Business

Codat raises $10 million for US expansion

Codat raises $10 million for US expansion - Appy Pie

Codat, a London-based startup has raised a $10 million funding round from Index Ventures. Codat helps to apply for a loan for a small business and makes the process simple. With today’s funding round, Codat plans to expand to the US and hire about 100 employees by the end of the year. A new office at New York City is underway, and Index partner Jan Hammer and venture partner Stephane Kurgan both will be joining the company’s board.

Codat which was founded in 2017 by CEO Peter Lord, COO Alex Cardona and CTO David Hoare, currently has tie-ups with 50 financial providers, such as Experian, iZettle, and two of the top four banks in the UK.

Every month, those companies process data from 10,000 small businesses that have interacted with those specific 50 institutions. The technology of the company connects the internal systems of small businesses to banks, fintechs, and other financial institutions, allowing business data to flow back and forth.

The company uses a single API to directly plugin to the software used by small businesses and is pitched as an alternative to sharing Excel sheets and PDFs with clients.

Codat’s API will support small businesses by fetching data ranging from accounting software, such as Xero, Sage, and QuickBooks to payment terminals.

Codat API (Application Programming Interface) will help to connect with all the systems holding important financial data. The company will spread this type of information across multiple systems. Also banks, insurance companies will be able to speed up their internal processes and give the user a relevant answer for their next loan. It also provides information on insurance products in the market.

Codat will connect to data sources and then regularly fetches new data on an hourly or monthly basis as per the user’s needs.

With accurate data and some level of standardization, financial institutions could improve their models as well. This will allows banks and FinTechs to understand a company’s circumstances before providing loans, insurance and other financial products.

CEO Peter Lord said, “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.”

Jan Hammer from Index said, “Codat represents a huge opportunity to increase the bandwidth and speed of business interactions. It will help make data exchanges between businesses smoother and more responsive, as it allows systems to communicate electronically and seamlessly with each other in realtime.”

Plaid is another fintech company that is in the process of being acquired by Visa for $5.3 billion, is building an API that lets you fetch financial data from consumer accounts.  However, Codat has a different focus as it connects with accounting software and other related tools from small businesses.

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