Fintech
Fintech Fragment Fixes Ledger Problems, Raising $9M From Stripe, Jack Altman, BoxGroup, and More
Ask any engineer responsible for keeping track of customer balances what their experience is like and they will tell you that accounting is the bane of existence.
Fragment is a startup that offers an accounting API that makes real-time double-entry accounting accessible to engineers without having to learn a whole new accounting vocabulary. Founders Thomas Neckel, CEO, and Omi Chowdhury, CTO, founded Fragment in 2021. This software is geared towards engineers to create software for tracking customer balances.
This is the third startup the co-founding duo has created together. They previously created an identity management company called Scuid that competed with Okta and was acquired by CA Technologies in 2014. They then created a private investment platform called Cove.io. This was the catalyst for identifying the importance of a registry, with Neckel saying it was “a big problem that we had ourselves.”
“In order for anyone to close their books for the month, the balances need to be corrected and reconciled with bank statements,” Neckel told TechCrunch. “Accountants typically do this with the help of enterprise resource planning systems.” While the reconciliation happens between the product and the bank, Fragment keeps the balances in the fintech product in sync with the bank and the balance sheets they’re built on. The result is that customers can close their books faster because the transactions are fully reconciled, Neckel said.
Reconciliation problems are what happened with Evolve Bank and SynapseNeckel stressed, and these issues have given rise to a series of accusations and mutual accusations between the two.
With Fragment, fintech developers can use the API to create financial products. They can compose fund flows, turn them into code, and embed the code into their products. Fund flows are the set of steps that are recorded in the database as entries, and each entry updates a set of accounts, Neckel said.
Fragment dashboard for composing and simulating fund flows.
“We give you a designer to model the flow of funds, and then basically a database, not too different from Postgres, to implement it, and a dashboard to manage it,” Neckel said. (Postgres, of course, also known as PostgreSQL, is an open source database.)
While the New York-based startup says it already counts companies like TruckSmarter, Nala, and Pleo among its early customers, it will officially launch to the public on Monday. TruckSmarter runs its own fuel payments network and finances purchases using Fragment. Nala uses Fragment to help businesses send payments to Africa. Meanwhile, B2B expense management platform Pleo uses it to store and track historical balances for its 30,000 customers, Fragment says.
The startup is also announcing a $9 million seed funding round backed by fintech infrastructure executives from Stripe, BoxGroup, Avid Ventures, Zach Perret (Plaid), Jack Altman (Lattice), Gokul Rajaram (DoorDash), Dara Khosrowshahi (Uber), Emilie Choi (Coinbase), Scott Belsky (Adobe), and Cristina Cordova (Linear). Including this new investment, Fragment has raised a total of $10.8 million since June 2021. Gradient Ventures invested in the company’s seed funding round.
Fragment’s accounting technology competes more directly with payments firm Modern Treasury, according to Neckel. However, Fragment’s mission is to go beyond balances to solve the most basic problem of exchanging value online.
“Stripe gave two people in a garage the same payments infrastructure as Amazon,” Neckel said, referring to “Let’s see what’s possible when we give two people in a garage the same financial infrastructure as Square, Stripe, and Uber.”
Fragment plans to use the funding to expand its engineering team and invest in go-to-market resources.
“We are excited to see what can be achieved by empowering technology companies with programmable versions of the double-entry systems that underpin the modern economy,” said Adam Rothenberg, a partner at BoxGroup, in a written statement.