Codat has received $10m for its fintech solution that aims to simplify interactions between small businesses and banks.
Today (11 June), London start-up Codat announced that it has raised $10m in funding.
The investment came from Index Ventures, the backer of payments platform Adyen, Californian fintech Plaid and trading app Robinhood. Index Ventures partner Jan Hammer and venture partner Stephane Kurgan will now join Codat’s board.
Codat’s technology connects the internal systems of small businesses to financial organisations to enable the flow of data in real time.
Its API can plug into the software used by small businesses, allowing banks, fintech firms or other financial institutions to access everything from the company’s accounting software to payment terminals and record transactions.
London-based Codat said that the funding will help it expand to the US and increase its headcount to 100 by the end of the year. The company’s current clients include fintech companies iZettle and Experian, as well as two of the top four UK banks.
The start-up’s solution aims to simplify and improve existing processes and prevent small businesses from having to share financial information over email and through documents. It said this “shifts the process” of accessing capital from a single point-in-time approval to a more responsive, proactive and ongoing relationship between the two parties.
For banks and fintechs, Codat said that its technology allows them to scale and speed up their offerings to more small businesses and to provide faster and more tailored access to loans, insurance and other financial products.
‘The urgency of digitsation’
Peter Lord, CEO and co-founder of Codat, said that the way small businesses interact with banks has been “broken for a long time”.
“They operate in a system that’s clumsy and unable to scale. Reviewing balance sheets, for example, soon becomes a nightmare of data requests and manual entry. Coronavirus has exposed those weaknesses for all to see, and accelerated the urgency of digitisation.”
He added that Codat is instead developing an “intelligent real-time platform that automates communication and builds trust between the parties”.
The start-up was founded in 2017 by Lord, along with COO Alex Cardona and CTO David Hoare. The three co-founders have backgrounds in software engineering and had worked together at what is now MarketFinance.
Hammer, partner at Index Ventures, said: “It’s simply luddite for so much business data to travel over email. Codat represents a huge opportunity to increase the bandwidth and speed of business interactions.
“It makes data exchanges between businesses smoother and more responsive, as it allows systems to communicate electronically and seamlessly with each other in real time.”