Embedded finance — where financial services firms and others infuse different types of fintech technology through APIs to enhance their own offerings with more data and functionality — remains a growing opportunity, both to drive new business and help incumbents get up to speed. come with their jammers. In the latest development, Bud Financial, a provider of an AI-based open banking platform used by major banks and others to support lending and other personalized products, has raised $80 million.
Ed Maslaveckas, the CEO and co-founder, told Vidak For Congress about the investment, a Series B, will be used for both R&D – in particular to further develop the tools based on artificial intelligence – and for international expansion. The company’s technology appears to be based on natural language, and that language is English: it’s live in the UK, Australia and New Zealand, and it plans to expand to two more countries this year. It won’t say which ones, but it has many multinational investors, including some from another Anglophone market, the United States.
Bud also doesn’t disclose customer or transaction numbers, earnings, nor his valuation with this round, but here’s some context on that. This round is led by Bellis Phantom Holdco ltd, an indirect subsidiary of investment funds managed by TDR Capital (which is a large PE investor whose name is not typically associated with tech investments, with its portfolio that includes the Pizza Express restaurant chain and ex-Walmart supermarket giant Asda). Others in this round are SEI Investments Outward VC and others.
More context: In 2019, before the pandemic, Bud raised $20 million from an impressive group that included HSBC, Goldman Sachs, ANZ, Investec’s INVC fund and InnoCells (the corporate venture arm of Banco Sabadell) – 25 investors in total . PitchBook notes that prior to this round, previous investments gave the company a modest valuation of less than $58 million. I suspect that number is definitely higher now, although with all the pressure we’ve seen in the market, and the many people who have been talking about how valuations are definitely low, anyone can guess what Bud’s valuation might be right now. .
Some of Bud’s major financial investors are also customers, which also speaks volumes about the business model. Like other European fintech players such as open banking specialists Tink and Truelayer, as well as others in the embedded finance space such as 10x and Thought Machine – both of which have raised healthy amounts of funding, including from investors including large financial incumbents – the startup to fill the gap in the market created by the rise of API-based embedded financial services, a plethora of successful disruptive startups entering the market, and the existence of very large financial services firms avoiding their own approach to that you will lose customers and transactions.
It started, ironically, itself as a consumer-oriented disruptor.
In 2014, Maslaveckas said he was still alive between Ireland and the UK and he used “a lot of financial apps to manage the situation”.
The original idea, he said, “was around providing a single point of access for people to learn about all these new apps. That morphed pretty quickly into a consumer-oriented app that used screen scraping to identify areas we thought we’d that people could benefit from interacting with some of the fintechs we were working with.”
The “B2B switch,” he added, came in 2017 when “we realized we could get all of this to market much faster if we partnered with institutions to help them change the way they interacted with customers.” improve using the technology we had developed.” Interestingly enough, that was before the idea of ”neobanking” wasn’t very popular (let alone a concept used by younger consumers as neobanking services are now), so you can see how Bud would have seen an opportunity, without strong traction from themselves, to turn to B2B, after foresightedly seeing how behind the current incumbents already were, and would stay if they didn’t jump into something new.
In any case, much of Bud’s ethos stayed with the pivot, he said. “Essentially, we all think it should be easier to manage money well, so all the APIs we’ve built were built with that in mind,” he said.
“Being good with money” often boils down to two main concepts: not overspending what you can’t repay (but while letting the liquidity and activity bubble), and investing to grow your money, which are, loosely, two of the more popular “intelligence” services Bud is helping to enable: it helps banks collect and use transactional insights, and better assess the risks associated with credit-based products.
It relies on advances in areas such as open banking, which in some ways is less about banks taking in more data from elsewhere, but simply better understanding what’s in their own coffers and database. More specific features that Bud has and continues to improve include areas such as categorization, trader recognition and income verification, said Maslaveckas.
It also covers payments. “Most of the features that people build with our technology end up in some kind of payment, and we can process it through the Open Banking APIs,” he said. He added that the insights it provides “is where we differentiate ourselves and where people choose us over competitors like Tink and Truelayer. That’s what HSBC uses, for example, to power some of the new features in the first direct banking app.” .”
The company claims that its “transaction enrichment” technology is 33% more accurate than industry leaders, with “over 93% accuracy in just six weeks” in an unspecified new market it recently entered. (Take those with a grain of salt, though, for lack of hard names and numbers.)
“We are extremely excited about Bud’s potential, not only in its platform’s ability to truly capitalize on the opportunities of open banking, but also in its far-reaching potential to power other companies we have invested in,” said Gary Lindsay. , a managing partner at TDR Capital, in a statement. “The effective integration of technology and data science has long been an important part of TDR’s operational strategy and this investment fits into that approach.”