BondLink Gives the $4 Trillion Dollar Bond Market a Much-Needed Technology Boost
Back in 2011, Marc Andreessen wrote an essay for the Wall Street Journal titled “Why Software Is Eating the World.” Since then, several industries have been disrupted by technology. However, it is shocking that the $4 trillion dollar municipal bond market has flown under the radar this long and Boston-based BondLink is on a mission to disrupt it.
BondLink Co-Founder and CEO Colin MacNaught and Co-Founder and CTO Carl Query shared with us some eye-opening information regarding municipal bonds. Nearly two-thirds of the infrastructure in the United States is built by local and state governments through roughly 50,000 public sector bond issuers, who issue nearly $1 billion in bonds every day. Those bonds are, in turn, used to build tunnels, bridges, schools, and other public infrastructure.
Historically, large financial institutions have been buying these bonds and the technology to support these massive bond sales has been archaic or non-existent.
For example, on the issuer side, there could be a $500M bond sale launching tomorrow and the entity would have no idea who would buy the bonds, as there hasn’t been any investor databases or tools for acquiring new investors. Ultimately, it was a less than ideal situation, especially when you consider the large sums of public funds that were getting raised.
BondLink is solving this problem with a modern SaaS application that gives those issuing municipal bonds a platform to run their business more efficiently and effectively. It also helps issuers save money on their offerings, which means more of the funds will go towards infrastructure projects.
Another area of disruption that BondLink is tackling is bringing more transparency to this asset class. The hope is that the transparency will help engage interest in this form of investment from individual investors (taxpayers). All investments have risk, but municipal bonds are usually a relatively low risk, stable asset class.
“When a government issues bonds for a time, access is given to local taxpayers,” said MacNaught. “It raises awareness and increases demand through transparency and that’s what regulators are looking for in the market.”
BondLink’s platform can be seen as a reaction to the overall lack of innovation within the industry. It has an easy-to-use interface where users can access information regarding bonds and bond sales. BondLink also offers a full-service suite of back-office operations and it has a communications feature that is ideal for engaging between investors. It is also cross-platform, available for both desktop and mobile.
A Bonding of the Minds
MacNaught has been working in the bonds market for nearly 25 years, which gave him direct insight into how the market needs improvement. His most recent position was working directly for the Massachusetts State Treasurer’s Office.
MacNaught had an idea for a platform, but since he didn’t have a tech background, he was fortunate to meet Query through a mutual connection.
Query, who has had a long-running career in startups, with his most recent position as Co-Founder and CTO of FlipKey, became intrigued by MacNaught’s idea for the company.
“I saw an opportunity in the bond market, and then saw it was a trillion dollar industry. You don’t hear that too often,” Query told us. “I started to productize the concepts Colin had in mind.”
Since its investor platform went live last year, the product already has a wide reach across the United States, with issuers in nearly every state and sector. Clients include the City of Chicago, the University of Texas System, Los Angeles Metro and the State of California (the municipal market’s single largest issuer).
The company announced that they had raised $10M in their Series A financing this past January. The round was led by Franklin Templeton Investments, one of the most prolific bond fund managers in the United States.
“They are a strategic investor,” MacNaught said. “They are based in San Mateo, and have been using and benefiting from our software. They understand the opportunity in this market.”
Aside from participating in and making connections thanks to Boston’s FinTech Sandbox, BondLink plans to move ahead and create a more robust line of products, while also refining the products they currently have on the market.
The company currently has 20 people and is hiring across all functional areas with a plan to double in size.
“We are focused on setting the foundation for an enduring company in the Boston tech scene,” MacNaught said.
Images courtesy of BondLink.