London-based Credit Benchmark, which acts as a source of consensus credit risk information, in a Series B funding round led by UK-based venture capital fund Balderton Capital, has raised $20million. New investor Balderton Capital was joined by existing partner Index Ventures in the round. This investment follows an earlier round of $7 million in July 2014, which was led by Index. The new capital will be used to expand Credit Benchmark’s data gathering efforts with global IRB banks extend its intelligence platform and grow its international team and presence.
Established in 2012, Credit Benchmark offers a platform aimed at improving financial market benchmarks and risk assessments. In the fintech startup segment, it functions by assessment analysis by aggregating anonymised credit risk data from the world’s largest banks to create consensus credit data and analysis that reflects the views of banks’ own risk teams. It collects various risk metrics, including probability of default and loss given default from contributing Internal Ratings-Based Approach banks. This information is then pooled to provide clients with consensus credit risk data and analytics for sovereigns, corporates, banks and non-banking financial institutions. It showcases the insight of organisations with assets in the trillions and with thousands of credit analysts. The coverage by Credit Benchmark includes globally systemic entities as well as deep country-specific databases.
So how does consensus data help in credit risk management? According to a whitepaper published by Credit Benchmark on sovereign risk, it highlighted the differences between industry-sourced estimates and other sources of credit assessment and the predictive power of banks’ analysis. Credit Benchmark’s data platform has been run before by founders Mark Faulkner and Donal Smith in their previous company Data Explorers, adding to its credibility. It was also selected in the 2015 Fintech 50 awards.
Post the Series B round, Credit Benchmark announced the formal launch of its US presence, though it already had a New York-based team. The new addition to the existing set up is Harry Chopra, as its chief commercial officer, who is expected to bring more banks on board and increase the volume of feeding data into the platform. Last year, Credit Benchmark had named a dozen global banks in the US, UK and Continental Europe who had committed to supplying data for its platform. However, the company is no longer speaking about its sources, though it has hinted on newer contributors coming on board. It has also invested heavily in security and scalability of its platform.
The startup had earlier also announced the launch of a commercial service, which however was delayed until now. The reason it said has been compliance processes involved with getting contributor banks on board, but not a lack of interest, it reiterated, of banks getting involved with a consensus, data-sharing credit risk model.