Bundaval Raise $15 Million Series A for Alternative to Traditional Bank Guarantees • TechCrunch

BundavalThales Capital has led a $15 million Series A financing for the London-based B2B company that provides credit teams with a guarantee that customers will pay their financial obligations. The round was also participated by returning investors Octopus Ventures and Insurtech Gateway Ltd. Truesight and Expa and new investors FJ Labs and Broadhaven Ventures. Bondaval will be joined by Tom Williams, General Partner at Talis Capital.

TechCrunch did not cover Bondaval last time they covered it. It announced its seed funding in October 2021. It has since expanded its reach to 31 European and North American countries and increased its workforce to 20 people. There are plans to hire more. Shell and BP are now its clients.

Bondaval will use the new funding to recruit, expand into international markets, and add more uses cases to its platform. The startup has raised $25m since its inception in 2020 by Sam Damoussi and Tom Powell.

MicroBonds is Bondaval’s flagship product. These serve as an alternative for traditional bank guarantees and commercial insurability by segmenting underwriting. The process of underwriting surety bond is lengthy and costly because they are typically reserved for large-scale contracts and transactions. Bondaval’s credit decision engine, which analyses the probability of defaulting on bond terms, speeds up the process and makes it more intuitive. This allows Bondaval, to issue MicroBonds in large quantities. MicroBonds are purchased by customers to assure credit teams that they will honour the terms of the contract.

Credit teams without MicroBonds have many options to reduce risk. Credit teams have several options to reduce risk. They can choose not to extend credit and ask customers for cash up front. However, that leaves them with less liquidity to expand their businesses. Credit teams may ask for collateral-based security, such as bank guarantees. However, these can take three to six months to issue, and leave customers with very limited liquidity. Credit insurance is another option. Insurance companies can cancel these policies, but that is the drawback. MicroBonds, which are underwritten S&P A+ insurances, aims to solve all these problems by offering credit teams and their customers an online alternative that is faster, irrevocable, and more convenient.

TechCrunch was initially focused on Bondaval’s supply chain and independent retailers when it first covered it. MicroBonds are still available to smaller retailers. They only need to pay an annual premium and not have to post collateral-based collateral. This means that they can get more liquidity. Bondaval now has new uses for credit managers working in large companies who need to secure payments from a portfolio basis. These companies include energy companies like Shell, BP and Highland Fuels.

In a statement, Williams said, “We have been impressed by the MicroBonds opportunity that can be applied in so many different ways, and the sheer scale of the opportunity is amazing, that it can transform credit. We see boundless potential for Bondaval and are thrilled to be part of the journey.”