Bondaval, a London-based B2B guarantor that provides credit groups with assurance that customers will meet their financial obligations, has raised $15 million in Series A funding led by Thales Capital. The round included participation from returning investors Octopus Ventures, Insurtech Gateway Ltd, Truesight and Expa, and new investors FJ Labs and Broadhaven Ventures. Thales Capital General Partner Tom Williams will join Bondaval’s board.
TechCrunch last covered Bondaval, a seed fund, in October 2021. Since then, it has expanded its reach to 31 in Europe and North America, growing its team to 20 people and plans to hire more. Its clients now include BP and Shell.
Bondaval’s new funding will be used to hire, expand into new global markets and add more use cases for the platform. In the year Since being founded in 2020 by Tom Powell and Sam Damossi, the startup has now raised $25 million.
Bondaval’s core products are microbonds, which serve as an alternative to traditional bank guarantees and commercial insurance by fractionalizing the underwriting process. As surety bonds are usually reserved for large transactions and contracts, their writing is long and expensive. Bondaval speeds up the process and makes it accessible through its proprietary credit risk decision engine, which analyzes the likelihood of default on bond terms and allows Bondaval to issue microbonds at scale. Customers buy microbonds to ensure that credit groups meet the terms of the contract.
Without microbonds, credit unions have several options to mitigate risk. For example, they may decide not to extend a loan and ask their customers to pay cash upfront, but that means both parties have less cash to grow their businesses. Credit unions can request collateral-based security, including bank guarantees, but those take three to six months to approve and leave customers with limited funds. Another option is credit insurance; The downside is that those policies can be canceled by insurers. Microbond, underwritten by S&P A+ insurers, seeks to solve all of these problems by providing credit groups and their customers with a fast, non-cancellable option online.
When TechCrunch first covered Bondaval, it focused on independent retailers and supply chains. Small retailers can still benefit from MicroBonds because instead of posting collateral-based security, they only have to pay an annual premium, which means more liquidity. But Bondaval has expanded to new use cases for loan managers at large companies who want to secure payments on a portfolio basis. These include companies in the energy sector such as Shell, BP, Highland Fuels and TACEnergy.
In a statement, Williams said: “We’re impressed by the potential for microbonds to be applied in so many different ways, and the scale of the opportunity is compelling, insofar as it can transform credit. We see limitless potential for Bondaval and are excited to be a part of the journey.
