London-based Codat has raised $10m in new funding from Robinhood backer Index Ventures, an investment that it says could benefit banks busy bashing out Covid-19 related loans.
The technology company has developed a solution to connect the internal systems of small businesses to banks, FinTechs and other financial institutions. This enables business data to flow back and forth in real time.
The application programming interface (API) empowers banks and FinTechs to instantly plug into small businesses data and to better understand the unique circumstances of each business. This, Codat argues, will enable them to provide easier, faster and more tailored access to loans, insurance and other financial products. These improvements have been especially important throughout the Covid-19 crisis, when banks have had to handle unprecedented volumes of requests. Codat boasts that the solution could cut away weeks from the process until businesses get money in hand, time that is especially crucial during this pandemic.
“The way small businesses interact with banks has been broken for a long time,” said Peter Lord, CEO and co-founder of Codat. “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.
“At Codat, we’re trying to shift the model for business communication from being like exchanging letters in the post, to instead having an intelligent real-time platform that automates communication and builds trust between the parties.”
Codat will use the money to expand to the US and grow to 100 people by the end of the year.
Index Ventures’ partner Jan Hammer and venture partner Stephane Kurgan join the board. “It’s simply luddite for so much business data to travel over email,” said Hammer. “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. We believe Codat represents a step-change that will dramatically expand businesses’ access to capital, customers and new commercial possibilities.”
Codat was founded in 2017 by Lord, COO Alex Cardona and CTO David Hoare. They had previously worked together at what is now MarketFinance, a peer-to-peer invoice finance platform.
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