Bondaval raises $15 million Series A for its alternative to traditional bank guarantees • ExamPaper

Bondaval, the London-based B2B insurance tech that gives credit teams the assurance that clients will meet their financial obligations, has raised $15 million 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. Tom Williams, general partner of Talis Capital, will join Bondaval’s board.

ExamPaper last reported on Bondaval when it announced its seed funding in October 2021. It has since expanded its reach to 31 countries in Europe and North America, growing its team to 20 people, with plans to hire more. Customers now include BP and Shell.

Bondaval’s new funding will be used for hiring, expanding into new international markets and adding more 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 products are MicroBonds, which serve as an alternative to traditional bank guarantees and trade insurance by fractionating the underwriting process. Since sureties are usually reserved for large-scale transactions and contracts, this means that their underwriting is lengthy and expensive. Bondaval speeds up the process and makes it more accessible through its proprietary credit risk decision engine, which analyzes the probability of a default within the terms of a bond and enables Bondaval to issue MicroBonds at scale. Clients buy MicroBonds to assure credit teams that they will honor the terms of a contract.

Without MicroBonds, credit teams have several 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 liquidity to grow their business. Credit teams can request collateral-based securities, including bank guarantees, but those take about three to six months to complete and also leave clients with limited liquidity. Another option is credit insurance; the downside is that those policies can be canceled by insurers. Endorsed by S&P A+ insurers, MicroBonds seeks to solve all of these problems by providing credit teams and their clients with a faster, non-cancellable alternative available online.

When ExamPaper first covered Bondaval, it was aimed at independent retailers and the supply chain. Small retailers can still benefit from MicroBonds because they only have to pay an annual premium instead of putting up collateral-based securities, which means more liquidity. But Bondaval has expanded into new use cases for corporate credit managers who need to secure payments on a portfolio basis. These include companies in the energy sector, such as current customers Shell, BP, Highland Fuels and TACenergy.

In a statement, Williams said: “We are impressed with the opportunity for MicroBonds, which can be applied in so many different ways, and the sheer magnitude of the opportunity is astonishing, to the point where it could transform credit. We see a boundless potential for Bondaval and are delighted to be part of the journey.”

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