London-based startup Kodat has raised $ 10 million from Index Ventures. If you have ever tried to apply for a loan for your small business or have applied for an insurance product, then you know that it can be a long and painful process.
The codec is building an API that connects to all systems that hold all relevant financial data. This type of information is usually spread across multiple systems, and small businesses often use different systems. On the other hand, banks, insurance companies and more can speed up their internal processes and give you an educated answer to your next loan or insurance product.
Codat currently works with 50 financial providers, such as IZettle, Experian and two of the top four banks in the U.K. Every month, those companies process data from 10,000 small businesses that have interacted with those 50 institutions.
So what kind of data can you get using the codec’s API? It ranges from accounting software, such as Zero, Sage and QuickBooks to payment terminals. The codec connects to those data sources, standardizes the data across services and then receives new data regularly – this can be done every hour, every month or whenever you want.
Many financial institutions waste a ton of time getting Excel files from their clients to review the balance sheet. Many small businesses are facing some liquidity issues right now, automating data aggregation after collecting debt can accelerate the time it takes to secure money on your bank account.
With more accurate data and some levels of standardization, financial institutions can improve their models more easily.
As you can see, there are some similarities between Plaid and Kodat. Plaid, fintech The company which is in the process of being acquired by Visa for $ 5.3 billion is building an API that allows you to fetch financial data from consumer accounts. If you have used Venmo, Betterment, Square’s Cash app or Robinhood in the past, those apps use Plaid to connect to your bank account.
Codeat has a different focus as it connects small businesses with accounting software and other related tools. But it is still part of a broader trend – many startups are building APIs to create multiple applications to speak in the same language.
With today’s funding round, CODAT plans to expand into the US and employ more people – to have 100 employees by the end of the year.