We started Bond to build an API platform to expand banking services to the consumer apps we use everyday, transforming banking on a massive scale.
Today, I’m excited to announce a $10 million seed financing, with Michael Gilroy at Canaan leading the round, and participation from Thomas Laffont at Coatue and an incredible group of angel investors.
The future of banking and technology is finally here.
I recently realized that I had been working towards this future since I was 10 years old. In 1988, my mother and I emigrated to the suburbs of Los Angeles from Hong Kong, where my father stayed behind for a year to wrap up our old life. One of the first commandments of American living — according to relatives, new friends and neighbors — was to establish good credit. There were lots of ways to begin a banking relationship, but the barriers to entry were numerous and much of it was bewildering to a 10-year-old immigrant family CFO.
I remember walking with my mother into Sears, where we found all the big ticket items we’d need — the basics, a refrigerator and the washer-dryer, plus what we never had in Hong Kong, a lawn mower and a barbecue grill! When the cashier asked if we had a Sears card, we shook our heads, no, we did not. And did we want to open an account? I nudged my mother and she nodded. Yes, we certainly did.
The cashier did not ask us any of the typical banking questions. Sears understood their customer, and their financing partner trusted them to start us small. In return, our family rewarded them with years of repeat business and a perfect repayment record, which opened the door for us to apply for credit cards, lease a car and finance my college education.
Modern fintechs make these kinds of consumer-financing relationships even better, deeper and broader — all enhanced through data. The major bottleneck in this fintech revolution is that plugging into the banking system is so complex.
My family laughs that it was a short jump from me being the lead arranger of that original Ng family credit facility to the decade I spent structuring deals for clients at Goldman Sachs.
It was at Goldman that finance met tech. My clients were market-leading tech companies — Baidu, Infosys, Foxconn, Siebel, Business Objects — as well as the early wave of Software-as-a-Service (SaaS) companies, including HR software leader SuccessFactors. I joined SuccessFactors in my first operating role, and subsequently went on to leadership roles at SAP, and at API platforms Twilio and Mapbox.
The sum total of these work and life experiences led me to strongly believe that empowering software builders and innovators can change industries.
I first met Michael at Canaan when he got in touch to talk about an API concept and broader investment thesis he’d been formulating: “Twilio for banking,” he called it. I immediately understood the vision: build a fintech layer for technology companies to plug-in to the backend of banks, removing the friction of them trying to do this on their own.
Looking at tech companies that have been able to connect to the banking sector on their own, companies like Square, Lyft and ScaleFactor validate this model for many more brands in the future.
Square’s point-of-sale app allows a business owner to attach a little “square” reader to their mobile phone to swipe credit cards and take customer payments. On the front-end, their technology is a friendly consumer app; on the back-end, Square did the hard work of creating agreements with credit card processors and connecting to their systems, ultimately building a middle layer enables millions of business owners to grow.
The data being generated by app users is powerful. Square knows their customers’ businesses better than anyone — granular daily sales, average purchase size, percentage of repeat business, location, everything. These data-driven digital networks provide feedback loops to improve operations, refine customer experiences, identify and mitigate risks and create market differentiation.
In 2014, Square formed its own lending business, Square Capital. After all, who better to judge the credit worthiness of a business and determine if a working capital loan to buy inventory would be repaid?
Lyft knows its drivers equally well — daily rides, idle time, gas mileage — why not offer the best drivers loans to buy new, more efficient vehicles?
ScaleFactor — one of Canaan and Coatue’s portfolio companies — offers accounting and business management software; they’ve also realized they’re in a unique position to offer lending to their small business customers.
In today’s world — just like at Sears — a brand knows its customers better than any bank can. Brands understand sales patterns, spending patterns, work habits, and income flows in detail and over time.
Interestingly, businesses like Square Capital aren’t actually banks. Square Capital operates through a partnership with a regional lender you may not have heard of, Celtic Bank of Salt Lake City.
A bank partnership like that takes a lot of work. This kind of deal requires hundreds of pages of documentation and legal agreements to fulfill the extensive rules, regulations and requirements governing federal, state and local banking laws.
Speaking with tech companies that are trying to work directly with banks, we repeatedly hear about the serious challenges involved in these partnerships. In addition to the manual due diligence and documentation process, new systems need to be created to integrate with each other’s existing systems. This entails lots of product iterations and trial and error to get to the point where it’s as seamless as pressing a button on an app.
Bond is reducing the friction from the administrative onboarding and technical integration, creating a platform that makes this process more repeatable across many brand-bank relationships.
This is not just about expanding the tech world. The fintech revolution is also the banks’ own vision of their future. Many smaller banks are embracing fintech as a new growth channel.
There are thousands of regional banks and community lenders in the US, but only a dozen or so have been able to get these types of partnerships off the ground. Progress is painfully slow because of compliance, operational, and regulatory requirements on the one hand, and complex technical integrations on the other. Rather than have every app and every bank recreate the wheel for each new partnership, Bond now does the hard work in the middle so banks and brands can each concentrate on what they do best.
The promise of this fintech revolution is to leverage the data gleaned from apps, products and services. From the customer’s point of view, the integration is about convenience and a more natural context for using financial products where and when we need them. The result — enabling a foundation to support growth, job creation and compliance.
My own American Dream was built around these questions of banking and technology and I’m so excited and proud to be able to bring these experiences together, helping people accelerate the pace of financial innovation and realize their dreams.
Welcome to Bond.