Why we invested in Bud

  • Author

    Devin Kohli

  • Category


  • Date

    June 7, 2022

Why we invested in Bud

Outward is delighted to announce our follow on investment into Bud’s $80m Series B fundraise alongside new investor TDR Capital. Outward first invested in Bud back in 2018 and have continued to support Ed and the team on their growth journey.

A marathon not a spint...

We are an impatient generation. We value convenience, speed and simplicity – even if it comes at the expense of losing control over our data and a reduction in our privacy. Our lives are increasingly “on demand” – be it groceries, dating, travel – and we expect the same when it comes to the delivery of our financial needs.

“Open Banking” was born to cater for such impatience – launched with noble ambitions to bring substantial benefits to consumers and SME’s. The appeal to consumer, business and regulator alike is simple to understand – after all who wouldn’t want to aggregate their financial products in one place; attain insight about their spending patterns; appreciate recommendations on saving money and managing cashflow or indeed my personal “bête noire” – have their online forms autocompleted.

However, as any startup founder will tell you - ambition and reality seldom go hand in hand.

Ed Maslaveckas and Bud were first introduced to me via an Alipay executive in the months leading up to Open Banking (PSD2) coming into effect. Despite these regulatory tailwinds, Ed didn’t conform to stereotype – and spared me the rose-tinted vision that normally accompanies a founder to VC first encounter. His company was running on fumes; the business initially started as a consumer first open banking solution but burned through seed capital trying to prove out user adoption and customer education. Nevertheless, he and his management team (all former school mates) remained resolute that the technology was robust and that an enterprise first solution targeting the big banks would prevail.

Bud was close to signing a tier 1 global bank that would showcase their technology which in turn would build pipeline. The tech appeared sound, the bet appeared to be on tech delivery inside and with a slow-moving banking conglomerate. Procurement cycles are notoriously slow inside large financial institutions and contracts have horrifically long lead times as they go through countless legal, and information security hurdles. However, Bud remain convinced that the prize was worth it – get a tier 1 bank onside using your technology and voila – you unlock the holy grail – vast amounts of transactional data from millions of users. Enrich that data and you improve user experience and increase retention. Rinse and repeat that sales cycle and you create considerable value.

Transactional data is particularly powerful – a holy grail – because it is a high-quality data-set that informs others about how we spend, and from this to infer our priorities, interests and needs. Commercially speaking, transactional data heightens the importance of my identity as it shows clearly what I could be worth to any kind of provider of goods and services – especially so if it is a tier 1 bank that wishes to retain and grow its user base. Bud’s tools could provide new insights that help people and businesses manage their money and access products they may not have had before. Services could be more personalised or tailored to the individual’s behaviours and lifestyle. Bud could develop and layer on top ‘tools’ which make dealing with money more convenient, simpler and quicker – be it  ESG related e.g. Carbon Tracking, Credit Tools (rental recognition, cashflow management) or Insight Automation (e.g. product recommendation, detailed spend insights).

Open Banking is the next financial infrastructure superhighway

Bud was not alone in building finance’s new plumbing. It was inevitable that other well-funded European rivals, not to mention US peer Plaid, would push hard to capture a very large global market.  Open Banking is the next financial infrastructure superhighway and a recent market sizing by Accenture illustrates why – it amounts to a £300bn per annum global opportunity. Despite raising a subsequent Series A from banking triumvirate – Goldman Sachs, HSBC and ANZ, Bud’s large enterprise strategy meant competitors like Truelayer, Tink and Yapily had free reign to target and win over the long tail of smaller SME’s and smaller financial institutions. As they developed a more diverse set of clients, such competitors were also able to hire aggressive sales teams and raise larger rounds at lofty valuations, further fuelled by VC bubble of 2019-21.

The decision to go deep in data intelligence rather than focusing on broad European connectivity didn’t seem like a winning strategy at first, especially in the face of other aggressive open banking funding rounds and valuations. However, the management team were adamant that a long term investment in ‘data intelligence infrastructure’ would prove more valuable than being one of ten connectivity players. At its core, the team remained convinced that their strategy software would prevail if given the chance.

Ed and team looked in the mirror, acknowledged some changes and made tough decisions speedily – on people and strategy – a hallmark of competent leadership

The bet paid off – over the course of the last 12 months clients like TotallyMoney and Charles Stanley were won in competitive tenders that nicely supplemented big banking enterprise contract wins with ANZ, TSB and HSBC. ARR has increased 8x and the ethos to constantly iterate has meant Bud is already well advanced on Open Banking 2.0 product development (watch this space!).

The news today that our friends at TDR have led a $80m funding round with a further commitment to unlock considerable revenue from their own extensive PE portfolio is the best illustration of Bud’s successful transformation. Ed and team looked in the mirror, acknowledged some changes and made tough decisions speedily – on people and strategy –  a hallmark of competent leadership.

Today is not a day for celebration. Many things may still go awry and open banking is just at its beginnings. Hats off however to the team for staying the course, believing in their product and constantly iterating. The Bud story is far from over – merely at an inflexion point – but as Ed and Bud’s own experience may ultimately prove – hares may set the pace but tortoises win the race.