Codat raises $100 million to build the internet for business data
Codat, the universal API for small business data, announced that it has raised $100 million in a series C investment round led by JP Morgan Growth Equity Partners. Canapi Ventures and Shopify also participated in the round and Plaid has been publicly named as an investor for the first time. Existing investors Index Ventures and PayPal Ventures also participated in the round. As part of the financing, Patrick McGoldrick, Partner at J.P. Morgan Growth Equity Partners will join Codat’s board.
Codat’s API is used by SaaS, lending and payments companies to build integrated products for their SMB customers. Whether that’s a neobank building a cashflow forecast in their app, or a payment provider enabling merchants to sync transactions with their accounting software, there is a use case for Codat in almost every fintech serving SMBs. The investment comes less than a year after Codat announced a Series B investment round last July led by Tiger Global, alongside American Express and PayPal Ventures. Codat reports that it now has over 200 clients, including many of the world’s largest banks as well as rapidly growing fintechs such as Brex, Jeeves, Pipe and Clover, and a team of 250 people across the UK, North America and Australia.
Codat will use the funds to build out their critical infrastructure to be the default means of sharing data for the small business economy. In the same way that the internet has changed almost every aspect of how we live and work, Codat’s technology will underpin the flow of small business data, giving way to tools, capabilities and opportunities not yet seen or imagined. The economic impact of this infrastructure is already proven. The SMBs sharing and syncing data to other systems via Codat’s technology have grown on average 2.7 times faster than GDP in 2021.
“Today, we’re in the age of ‘dial-up’ when it comes to business data.” commented Pete Lord, Codat’s CEO. “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 caliber 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 capitalize on the massive opportunity in front of us.”
The Series C funding round is made up mainly of strategic investors, demonstrating the collective industry buy-in to the increasing importance of connectivity in the future of finance and the growing role of Codat as the default means to integrate with small business systems. JP Morgan, Plaid and Shopify are all already partners, clients or collaborating with Codat.
Patrick McGoldrick, Partner at J.P. Morgan Growth Equity Partners said, “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 standardizing data – whether it is used for onboarding new customers or offering insights on business performance. This unique global perspective and Codat’s impressive management team deepened our conviction.”
Jeff Kennedy, Corporate Development at Shopify, commented: “At Shopify, we’re always looking to support companies that are aligned with our mission to make commerce better for everyone. We’re thrilled to participate in Codat’s Series C because we know how important it is for our merchants to have all of their systems in sync. Unlocking this connectivity is the key to helping them scale more efficiently.”
Financial technology company Plaid is a leader in open finance and invested in Codat in a prior round. The companies 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.
“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,” commented Plaid’s head of business and corporate development, Jason Pate. “Digitizing financial services has proven to save people time, money and financial stress and should unlock even more benefits for small businesses. Pate added, “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.”