Credit Benchmark, an innovative financial technology company founded by serial entrepreneurs Mark Faulkner and Donal Smith, announces today that it has raised $7m in a Series A financing round led by Index Ventures to accelerate its development of a new data source in the $6bn credit risk information market.
Today also marks the launch of Credit Benchmark's commercial service for banks. Following completion of a proof of concept, a dozen global banks in the US, UK and Continental Europe have already committed to contribute their data, with more set to follow.
Credit Benchmark unlocks an immense untapped resource in institutional credit risk: internal estimates from the world's largest banks. Produced by highly skilled analysts using models validated by regulators, these estimates represent the views of qualified market participants with "real skin in the game." Credit Benchmark, for the first time, transforms the value of these estimates by anonymizing and aggregating them to create precise and dynamic consensus views.
The inherent scalability of Credit Benchmark's contributed-data model, a model successfully applied by the founders in their previous company Data Explorers and also utilized by companies such as Markit and Bloomberg, means that the more institutions contribute, the deeper and more insightful the consensus outputs become. Credit Benchmark expects to offer comprehensive coverage of the entities that matter most to financial institutions, including those such as funds, emerging market corporates and SMEs where there is currently little or no data from existing sources such as ratings agencies and credit default prices.
"Major banks already produce in-depth credit assessments of every counterparty and obligor they do business with, and we offer them a way to further capitalize on this effort," said CEO Elly Hardwick. "By aggregating bank estimates, Credit Benchmark creates a new source of transparency in credit risk. Our data provides unique and novel insight into the creditworthiness of sovereign issuers, corporates and funds, enabling financial institutions to manage their risk better." Hardwick added. "Our data reflects the views of qualified contributors whose incentives are aligned around the effective management of risk. Credit Benchmark's clients are continually expanding their use cases for the consensus data both within and beyond risk management," she said.
The company has created robust technological, security and legal frameworks for managing contributed data, guaranteeing the confidentiality of individual contributors' estimates and allowing it to act as a trusted intermediary. The team will use the investment to expand their presence in the US, opening an office in New York later this year. The company also plans to increase its headcount with 30 new employees, with the majority of new positions focusing on data quality and data science, thereby increasing the value of the service to contributors. In addition, Credit Benchmark will grow its salesforce.
"It would be difficult to find more experienced and talented founders than Donal and Mark. Together with CEO Elly Hardwick, they have the proven track records -- in developing and managing contributed data models -- required to work with the elite among global banks," said Jan Hammer, partner at Index Ventures. "What's so exciting to us is that it's already clear that ultimately it's not just banks that will derive value from access to Credit Benchmark's credit risk data, but a host of other financial services too.