With re:cap Institutional, Channel Capital now has access to real-time financial insights into its portfolio, which lead to optimized team efficiency and enhanced strategic decision-making. This ultimately improves risk management and fosters success for both Channel and its portfolio companies.
Channel Capital Advisors LLP, a subsidiary of Channel Digital Holdings Limited, is an alternative financing lender and was founded in 2006. The Channel Group provides financing structures to entrepreneurial-led businesses and growth companies within the innovation economy in global markets. Channel is managing a cumulative asset turnover of $12bn over the past 8-years.
Channel is driven by data. "We merge traditional relationship-building with a rigorous data-driven approach”, explains Kristian Wilson, CTO of the Channel Group and director of Channel Digital Technologies Limited, Channel’s own tech division.
Until now, the Group has relied on a non-automatized, manual process for data analysis and underwriting process. This approach is not only time-consuming but is also challenged from a data perspective. Kristian emphasizes, "Our objective is to access information in real-time."
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Channel places a significant emphasis on cash flow and liquidity monitoring for portfolio companies, post-investment. Kristian emphasizes cash flow as a key concern, noting,
"Insufficient liquidity is a major cause of business failure. Open banking data offers valuable insights, but raw data needs thorough analysis to reveal underlying trends and flag anomalies for our investment managers."
Early detection of potential issues is critical for Channel, allowing for corrective action.
To enhance its analytical capabilities, Kristian and his team sought a partner that analyzes banking data and delivers insights into key financial metrics. "Efficiency is paramount. We aim to maximize our resources and expertise, recognizing the limited hours available each day," he explains.
The re:cap Institutional product tackles the challenge of uncategorized open banking data by refining classifications for deeper analysis based on Large Language Models (LLM). This empowers Channel to access comprehensive transaction metrics, including cash-based P&L, runway analysis, and customizable alerts, moving beyond basic balance tracking.
For Channel, maximizing team efficiency is crucial.
“re:cap Institutional empowers us to fully focus on areas requiring human intervention by our investment managers. This means that we create the necessary capacity for them to concentrate on the important things and reduce repetitive tasks. By automating initial analyses and flagging concerns, our team can dedicate more time to strategic decision-making.”
This approach benefits not only Channel but also its portfolio companies. They can independently manage their cash positions, aligning borrower and lender perspectives. “It’s not a black box where we pull data and perform smart analyses out of sight. Our portfolio companies see the same metrics we do. This ensures transparency,” Kristian explains.
Kristian highlights the value of runway visualizations and the clear understanding of cash inflows and outflows. The objective is to identify early warnings of deviations or escalating risks. Leveraging raw business data provides early indicators such as shrinking portfolio value, delayed payments, or increasing burn rates.
Accurate analysis is crucial for detecting these early signs. “With reliable data, we can proactively address potential issues before they escalate, ensuring better risk management and strategic decision-making, ultimately fostering success for us and our portfolio companies,” Kristian concludes.
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