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In the year As venture capital investments taper off in 2022, some startups are turning to private loans, including debt capital, to fund their operations until then. However, the paperwork and policies and procedures that go along with these agreements aren’t always easy to understand.
Finlay CEO Jeremy Tsui told TechCrunch that personal credit is a $1.2 trillion industry and accounts for 90 percent of all corporate debt in the middle market. However, while working in debt capital at Goldman Sachs, he noticed two things: personal loans or lending by non-banks, filling a gap when banks offer small corporate loans, and then companies find hundreds of pages difficult to understand. their agreement.
“We’ve seen a lot of innovation in consumer credit, but commercial credit or business credit has been stuck in the past,” he said.
That’s when, in 2020, together with his brother Josiah Tuy and friend Kevin Suh, Finley started a software company that helps customers manage their personal loans, turning hundreds of pages of documents into digestible bites, including storing key dates. Companies taking out these types of loans can easily comply with loan terms and reporting requirements.
Finlay It raised $3 million in 2021 and has spent the past two years building the product and hitting a few key revenue and production milestones, closing in $17 million in Series A capital, Tsui said.
CRV led the round, and as part of the investment, CRV general partner James Green will join Finlay’s board.
Green told TechCrunch that he met Tsui and his co-founders in 2021 after they had just exited Y Combinator and raised their seed. Finley’s investment is similar to other investments the company has made, including Mercury and Jeeves. Demand for loan capital is growing even among non-tech companies, he said.
Finlay’s Debt Capital Management Dashboard. Image Credits: Finley
“The reality is that as interest rates are rising and the cost of capital is rising, the requirements for debt have become more challenging, and there is still more,” Green said. But between the covenants and the securities, the report is all the more complicated than it was three years ago when capital was so cheap.
Existing investors joining CRV in the round are Bain Capital Ventures, Haystack, Y Combinator, Nine Four Ventures and specialty lender Upper90.
Finlay is working with companies such as Ramp, Parafin and TripActions to fund hundreds of millions of dollars in debt capital and portfolio analytics to manage activities such as loan agreement digitization.
“Finley is helping us manage our $300 million credit facility with Goldman Sachs,” Lorraine Tang, vice president of tax and treasury at TripActions, said in a written statement. “There is a lot of coordination, reporting and optimization that goes into making the most of our funding. Finley’s software helps coordinate these tasks by pulling data from across our system and integrating many aspects of debt capital management for this facility.”
Meanwhile, Jeremy Tsui said that the new funding will be used to expand to new locations, hire on board and provide new software for debt capital providers and lenders. The company also doubled its capital figure to 18 last year.
Tsui declined to disclose firm revenue figures or valuations, but said the company has grown revenue fivefold in the past year, saved the average customer one to two bills and opened up access to capital that companies didn’t have before.
“Having access to capital can be the difference between shrinking and growing,” he added. We work closely with CFOs to ensure that they not only secure the loans and maintain access to those loans, but we also do the reporting and compliance.
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