Fintech Fragment secures $9M from Stripe, Jack Altman, BoxGroup, others

Fragment: Revolutionizing Accounting with Real-Time Digital Ledger API

Closing out the books at the end of each month often comes with a deep sigh from anyone tasked with this responsibility, especially in businesses handling a massive volume of transactions. Fragment, a startup, addresses this pain point with its digital ledger API that applies real-time, double-entry accounting to identify discrepancies quickly.

Origins and Founders' Background

Founded in 2021 by Thomas Neckel and Omi Chowdhury, Fragment is their third venture together. Previously, they created an identity management company, Scuid, later acquired by CA Technologies in 2014, and a private investment platform, Cove.io. Neckel acknowledged, "Identifying the importance of a ledger was a huge problem we had ourselves."

Solving Reconciliation Challenges

In traditional accounting, balances must be accurate and reconciled with bank statements for the books to be closed at the end of the month. Typically, this involves using enterprise resource planning (ERP) systems, which can be complex and inaccessible for many. Fragment offers a streamlined solution, ensuring quicker reconciliation, particularly when large transaction volumes are involved.

The Role of Fragment's API

Fragment's API allows fintech developers to construct financial products using automated fund flows encoded within their applications. This system logs each entry and updates relevant accounts in real time. Neckel illustrated, "For instance, depositing money updates both your product's account and the bank's simultaneously."

How It Works

Fragment provides a designer tool to model fund flows, a database similar to PostgreSQL for implementation, and a dashboard for operations, making it highly user-friendly.

Early Use Cases and Future Plans

Despite its recent beginnings, Fragment has already partnered with companies like TruckSmarter, Nala, and Pleo. TruckSmarter uses Fragment for its fuel payments network, Nala facilitates payments to Africa, and Pleo tracks historical balances for its 30,000 customers using Fragment’s technology.

Financial Backing and Expansion

The startup announced a $9 million seed round, attracting investments from notable fintech infrastructure executives and companies, including Stripe and BoxGroup. This contribution brings Fragment’s total funding to $10.8 million since June 2021. Previous backing came from Gradient Ventures during the pre-seed phase.

Competitive Landscape and Vision

Fragment competes directly with Modern Treasury but seeks to extend beyond simply managing balances to solving fundamental online value exchange problems. Neckel stated, "Stripe offered powerful payments infrastructure to small entities; we aim to provide the same level of financial infrastructure to startups as big players like Square and Uber." The new capital will be used to expand the engineering team and enhance market resources.

Future Aspirations

Adam Rothenberg, a partner at BoxGroup, expressed enthusiasm: "We’re excited to see what’s possible when you arm technology companies with programmable versions of the double-entry systems the modern economy runs on."