Launch HN: Finley (YC W21) – Debt capital monitoring and reporting software

Hey HN! We’re Kevin, Jeremy, and Josiah, and we’re in the current YC batch. We’re building Finley (https://www.finleycms.com), software that streamlines the debt capital raise and management process, starting with compliance monitoring and reporting.

Debt capital is basically a corporate loan of over $20 million used to fund operations and growth. That’s a universal business need, so it’s not surprising that debt capital is huge—add up all the venture capital investments in 2020 and you’d still be $70 billion short of debt capital investments over the same period. [1]

Debt capital also comes with rules. Hundreds of pages of them. Here’s an example of a typical credit agreement, which is the type of contract that borrowers and lenders sign when they agree to a loan:

https://www.sec.gov/Archives/edgar/data/1357204/000119312511...

The credit agreement dictates all the conditions that companies have to comply with in order to maintain access to their funding. These conditions are known as covenants. [2] If companies don’t submit the right reports to lenders on a weekly basis that show they’re in compliance, they can lose access to tens of millions of dollars of their loan.

The problem is that borrowers today manage their credit agreement compliance with some combination of email, Word, Excel, head knowledge, and Post-it Notes. Today’s options for managing credit agreements are outmoded, error-prone, and end up costing companies millions in fines and lost access to capital (Fintech founders often unwittingly discover this after starting their lending business, as Stilt (W16) co-founder Rohit Mittal has pointed out. [3]).

Our software helps companies automate their regular reports on debt capital to their lenders. Consistent with Murphy’s law, this seemingly boring task turns out to be quite a difficult technical problem. It starts with encoding the conditions of credit agreements into properties that companies can query their loan data against to monitor and report on in real time. The process of turning unstructured data from credit agreements into structured data is challenging, but tractable, and we’ve been encouraged by the similarities we’ve seen across our credit agreements and excited by what doing this can enable.

Jeremy, our CEO, saw firsthand at Goldman Sachs that keeping track of credit compliance can require a small army of bankers and lawyers. At Ironclad (S15), a contract management startup, our COO Josiah worked on the Collaboration and Negotiation team and helped launch an in-app contract negotiation tool. [4] And as the first engineer at Nova Credit (S16), I saw how existing financial systems can be made much more efficient with modern technologies. [5]

What excites me the most here is the chance to build infrastructure in the capital markets space, which has ramifications far beyond reporting. In the longer-term, we’d love to empower companies to conduct debt capital raises faster and more effectively (the current process of raising debt capital comes with exorbitant legal fees and can take 6+ months).

Today, we’re helping startups manage hundreds of millions in debt capital and, as you might expect, building the plane as we fly it. We’d love your thoughts on our approach, questions about debt capital or fintech infrastructure, and any other feedback you might have.

Thanks!

-- Kevin

[1] See full report here: https://www.mckinsey.com/~/media/mckinsey/industries/private...

[2] https://www.investopedia.com/terms/c/covenant.asp

[3] https://rohitmittal.substack.com/p/a-brief-guide-to-starting...

[4] https://ironcladapp.com/blog/introducing-ironclad-editor/

[5] https://www.novacredit.com/

[disclosure: finley co-founder]

no, you're not alone! we've actually had this conversation as a team and with yc batchmates as we've gone through yc w21.

to really simplify what we do, we're a reporting tool for companies that take out large loans from banks and need to send updates to their lender every month.

i think there are a few questions contained in your original question, though. among them: has the low-hanging fruit of tech/software been picked, such that only esoteric or niche ideas (there was a slightly heated conversation about a calendar app the other day) get funded? has abundant VC funding created a culture of solutions looking for problems? etc.

my hot takes, in order of conviction:

a) "[tech] can only be understood backwards; but it must be [created] forwards" (apologies for the misappropriation) -- another way of stating PG's point that tech startups look like niche/low-value toys at first before expanding into larger areas. this is a bit tired, but like all good heuristics, even if you know it you still fall into the mental trap. so when i look around and start to see other yc w21 companies as "toys" or inscrutable or bizarre, i try to interrogate that belief. easier said than done!

b) this could be a symptom of spiraling complexity in software (and the saas ecosystem). all the new yc startups are building on top of a few generations of other yc startups (e.g., now that everyone has a CRM + ERP, what could you build on top of that?). i was previously at a yc-backed enterprise saas company whose clients included many other yc-backed enterprise saas companies. my brother, a debt investor at a bank, is entering tech for the first time. i only bring that up because i have been shocked at how high the hurdle is for participating in saas conversations re early-stage startups. whether it's "figma for finance with a workflow element" or "carta for cap markets in the neobank space," the way silicon valley frames conversations around new software in terms of slightly less new offerings is astounding (it is both positive and negative. positive--faster to iterate on familiar concepts. negative--keeps other people out of the convo).

c) increasing distance between software greenfield and the average consumer. as i look at yc's large fintech companies, it seems like they've gone further up the value chain, or perhaps further way from the end-user. in fintech, you have stripe, which handles payments and which many companies might be familiar with (even though overall penetration has a lot of room for growth). but the "back-end" solutions like modern treasury or finch are not built for the average consumer, even if they can provide a ton of utility.

thanks for your comment!

Yeah, this isn't the HN experience I was hoping for... :-).

If I may, the final ingredient I'll add is that this problem is one where software not only automates but enhances the solution. As a company grows, they'll add additional credit facilities and explore other financing options (like forward flow arrangements). Each agreement/arrangement comes with their custom set of requirements on your various credit products, and the lack of a central data store creates all sort of internal process complexity.