Failed 2020

    ZestFinance

    AI-powered underwriting for subprime loans faces regulatory scrutiny and fair lending concerns that limit scale.

    Founded → Closed

    2009 → 2020

    Funding Raised

    $292M

    Industry

    Fintech/AI Lending

    Country

    USA

    IdeaProof AI Failure Score

    58/100
    Market Fit RiskBurn Rate RiskFounder Risk
    Market Fit Risk
    45
    Burn Rate Risk
    65
    Founder Risk
    30

    Full Analysis

    ZestFinance, founded by Google's former CIO Douglas Merrill, used machine learning to underwrite loans for borrowers with thin credit files. Despite $292M in funding and partnerships, the company struggled with regulatory fair-lending requirements and the inherent riskiness of the subprime market. ZestFinance pivoted to selling its AI models to banks but couldn't achieve scale. The company effectively wound down in 2020.

    Could This Failure Have Been Prevented?

    IdeaProof's AI validates market demand, competitive positioning, and business model viability in minutes — catching the exact issues that sank ZestFinance.