ValidMind, the leading next-generation 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 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.

“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,” said Jonas Jacobi, CEO and Co-founder of ValidMind. “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.”

“We back companies that provide new fintech infrastructure to foster innovation, and ValidMind is working to do just that,” said Tripp Shriner, Managing Partner at Point72 Ventures. “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.

“Model Risk Management (MRM) automation is pivotal for efficiency and compliance in the rapidly evolving AI regulatory space,” said Doganaksoy. “ValidMind’s innovative platform facilitates seamless communication, development, and validation, ensuring rigorous adherence to regulatory standards. I’m excited to work with ValidMind to support their dedication to enhancing customers’ MRM program, promising a standardized, auditable process that fosters effective challenges and regulatory compliance.”

As a member of the ValidMind Advisory Board, Doganaksoy will share his expertise on ValidMind’s product development and the company’s broader strategy. His understanding of the model risk management field will help shape ValidMind’s solution as an end-to-end AI and Model Risk Management solution that reduces the inherent complexity that first and second lines of defense face in their day-to-day operations.