London-based Codat, a fintech company that offers a universal API for small business data, announced on Wednesday that it has raised $100M (approximately €93.27M) in a series C round of funding.
The round comes less than a year after the company announced its nearly €33.8M Series B round in July, 2021, led by Tiger Global, with participation from American Express and PayPal Ventures.
Series C round investors
The current round was led by JPMorgan Chase & Co.’s growth-equity arm. As per the deal, Patrick McGoldrick, Partner at JP Morgan Growth Equity Partners, will join Codat’s board.
McGoldrick, says, “We believe Codat has the potential to fundamentally change the way data is shared across the small business economy. JPMorgan Chase has an extensive small business customer base so we understand the power of connecting and standardising data – whether it is used for onboarding new customers or offering insights on business performance.”
New investors Canapi Ventures and Shopify also participated in the round. Existing investors Index Ventures and PayPal Ventures also joined.
Financial technology company Plaid, which invested in Codat in a prior round, has been publicly named as an investor for the first time. Plaid and Codat also have a business partnership whereby Plaid’s product is integrated into Codat’s API, enabling clients to access banking, accounting and commerce data via a single integration. They count Rho Business Banking and Atom Bank among their joint customers.
Plaid’s head of business and corporate development, Jason Pate, says, “Creating an open data ecosystem for small businesses has lagged behind the progress we’ve seen in the consumer sphere, despite SMBs accounting for more than half of the world’s GDP. Digitising financial services has proven to save people time, money and financial stress and should unlock even more benefits for small businesses. Codat is a leader in this space and we are looking forward to building on several years of successful partnership and supporting them in their next stage of growth.”
Capital utilisation
The proceeds from this round will help Codat to build its critical infrastructure so that it can be the default means of sharing data for the small business economy. The company reports that SMBs sharing and syncing data to other systems via Codat’s technology have grown on average 2.7X faster than GDP in 2021.
Codat’s CEO Pete Lord says, “Today, we’re in the age of ‘dial-up’ when it comes to business data. Despite radical advancements in other areas of technology, in 2022 the majority of small business systems still don’t speak to each other, creating hours of painful admin and serious barriers to growth. No one will be speaking about SMB financial software integrations in 5-10 years – automated data flows over the Codat platform will be a presumed standard. The only time you’ll notice integrations is when they are not there.”
“With the impressive calibre and strong sector expertise that J.P. Morgan and Patrick bring to our board, alongside our other advisors, we couldn’t be in a better position to capitalise on the massive opportunity in front of us,” adds Lord.
What does Codat offer?
Founded in 2017 by Alex Cardona, David Hoare, and Peter Lord, Codat’s API is used by SaaS, lending and payments companies to build integrated products for their SMB customers.
According to the company, it has a use case in practically every fintech that serves SMBs, whether it’s a neobank developing a cashflow projection in their app or a payment provider allowing merchants to integrate transactions with their accounting software. Codat clients range from lenders to corporate card providers and business forecasting tools, and use cases include automatic reconciliation, business dashboarding, and loan decisioning.
Codat has over 200 clients, including many of the world’s largest banks as well as growing fintechs such as Brex, Jeeves, Pipe and Clover, and a team of 250 people across the UK, North America and Australia.
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