Fintech
Fintech Fragment Simplifies Bank Account Reconciliation, Raising $9M From Stripe, Jack Altmam, Others
Ask anyone who has ever closed the books at the end of the month what that experience is like, and you will get a deep sigh that says, reconciliation is the bane of existence. This is especially true for a business with hundreds, thousands, or hundreds of thousands of transactions per month.
Fragment is a startup that offers a digital accounting API that applies real-time double-entry bookkeeping to find errors where things don’t add up. Founders Thomas Neckel, CEO, and Omi Chowdhury, CTO, founded Fragment in 2021.
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, 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.” But for those who can’t go the complicated route of ERP software, Fragment says its software reconciles accounts faster than humans can, especially when a large volume of transactions is involved.
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, 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 to compose and simulate your funds flow.Image Credits: Fragment / Fragment
For example, let’s say you want to deposit money into an account. One step in the flow of funds is to make the deposit. The entry is called “make deposit” and it will update the account in both your product and your bank.
“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 fuel payments network and finances purchases using Fragment. Nala uses Fragment to help companies 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, Zack 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.