According to TechCrunch, Cyphr is a Kansas City-based startup founded in 2022 by Jannae Gammage and Alaia Martin that’s developing AI-powered technology to streamline the lending process for small businesses and lenders. The company, which has raised $1 million to date and officially launched in April 2024, uses fine-tuned OpenAI models to analyze alternative data sources and financial patterns to assess small business creditworthiness. As a Top 20 finalist in Startup Battlefield at TechCrunch Disrupt 2025, the founders developed their solution after Gammage’s experience as a Small Business Administration technology consultant revealed how outdated lending workflows were preventing qualified businesses from accessing capital. The timing appears fortuitous, as lenders have become more receptive to artificial intelligence solutions post-COVID, whereas the founders believe their 2022 launch would have faced greater resistance.
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The Small Business Lending Gap Problem
The problem Cyphr addresses is substantial and systemic. Traditional lending institutions have long struggled to accurately assess small business creditworthiness due to limited financial histories and the unique nature of small business operations. This creates what’s known in the industry as the “small business lending gap” – estimated by the Federal Reserve to exceed $1.7 trillion globally. The challenge isn’t just technological; it’s fundamentally about risk assessment methodologies that haven’t evolved to capture the full picture of a small business’s health. Traditional underwriting often misses crucial indicators like customer loyalty, online reputation, or seasonal cash flow patterns that could reveal a business’s true potential.
The AI Underwriting Revolution
What makes Cyphr’s approach particularly interesting is their focus on fine-tuning existing large language models rather than building from scratch. This strategy reflects a broader trend in fintech where specialized domain expertise combined with established AI infrastructure can create competitive advantages faster than pure technical innovation. Their borrower-centric design philosophy also represents a significant shift from most lending technology, which traditionally prioritizes lender needs. However, the real test will be whether their models can consistently outperform traditional credit scoring while maintaining regulatory compliance. The financial industry’s cautious adoption of AI means Cyphr must demonstrate not just effectiveness but also transparency and fairness in their algorithms.
Why Founder Background Matters
The founders’ non-technical backgrounds and Midwest origins actually position them uniquely in the fintech landscape. Their direct experience with the Small Business Administration gives them domain expertise that purely technical founders often lack. This practical understanding of the actual pain points in small business lending could be their secret weapon. Their successful fundraising despite being outside the traditional Silicon Valley mold also suggests that investor priorities may be shifting toward domain expertise and market understanding over pure technical pedigree. That said, their mention of receiving funding in tranches rather than large rounds highlights the ongoing challenges diverse founders face in accessing traditional venture capital pathways.
Market Positioning and Challenges Ahead
Cyphr enters a crowded but still immature market for AI-powered small business lending solutions. They’ll compete against both established fintech platforms and emerging AI specialists, each tackling different aspects of the lending process. Their success will depend on several factors beyond just technology, including partnership development with lenders, regulatory navigation, and scaling their model across diverse business types and industries. The World Cup platform initiative they mention suggests they’re already thinking about specialized vertical approaches, which could be a smart differentiation strategy. However, the ultimate challenge will be proving their AI models can reliably reduce default rates while expanding access to capital – the holy grail of lending innovation that has eluded many well-funded competitors.
Broader Industry Implications
If successful, Cyphr’s approach could catalyze a much-needed modernization of the entire small business lending ecosystem. Their technology represents the next evolution beyond the first wave of online lending platforms that primarily digitized existing processes rather than fundamentally rethinking risk assessment. The timing is particularly relevant as small businesses face increasing economic pressures and traditional lenders seek technological solutions to improve efficiency. As a TechCrunch Disrupt finalist, their visibility could accelerate industry-wide adoption of similar AI approaches, potentially transforming how capital flows to the small business sector that drives so much economic growth and innovation.
