Of the many issues highlighted by the collapse of Silicon Valley Bank, one big one was the liability of having too much cash sitting in too few bank accounts. Today a London startup called TreasurySpring — which has built a platform for businesses to put some of their cash reserves to work, in investments — is announcing $29 million in funding to expand its products on the back of a surge of interest in its services.
The funding, a Series B, is being led by Balderton Capital, with new backer Mubadala Capital and previous backers ETFS Capital, MMC Ventures and Anthemis Group also participating. Previously the company had raised some $13 million, and partial details of this latest round (£15 million to be exact) leaked out last week. We now understand that the full round of $29 million includes both primary and secondary funding and values the startup at close to $100 million.
Prior to founding TreasurySpring, the three co-founders Kevin Cook (CEO), James Skillen (CTO) and Matthew Longhurst (COO), cut their teeth working in hedge funds, asset management and investment consulting and it was that experience, Cook said, that gave them the idea of building a platform to help businesses manage their cash reserves better.
The challenge is a familiar one in the world of business: big entities typically have better access to services than smaller organizations. In this case, what the three saw was that treasury departments at huge enterprises might typically work with large investment banks to invest their cash reserves in diverse ways, but for companies that are not the largest in the world, there were no routes to do the same, so the answer was to build a platform that could help them manage their money in similar ways.
To be clear, TreasurySpring’s customers are not exactly small. On average, they might have between $5 million and $10 million in cash reserves, and they include FTSE 100 corporations and other multinationals, as well as startups that are scaling, and also charities. Some of them are retail behemoth Sainsbury’s, Schroders, dairy giant Muller, Hg, Bunq, Lendable and Tide. In all there are already some 250 using its platform, with another 100 being onboarded right now, the company says (part of the surge of interest that spurred this round).
The platform, meanwhile, has been built to include some 600 standardised cash investment products, tapping seven currencies across three chief categories: governments, corporates and banks such as Goldman Sachs, Barclays and Societe Generale. Just as consumers have been served a range of ETFs to allow them to access portfolios of investments they might not have been able to access previously, in this case TreasurySpring offers FTFs: Fixed-Term-Funds that it describes as “standardised and regulated” and aimed at packaging and making different investment options more accessible to the treasury teams.
Cook said that business has been growing steadily for years — it was founded in 2017 — but the recent meltdown at SVB, and subsequently issues at Credit Suisse, really put TreasurySpring “on the radar.”
“When it comes to the cash you have in your business, you need to know where it is, and that you’re not too exposed,” Cook said, “and secondly you want to maximize any return you can on that cash.” With interest rates now at only around 5-6%, deposit accounts are still not a great return, and “if you’re not making the most of your money, you’re being delinquent.”
That being said, there is still a lot of work to do build out what is effectively a new market being sold to a clientele that is risk-averse by nature, it seems. (Indeed there are few competitors here: Flagstone is another player in a similar area, although it focuses on high interest savings accounts.)
“First they had to build the product and it took them years to do that, and I liked the resilience of the team,” said Rob Moffat, the partner at Balderton who led the investment. “But now it’s about getting to market. How do you get treasurers to buy something new? Does one really want to be the first treasurer to buy a new capital product?”
Cook however is bullish on what he sees as an obvious opportunity.
“Largest institutions [collectively] have multiple billions in cash,” he said, “and the common thread among all of them is that while they may be long on excess cash, they are short on time and expertise.”