Ask any engineer tasked with tracking customer balances what their experience is like and you'll likely hear a deep sigh that ledger management is the bane of their existence.
Fragment is a startup that offers a ledger API that gives engineers access to real-time double-entry bookkeeping without having to learn an entirely new accounting jargon. Founders CEO Thomas Neckel and CTO Omi Chowdhury founded Fragment in 2021. The software targets engineers building software to track customer balances.
This is the co-founders' third startup together. They previously launched an identity management company called Scuid, which competed with Okta and was acquired by CA Technologies in 2014. They then launched a private investment platform called Cove.io, which is where they realized the importance of ledgers, which Neckel says “was a big problem we were running into ourselves.”
“For someone to close the books for the month, the balances have to be correct and reconciled with the bank statements,” Necker told TechCrunch. “Accountants typically perform this function with the help of enterprise resource planning systems.” While the reconciliation happens between the product and the bank, Fragment syncs the balances within the fintech product with the banks and the balance sheets they're built on. As a result, clients can close the books faster because transactions are perfectly reconciled, Necker said.
Necker pointed to a settlement dispute between Evolve Bank and Synapse that led to a chain of accusations and suspicions between the two companies.
Fragment allows fintech developers to build financial products using APIs. They can configure a flow of funds, turn it into code, and then build that code into their product. A flow of funds is a series of steps recorded as entries in a database, with each entry updating a set of accounts, says Necker.
Fragment's dashboard for creating and simulating fund flows. Image courtesy of Fragment
“We give you a designer to model the flow of funds, and then we give you a database that's basically Postgres-like to implement it, and a dashboard to interact with it,” Necker said. (Postgres, of course, is also known as PostgreSQL, and is an open-source database.)
The New York-based startup says companies like TruckSmarter, Nala and Pleo are already early customers, but it officially launches to the public on Monday. TruckSmarter runs its own fuel payment network and uses Fragment to finance purchases. Nala uses Fragment to help businesses send payments to Africa, while B2B spend management platform Pleo uses Fragment to store and track balance history for its 30,000 customers, Fragment said.
The startup also announced a $9 million seed round backed by fintech infrastructure executives including Stripe, BoxGroup, Avid Ventures, Zach Perret (Plaid), Jack Altman (Lattice), Gokul Rajaram (DoorDash), Dara Khosrowshahi (Uber), Emilie Choi (Coinbase), Scott Belsky (Adobe) and Cristina Cordova (Linear). With this new investment, Fragment has raised a total of $10.8 million since June 2021. Gradient Ventures invested in the company's pre-seed round.
Necker said Fragment's ledger technology competes most directly with payments company Modern Treasury, but the company's mission goes beyond balances to solve the more fundamental problem of exchanging value online.
“Stripe gave two people in a garage the same payments infrastructure as Amazon,” Necker said. “Look at what's possible when you give two people in a garage the same financial infrastructure as Square, Stripe and Uber.”
Fragment plans to use the funding to expand its engineering team and invest in go-to-market resources.
“We're excited to see what's possible by providing technology companies with a programmable version of the double-entry accounting system that powers the modern economy,” Adam Rosenberg, a partner at Box Group, said in a statement.