For 2020-founded SaaS startup Passthrough, which serves the investment space, the deal flow has really come full circle.
Founded by Carta alumni Tim Flannery, Ben Doran and Alex Laplante, the startup closed a $10 million Series A round, it announced Wednesday. The round was led by an existing investor, Positive Sum, which led the company’s $5 million seed round one year ago. Motley Fool Ventures, Broadhaven Ventures and returning investors Company Ventures and Great Oaks VC also participated.
The 2023 RealLIST Startups runner-up launched a platform that streamlines and automates investor onboarding for fund managers and others in the fintech space. Since we checked in with them last year, the SaaS company now offers two products.
First, its electronic subscription documents which streamline the data collection that fund managers would otherwise piece together from investors through emails and financial documents.
And with the new funding, Passthrough has launched its latest, standalone anti-money-laundering and know-your-customer offering. The product collects information from investors, screens it against domestic and international sanctions lists and provides case management tools to ensure regulatory compliance.
Passthrough offers an investing experience with tech tools in a fund manager’s stack to quickly close their round. “Fund managers spend months and sometimes years convincing investors to invest in their funds, so why introduce friction just when you’re getting them over the finish line,” Flannery, the company’s Philly cofounder, said.
Flannery said that the team had a bit of a different experience raising this Series A than its first major round last year. This round was more challenging than the quick seed round in early 2022 when valuations were bloated and venture capital deals were flowing a bit more easily, he confirmed.
“We got pulled into a conversation earlier in 2022, and almost got to finish line, but that partner wasn’t right,” he told Technical.ly. “It was probably one of luckier things that could have happened to us, we would have had a valuation that was tough to grow into now.”
Flannery said the team is happy they went with Positive Sum, which has been very helpful with their go-to-market strategy and with hiring. The firm has also been instrumental in scaling its engineering teams, Flannery said. The funding will go toward continuing to build on Passthrough’s products and growing its customer base.
“We really thought through what we’re doing with the business, and aim to grow in a thoughtful way,” Flannery said. “We’re not taking money just to take money.”
Since its seed round in early 2022, the team has grown, and is currently made up of 26 distributed members. The company’s also grown from 13 customers to 250, Flannery said, and he touted that 80% of the electronic subscription documents are done in minutes and require no revisions. They’ve also collected data from 12,000 investors, and are launching an API that allows Passthrough to integrate into systems, rather than just be embedded.
“Every investor I talk to feels the pain in fund closing, and to have a company like Passthrough inventing solutions makes operating a fund so much easier,” Patrick O’Shaughnessy, partner and CEO at Positive Sum, said in a statement. “We are proud to lead another round of investment so they can continue solving these problems — single handedly changing the future of fund workflow automation.”
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