as an online broker focusing on our own Latino community. We discovered businesses that were less formally run—those that are mainly cash-based or have a thin credit file—struggled to find loans even from non-bank lenders. That prompted us to transition to lending directly to them.
Fast forward to now, where we've provided over $150 million in loans to overlooked entrepreneurs. We realized that our lending model is a match for entrepreneurs of different shapes, sizes, and backgrounds—particularly the solopreneur, the person that's only just getting started with an informally run business. We're built to not only provide capital but, as we continue to prove our product, design a user experience that enables our borrowers to grow with us from their first loan through our suite of credit financial service products. That's really our vision, to enable these companies to access their first capital and grow their business.
What does it look like to be a borrower at Camino Financial? How does artificial intelligence power the work that you do?
Let me start with just a few statistics about the unique set of people we're serving to frame this answer. Twenty-eight percent of our borrowers do not have a credit score, such as a FICO score, and 50 percent of our historic borrowers were undocumented, but they are taxpayers with a tax identification number. Overall, our borrowers have about $2,000 in their cash balance when they get a loan from us and our average loan size is $20,000. We're leveraging what they have in their bank account by 10 times because we’ve built an AI system that can make a very accurate mathematical guess on what the real income of their business is based on information provided in our application and larger data sets we’ve built over time.
Right now, our platform is using both traditional sets of data and alternative data points. On the traditional side, we use Experian Credit Bureau data and repayment data from the loans that we've issued—the fact that we've done over $150 million of loans gives us a nice track record for our system to analyze. But we started this business with a focus on taking a digital-first approach which empowers us to leverage more alternative kinds of data too. A lot of our competitors are still, to this day, collecting PDFs of bank statements. We use Plaid to download the last six months of an applicant’s transaction data, and we now have about 18 million rows of this data in our AI system.
All of this data enables our model to see the borrower in a more holistic picture and make loans to entrepreneurs that other institutions turn away. Going forward, we want to try to develop a member score for our existing accounts so we can better serve them and even lower their rates. As we think about the AI platform’s development, we started with the core credit decisions, but we're going to start to apply this in terms of how we’re servicing loans post-transaction.
What should policymakers keep in mind regarding potential AI bias and innovation designed to improve inclusion? How might government AI research resources help startups like Camino Financial?
A big segment of the traditionally overlooked demographic in lending are people that don't have a FICO score. Our AI model reviews other indicators aside from FICO scores and compares them to similar indicators. We’re able to use components, such as the previously mentioned Plaid transaction data, to evaluate our own determination of creditworthiness without relying solely on FICO scores. Our AI models enable a willingness to bet against the traditional ways of evaluating a borrower’s ability to pay. We find this approach works well in making sure that we're serving both of these segments as well as we can and controlling for potential bias.
A big part of our work is not only building the AI model, but also the data acquisition strategy. Companies that have greater access to large datasets have the upper hand in the AI space. And conceptually, the government has access to a lot of data that could help inform models that achieve more equitable outcomes. If the government were to develop AI datasets available to the public for research, these would be very attractive for us and other companies like us to use. Any data we don’t already have access to is a good thing for our ability to grow and innovate.
Can a heavy regulatory presence in areas like fintech or lending serve as a deterrent for folks trying to enter the market? How have these regulations affected you or the entrepreneurs you work with?
Traditionally, we've been focused on the commercial side of lending, but we recently launched a small-dollar lending program where we give loans as low as $1,500. We used to be at a $5,000 minimum. The moment you go under $5,000, you're treated as a consumer lender, and that's heavily regulated in a very different way from commercial loans. We currently have our licenses in California and in Florida to offer the small-dollar programs, and it's forced us to get a lot smarter on the regulations. Because this space is more regulated, we’re forced to be extremely selective about where and how we offer it. We're also a designated Community Development Financial Institution. In order for us to remain qualified for that there are certain reporting standards, so further building our compliance department is something that we have to be actively working on. The reason we’re building in that direction is to make sure that we're not only continuing to do what’s legal, but what’s to continue operating ethically as well.
I think the regulatory burdens and corresponding impact ultimately depend on what segments you're entering into. The reality is that the specific direct business lending segment we first entered wasn’t as heavily regulated, so it really enabled us to focus on getting smart on the lending piece and building those first generations of AI models along with the other technology we needed. In the end, understanding the compliance landscape is more of a tactical move based on the market you're addressing in your go-to-market strategy.
We know that underrepresented startup founders, including founders of color, receive disproportionately smaller percentages of venture investment or have access to limited funding opportunities like friends and family loans. What do you think policymakers can do to better support underrepresented founders?
We need to support ecosystem building. At the end of the day, your company may or may not just be a venture-backed kind of company—sometimes that’s not the right investment fit for a startup, sometimes they just can’t get an investor interested that should be. A lot of startups don’t get that kind of formal backing or the community of folks, like investment advisors, that comes with it. And the feedback they ultimately need comes from whatever ecosystem that you're part of and have access to. Sean and I have been really fortunate to be part of some really supportive community groups. And I call these out just because I think they've all been incredibly helpful in our journey. People ask us, “What's been your secret sauce?” It’s been building and maintaining great relationships with people we’ve had access to. But I am very aware that not everybody has access to the same opportunities that I have and to the extent that we can help build an ecosystem that reaches more individuals, it’s really important that we do for the founders that want to come next.
Are there any local, state, or federal startup issues that you think should receive more attention from policymakers?
My knee-jerk reaction is I think, for the most part, the U.S. is very culturally and institutionally startup-friendly, and that should be embraced by policymakers. There are already incentives for venture capitalists to exist and take risks. I think it's important for the perpetuation of this startup-friendly ecosystem that those high risks be rewarded. That is ultimately fueling money not only to the companies themselves, but creating a good reason—a high salary—why someone would want to become a software developer or data scientist. They are well-paid jobs because these companies are incentivized to raise money and take risks that create new innovations.
What are your goals for Camino Financial moving forward?
We're a Series A company. We raised about $20 million in equity and over $150 million in debt. We're looking to raise our next Series B round, and as we do, we’re going to use the capital in new ways. We’ve nailed the credit side of lending, so now we’re focusing on building out our frontend tech product. We want to turn it into a experience that gives entrepreneurs the insights they need to qualify for a broader suite of financial products—or ultimately just insights into their own business. We’re not just their lenders, we’re their partners.
All of the information in this profile was accurate at the date and time of publication.
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