Announcing our Investment in CDS

‍‍Where did we find this deal?

We were first introduced to Steve and the team through one of our existing portfolio companies. Steve is an experienced, exited entrepreneur building his second business in the treasury management space.

Treasury Management Products and Services in Banks — Treasury Management Divisions

What is Crowd Data Systems (CDS)?

Crowd Data Systems has been created to address the deficiencies in current treasury management systems. They plan to disrupt the market by focusing on three key areas:

Provide a genuine choice of modern technology to frustrated users of existing systems
Ensure the software is easy to adopt, with clear, guided implementation
Maintain open communication and collaboration to engage clients in a better partnership

Nearly 50% of respondents to a 2019 Deloitte survey of global corporate treasuries stated that they had inadequate technology to support their operations. The market consists of a small group of software players, relying on 10-15-year-old core technology to power their offerings. The result is a globally established market, supported by stagnating legacy systems and a lack of choice. Existing systems are unable to respond quickly to market challenges due to their technology debt, large overheads and antiquated process. Smaller treasuries departments are ‘locked out’ and forced into error-prone, Excel-based solutions.

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Who is behind it?

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Steve Whalley (co-CEO) is a software entrepreneur involved in technical companies for over 25 years in both hardware and software environments. Participated in three successful start-up software companies.

Kelly Scammell (co-CEO) is former co-founder of City Financial, ex COO at Wall Street Systems and former Division CEO at ION Treasury. ‍

Paul Traynier (CTO) former systems architect at City Financials and Wall Street Systems.

We have spent time getting to know Steve, Kelly and Paul. They have a great balance of technology, sales, and operational experience and all have worked together for 20 years, having successfully founded and exited a company in the global treasury software management space previously.

They have articulated a gap in the market and subsequently built a new system that will cater to an ever increasingly complex treasury function. We believe that the combination of industry expertise, new technology and contacts at nearly every FTSE 250 treasury department, leads to a significant opportunity in creating a global business in a £3.5bn market.

Their domain expertise and understanding of the market/competition is something we really liked and was evident at each stage of our due diligence. Having worked with 100 global clients, from BT, Vodafone and TimeWarner, their industry contacts are unrivalled, which leads to some strong differentiation and defensibility.

Founder Market Fit

The team are all experts in the space, having worked in the global treasury management space for the past 20 years together. They have a great balance of technology, sales, and operational experience, having successfully founded and exited a company previously. Their connections within the industry give Crowd Data Systems an unfair advantage in the market, to sell and implement their product.

Traction to date

CDS have created a live revenue-generating product and gained some early initial traction. To date, they have won a handful of early clients and CDS is currently being used in 30 countries globally. The company principals have invested directly to develop the core application framework, launch VISION and establish the first round of clients.

Within six months of launching their enterprise cash forecasting system, CDS have successfully implemented a FTSE 250 automotive engineering client in the UK, a global travel group in Australia and a specialist treasury outsourcing company in New Zealand.

Revenue Model

CDS operates a classic Software as a Service (SaaS) business model with a monthly licensing fee and an upfront implementation cost. CDS have a significant price advantage vs incumbents due their advancements in technology and the fact that traditionally large outsourcing providers such as Accenture implement software for clients, taking up to 12 months. This significant price and time difference will assist their go to market strategy significantly.

Market Opportunity

The market size is roughly £3.5bn and growing.

Competition:

The market is dominated by two large scale incumbents FIS and ION who provide treasury software as part of a larger ﬁnancial technology portfolio for banks, ﬁnancial institutions and corporations. Corporate treasury management software represents only a small part of the incumbent business revenue. The variety of products within their portfolios leads to a lack of clarity on product direction and focus. See attached detail competition slides vs CDS and below summary. Overall, we feel there is a clear gap in the market for a strong new entrant with a focus on resolving legacy issues of slow response times, outdated software and error-prone excel.

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Overall - Why we like this deal:

Team extremely experienced, solving a real problem, with impressive industry contacts and have sold a business together in the space.

Legacy Competition is archaic and their current technology stack has not been upgraded in 10 years - think Monzo mobile bank vs legacy banks e.g. HSBC still making you use those pin code machines to access your online banking.
Client Base With a disgruntled global base of contacts who have worked with CDS previously, their pipeline of potential clients is strong.
Exit Various exit potential including to private equity and incumbent providers.

Co-Investors

We are happy to be leading this exciting investment with the participating funds being Ascension Ventures and Force Over Mass Capital. We look forward to working alongside these great firms again.

Venture Pledge

Steve and his team have yet to have chose their charity. See what our other founders have chosen to support here.

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See more from Crowd Data Systems:

Website

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Our other Investment Notes:

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RLC Ventures is an Appointed Representative of FCA-authorised ‘Principal firm’ SFC Capital Partners Ltd (FRN:736284). EIS/SEIS investments should be treated as higher risk/speculative and place capital at risk. Past performance is not indicative of future performance and tax reliefs depend on individual circumstances and are subject to change. The products and/or services mentioned are only available to professional investors.

Why We Invested In Crowd Data Systems