Bondaval raises $15M Series A for its alternative to traditional bank guarantees • TechCrunch
Bondaval, the London-based B2B insurtech that gives credit teams confidence that clients will meet their financial obligations, has raised $15m in Series A funding led by Talis Capital. The round included participation from returning investors Octopus Ventures, Insurtech Gateway Ltd, Truesight and Expa, and new investors FJ Labs and Broadhaven Ventures. Talis Capital’s general partner, Tom Williams, will join Bondaval’s board of directors.
TechCrunch last covered Bondaval when it announced seed funding in October 2021. Since then, it has expanded its reach to 31 countries across Europe and North America and grown its team to 20 people, with the intention of hiring more. Its customers now include BP and Shell.
Bondaval’s new funding will be used for hiring, expanding into new international markets and adding new use cases for its platform. The startup has now raised $25 million since its founding in 2020 by Tom Powell and Sam Damoussi.
Bondaval’s flagship product are MicroBonds, which serve as an alternative to traditional bank guarantees and commercial insurance by splitting the underwriting process. Surety bonds are generally reserved for large transactions and contracts, which means that their subscription is long and expensive. Bondaval speeds up the process and makes it more accessible thanks to its proprietary credit risk decision engine, which analyzes the probability of default on the terms of a bond, and allows Bondaval to issue MicroBonds at scale. Customers buy MicroBonds to assure credit teams that they will honor the terms of a contract.
Without MicroBonds, credit teams have multiple options to mitigate risk. For example, they may decide not to extend credit and ask customers to pay cash upfront, but that means both parties have less cash to grow their businesses. Credit teams can apply for collateral-based collateral, including bank guarantees, but these take about three to six months to pass and also leave clients with limited cash. Another option is credit insurance; the downside is that these policies can be canceled by insurers. Backed by S&P A+ insurers, MicroBonds seeks to address all of these issues by providing credit teams and their clients with a faster, non-cancelable alternative available online.
When TechCrunch first covered Bondaval, it focused on independent retailers and the supply chain. Small retailers can still benefit from MicroBonds because they only have to pay an annual premium instead of posting collateral-based collateral, which means more cash. But Bondaval has expanded into new use cases for large enterprise credit managers, who need to secure payments on a portfolio basis. These include companies in the energy sector, such as current clients Shell, BP, Highland Fuels and TACenergy.
In a statement, Williams said: “We are impressed with the opportunity of MicroBonds which can be applied in so many different ways, and the sheer size of the opportunity is breathtaking, to the point that it could transform credit. We see unlimited potential for Bondaval and are excited to be part of the journey.