As venture capital investment slowed in 2022, some startups turned to private credit, including debt capital, as a way to supplement their operations in the meantime. However, the policy and procedure paperwork associated with these deals is not always easy to understand.
Finley That’s what CEO Jeremy Tsui told businessupdates.org private credit is a $1.2 trillion industry and accounts for 90% of all mid-market corporate debt. However, when he worked in debt capital at Goldman Sachs, he witnessed two things: private credit, or loans from non-bank parties, filling the gap for banks that issued fewer corporate loans, and then companies that found it difficult to read the hundreds of pages in their agreements.
“With consumer credit, we’ve seen a lot of innovation, but business credit or business loans are really stuck in the past,” he said.
Then in 2020, he teamed up with his brother, Josiah Tsui, and friend Kevin Suh to found Finley, a software company that helps clients manage their private credit loans, turn hundreds of pages of documents into digestible bites, including storing important data , so that companies taking out these types of loans can more easily comply with loan terms and reporting requirements.
Finley raised $3 million in 2021 and has now closed $17 million in Series A capital after spending the past two years focusing on building its product and hitting a few key revenue and product milestones, Tsui said.
CRV led the round and as part of the investment, James Green, general partner at CRV, will join Finley’s board.
Green told businessupdates.org that he met Tsui and his co-founders in 2021 after they had just come out of Y Combinator and raised the seed round. What Finley was doing is similar to other investments the company has made, including Mercury and Jeeves. He said interest in debt capital has grown, even among non-tech companies.
Finley’s debt capital management dashboard. Image Credits: Finley
“The reality is that with interest rates rising and the cost of capital rising, the requirements for debt have become more challenging, and there’s still plenty of it,” Green said. “But between the covenants and the warrants and documentation, the reporting is all much more complicated than it was when capital was much cheaper three years ago.”
Joining CRV in the round are existing investors Bain Capital Ventures, Haystack, Y Combinator, Nine Four Ventures and specialist lender Upper90.
Finley partners with companies such as Ramp, Parafin and TripActions to manage hundreds of millions of dollars in debt and tasks such as digitizing credit agreements to fund portfolio analysis disbursements.
“Finley is helping us manage our $300 million credit facility with Goldman Sachs,” Loraine Tang, TripActions vice president of tax and treasury, said in a written statement. “There are many compliance, reporting and optimization tasks that need to be coordinated to get the most out of our funding. Finley’s software helps coordinate these tasks by extracting data from our systems and streamlining many aspects of debt management for this facility.”
Meanwhile, the new funding will be spent on expanding into new industries, hiring across the board and on new software offerings for debt capital providers and lenders, Jeremy Tsui said. In addition, the company doubled its workforce to 18 in the past year.
Tsui declined to disclose hard revenue numbers or valuations, but said the company grew five times its revenue last year, saved one to two finance employees for the average customer and gained access to capital companies didn’t previously have.
“Having access to capital can be the difference between stagnation and growth,” he added. “We work closely with CFOs to make sure they not only secure the loan, but also do the reporting and compliance so they can maintain access to those loans.”
