ZestFinance, a company that licenses out its technology to minimize the risks in making loans, is getting a cash infusion from an entrepreneur who figured out how to make money transfers on the Internet: PayPal's Peter Thiel.

Thiel Capital is leading a $20 million Series C investment round in ZestFinance, joined by Northgate Capital and existing investors Lightspeed Venture Partners, Matrix Partners, Kensington Capital Holdings, and Eastward Capital Partners. Thiel Capital will take a board observer seat; its founder co-founded Ebay's PayPal.

ZestFinance takes an entirely different approach to underwriting using machine learning and large-scale big data analysis. With a team of some of the world's best data scientists from Google and lending experts from Capital One, ZestFinance analyzes thousands of potential credit variables - everything from financial information to technology usage - to better assess factors like the potential for fraud, the risk of default, and the viability of a long-term customer relationship.