DMV startup that helps Fortune 100 companies with AI risks lands a $3.5M seed round

Working for one of the country’s largest bank holding companies taught Guru Sethupathy just how much industries as tightly controlled as financial services need to understand artificial intelligence risks. 

On Thursday, the startup he founded to address this gap announced new funding to further develop its tech and hire more staff

The McLean, Virginia-based FairNow secured $2.5 million in a seed round after raising $1 million pre-seed which it converted to this current round, giving it a total raise of $3.5 million to date.

FairNow aims to help companies with AI processes, tracking AI laws and regulations, addressing biases, automating evaluations and working to assess risks. It focuses on highly regulated industries like human resources, financial services and the medical field, according to founder and CEO Guru Sethupathy. 

The company leader has worked in the AI industry for more than two decades, most recently as an executive at regional bank holding giant Capital One, where he led teams in building AI solutions. He realized through this role that AI would become embedded in highly monitored enterprises, and companies need to understand risk management. From there, Sethupathy founded FairNow in 2023. 

“Our mission is to help organizations build compliance and trust in their AI,” Sethupathy said. “When you have these powerful technologies, the potential is transformative, but you need a governance apparatus.”

He compared the rise of AI to the rollout of cars for commercial use in the early 20th century: When cars became more widely used, it was exciting, but a bit scary because seatbelts, rear-view mirrors and speed limits hadn’t been introduced yet. Just like with automobiles, AI needs regulation and risk management, Sethupathy said 

This funding round was led by angel investors Somen Mondal and Shaun Ricci, with about 10 angel investors, entrepreneurs and executives involved in total. 

Mondal and Ricci both have experience building software companies, and Sethupathy met them both through a mutual friend. The investors have been involved in FairNow since it was founded and serve as advisors and de facto board members, Sethupathy said. He added that their entrepreneurial experience has been especially helpful to him as a first-time founder.

 

FairNow currently has a staff of six full-time employees and about four contractors. With the $3.5 million raised, Sethupathy plans to hire more people, especially on the engineering side. He also intends to invest in marketing and further develop the technology itself. 

The startup has recently begun to work with clients, including Fortune 100 companies. As FairNow continues building out its customer base, people can expect the technology to become easier to use with a better interface, Sethupathy said.  

Sethupathy declined to share the exact number of anticipated hires and details about customers on the record.

This round went better than expected, surpassing the company’s goal of raising $3 million. There was a lot of interest, Sethupathy said, which attests to the mission of the startup. 

“That just shows the potential here,” he said, “and the promise of what we’re building.”