Why we invested in kennek?
By Paul Lehair
Posted
It is always great to get referrals from founders in our portfolio! We initially met Xavier, Co-Founder/Co-CEO at kennek, through Jan, Co-Founder/COO of our portfolio company Ramp, as the two of them previously worked together. We were impressed by the kennek team’s backgrounds and their vision of revolutionising the private debt space. AlbionVC could not be more excited to announce today that we are joining their seed round.
Private debt (= debt provided by alternative lenders ie. non-banks) has been growing massively from $0.5tn in 2015 to $1.4tn in 2022 to $2.3tn forecast in 2027. My colleague Kib, who previously worked in SME lending at Funding Circle, has witnessed first hand this explosion of private debt and alternative lenders. A secular trend behind this is the retrenching of banks from SME lending since the 2008 financial crisis (due to stricter regulatory requirements) and alternative lenders stepping in to fill the void. In the US, non-bank loans grew from 23% of total in 2009 to 45% in 2019.
Now, the problem is that the software stack to support alternative lenders has long been neglected. As a result, non-bank lenders use a fragmented stack of tools for their lending operations. Specialist software is only used for some processes at best (eg. CRM or loan management system) and many operations are still done primarily in excel. These various systems are siloed and do not speak to each other, which leads to inefficiencies and a lot of time wasted doing reconciliation and various other manual tasks.
As a result, there is also no single source of truth for private debt data, which is patchy and in poor shape. Data is key however to allow capital to flow from investors to lenders to borrowers. Besides, the challenging macro environment is pushing lenders to become more efficient and data-driven. Finally, lenders are also finding that investors into their credit funds are increasingly asking for more robust internal systems and processes.
In summary, there is a big gap in the market for an end-to-end, scalable and user-friendly solution. Existing providers focus either on some parts of the lending value chain, a specific customer type (eg. large banks), or a particular lending subvertical (eg. real estate lending).
kennek is the vertical software the kennek team wished they had when they ran lending businesses: an end-to-end solution for lenders that allows them to manage the full value chain of lending (from origination to underwriting, servicing/monitoring, analytics, risk management and investor reporting) in one platform instead of using different systems and tools. As such, kennek is developing a true operating system for lenders to manage all their workflows and by ensuring that data is properly tracked, structured and centralised, becoming the single source of truth. Beyond this much-needed vertical SaaS, kennek has a broader vision of building the central platform interconnecting and orchestrating the huge private debt space.
The kennek founders have exceptional founder-market fit, having previously founded, built, bought, funded and operated lenders in the private debt sector for decades. This deep expertise gave them unique insights of the space, which is a key advantage to build such vertical SaaS. Xavier, co-CEO, has 25y of experience including cofounding a new bank and working in fixed income structuring. Thibault, co-CEO, previously ran an SME lender (SME Capital) as well as advised a credit-focused investment manager and other alternative lenders, among other previous roles at Credit Suisse and Barclays. Edmund, CPO, has a decade’s experience in lending and previously worked with Thibault at SME Capital.
We were impressed by the team’s strong reputation and network in the sector as well as their ambition and vision. They have achieved fantastic growth in a short space of time having already attracted a broad range of customers. kennek was described as the ‘Apple of loan management’ by one of them!
Paul Lehair, Investment Director AlbionVC
AlbionVC is extremely proud to have been selected by kennek to join their seed round alongside HV Capital, Dutch Founders Fund, FFVC, Plug & Play Ventures and Syndicate One. We look forward to continuing supporting them on their journey to revolutionise private debt!
Paul Lehair, Investment Director AlbionVC
