Introduction
Pagaya operates an AI-powered network that plugs directly into a lender’s existing loan-origination system, evaluates applicants the lender might otherwise decline, and — if approved through Pagaya’s model — funds those loans through capital Pagaya raises from institutional investors rather than from the lending partner’s own balance sheet. The company was incorporated in Israel in 2016 by Gal Krubiner, Avital Pardo, and Yahav Yulzari and went public on the Nasdaq in June 2022 following a merger with a special purpose acquisition company.
Pagaya’s structure is a useful contrast within Brel’s AI in finance coverage: rather than selling underwriting software to a lender the way Zest AI does, or originating loans under its own brand the way Upstart does, Pagaya sits behind an existing lender’s brand and absorbs the resulting credit risk itself.
What the company does
Pagaya integrates with a lending partner’s origination system through an API, using machine-learning models trained on repayment data to identify applicants near the edge of a partner’s existing credit criteria who could reasonably be approved. According to Pagaya’s own SEC filings, its network has processed more than $3.6 trillion in loan applications since its founding, spanning personal loans, auto loans, point-of-sale financing, credit cards, and single-family rental financing.
Who it serves
Pagaya’s customers are banks, fintechs, and specialty lenders rather than individual borrowers, who typically never interact with Pagaya directly and instead experience it as part of their existing lender’s approval process. Publicly announced partners include SoFi, in a 2021 partnership the companies described as Pagaya’s biggest deployment to date, along with auto lenders Westlake Financial, Exeter Finance, OneMain Financial, and Ally. Pagaya has said its 2023 cohort of new auto-lending partners alone was expected to contribute a meaningful share of its total network volume within a few years, reflecting how much of its growth comes from adding new lending partners rather than expanding within existing ones.
Company background
Pagaya Technologies Ltd. was incorporated on March 20, 2016, under the laws of Israel, and was founded by Gal Krubiner, who serves as CEO, Avital Pardo, who serves as CTO, and Yahav Yulzari, who serves as Chief Revenue Officer, according to Pagaya’s own investor relations materials. The company operates from dual headquarters in New York and Tel Aviv. In September 2021, Pagaya announced a merger with EJF Acquisition Corp. that valued it at approximately $8.5 billion; the transaction closed in June 2022, and Pagaya began trading on the Nasdaq under the ticker PGY.
Product and AI capabilities
Pagaya describes its core technology as proprietary AI and machine-learning models that analyze loan applications in real time and are trained on data drawn from across its network of lending partners rather than any single partner’s own portfolio. Because Pagaya integrates via API and takes on the resulting credit risk through capital raised from institutional and other investors, a lending partner can approve more of its existing applicant pool without expanding its own balance-sheet exposure — a structural difference from underwriting-software vendors, which leave both the credit decision and the resulting risk with the lender itself.
Key developments
Pagaya was founded in Israel in 2016 and spent its early years building a network of institutional investors and lending partners, including a $102 million Series D round in June 2020. It began working with SoFi in October 2021 in what the companies called its biggest deployment to date, and it announced a SPAC merger with EJF Acquisition Corp. that same month, closing in June 2022 to become a Nasdaq-listed company. Pagaya has since expanded heavily into auto lending, announcing partnerships with Westlake Financial in September 2023 and Exeter Finance in December 2023, among others. That auto-lending push has become a significant part of Pagaya’s growth strategy, adding new dealer-facing and specialty auto finance partners on a rolling basis rather than relying solely on its original personal-loan business.
Why it matters
Pagaya illustrates a structural choice in AI-driven lending that is easy to miss if you only look at underwriting accuracy: deciding who bears the credit risk when an AI model approves a marginal applicant. By taking on that risk itself through institutional capital rather than leaving it with the lending partner, Pagaya has built a business model where its own financial results are directly exposed to how well its models actually perform over a loan’s life, which is worth keeping in mind alongside the volume figures the company reports. Its reported net losses in recent fiscal years, alongside trillions of dollars in cumulative processed applications, are both part of the same story and worth reading together rather than in isolation.
Sector context
Within Brel’s AI in finance coverage, Pagaya is a risk-absorbing AI network, distinct from underwriting-software vendors such as Zest AI and from direct-to-consumer lenders such as Upstart and Affirm. Its partnership with SoFi and various auto lenders also makes it a useful reference point for how AI-driven credit expansion reaches consumers indirectly, through their existing lender rather than a new AI-branded product.
Sources and references
This profile is based on Pagaya’s own investor relations announcements, its SPAC merger materials, and independent press coverage of its lending partnerships.
- Pagaya Technologies — SPAC merger announcement with EJF Acquisition Corp. (2021)
- Business Wire — “Pagaya Partners With SoFi…” (2021)
- Wikipedia — “Pagaya Technologies”