Codat, a London-based startup that connects the data systems of small businesses to banks, fintechs and other institutions, has raised $10 million from Index Ventures to finance expansion into the US.
The UK startup facilitates data exchange between small businesses and the financial institutions that help them secure loans, insurance, or other service. Codat consists of a single API that plugs into software used by small businesses, allowing outside organisations to access necessary accounting information in real time.
Ultimately, business owners no longer have to share sensitive data over email, and the API “shifts the process of accessing capital from being a single point-in-time approval to a more responsive, proactive and ongoing relationship between the two parties.”
“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,” says Peter Lord, CEO and co-founder of Codat.
Codat reports that a top UK bank processed all COVID-related small business loans through its API, cutting weeks off the ‘time to cash’ for recipients — and helping the bank cope with receiving a year’s worth of applications in a single week.
Founded in 2017 by Lord, Alex Cardona (COO) and David Hoare (CTO), the fintech startup won a £5 million grant from the Royal Bank of Scotland last year. The business claims that through its 50 financial service providers, about 10,000 small businesses connect to the API every month.
Thanks to the fresh funding, a New York City office is underway, and Index partner Jan Hammer and venture partner Stephane Kurgan will both join the company’s board.
Photo: Codat team