Proper raises $ 4.3 million seed round to help other fintechs quarrel over data – TechCrunch

What is one of the hottest areas in fintech today? Funny enough, it’s fintech for fintech (say it sometimes fast).

Fintech startups have certainly spread in recent years, but it is still a very fragmented area – and this is where “fintech for fintech” companies come in. Fentech companies often have complex technology stacks, which rely on data from various sources and service providers to support their core businesses.

Proper acknowledges that this fragmentation can get messy very quickly. The company is working to streamline operations at other fintech startups, especially through the reconciliation software that these companies can use to ensure they work with accurate and precise data even when coming from different locations, said co-founder and CEO Kyle Maloney TechCrunch. The company’s core product is a kind of universal book that shows and reconciles transaction data based on core accounting principles, Maloney said.

Maloney and his co-founder, Travis Gibson, both met while working in the engineering team at card issuing company Marqeta.

The right co-founders Kyle Maloney and Travis Gibson. Photo credit: Proper

“During our time in Marqeta, as we developed new money movement integrations, we were constantly in the process of stitching together different underlying vendors – think banking partners, payments, vendors, direct network integrations,” Gibson said in an interview with TechCrunch.

Gibson added that in their previous roles, they often spent 80% to 90% of the day building underlying financial data infrastructure to support various methods of money movement. Proper was created out of a desire to help make the data management process easier for fintech companies so they can focus on their core business, Gibson said.

The problem can be particularly sticky for high-growth early-stage companies looking to build more customized products, Maloney explained.

“Using a holistic stack like Stripe may not work for all types of money movement operations [early-stage companies] trying to complete. And so what happens is that they end up in this existential crisis, where Stripe is great, or how many of these vendors are amazing, but they might want to use a best-in-class solution, like Modern Treasury for ACH [for example]and now they have to build a bunch of infrastructure under the hood that Stripe provided, specifically at their service, Maloney said.

A number of other “fintech for fintech” startups, such as Meld and Novopayment, have taken the approach of developing APIs to help fintechs solve integration problems. But Proper’s core product is not an API, because the company itself often manages to build integrations instead of just giving developers the tools to do it themselves, Gibson explained. In the long run, he said, Proper plans to leverage APIs more often and expand its portfolio of integrations.

A screenshot of Proper’s data reconciliation platform. Photo credit: Proper

Proper uses two main strategies to ensure data accuracy, Gibson explained. The first is “balanced reconciliation”, where the start-up tracks money with banks and external parties to verify that funds they believe have been transferred have reached their destination. The second is “transaction matching”, which is basically what it sounds like – taking data from a given transaction across different sources and making sure the data is coherent, according to Gibson.

The startup, which participated in the Y Combinators Winter 2022 cohort, announced today that it has completed a $ 4.3 million seed round led by Redpoint Ventures with the participation of BoxGroup, Mischief, Y Combinator and others. Gibson and Maloney refused to share the number of customers that Proper serves today, but said that more new customers come every week.

The team, which consists of six people today, plans to use the new capital to develop a dashboard without a code for financial operations, which will fit into the company’s goal of helping engineering teams save time.

“One of the things we’ve heard a lot of is that there is a huge need for financial management teams internally to be able to manage, configure and manage money movements without the need for technical intervention,” said Maloney.

Maloney said he has mainly seen other fintechs deal with their reconciliation and ledger problems internally with internal solutions.

“We have not seen anything out there that really solves both the reconciliation and ledger problem in a single, ubiquitous solution. We know today that companies often manage these processes internally with custom SQL queries and Python scripts and operations teams and spreadsheets,” said Maloney. .