The Fundbox team began to realize that they could use the additional data provided by their customers' accounting software and other services in one of two potential ways—they could develop stronger models that would allow them to underwrite bigger customers with greater certainty, or they could think about how they might be able to underwrite the same small business owners, but with a higher fidelity down to individual transactions.

Fuloria summarized the situation: 

Our line of credit product helps SMBs. But first, we ask the small business to connect something—like their bank account or accounting software—and we then provide a line of credit. What ends up happening when the owner of an SMB connects their accounting software, for example, is that we learn about 200 other business that they work with, on average. We see both their accounts payable and receivable, and can begin to build a network of all transactions related to the business.”

Fuloria and his team began to use the network graph of business transactions provided by accounting software and bank accounts to extract additional data that they could use for more refined lending predictions. They soon realized that they could begin underwriting individual transactions within the graph, as he explained: “We realized that we could inject ourselves into business to business transactions and find a way for buyers and sellers to transact in a better way, one where more value is created for both sellers and buyers.”

By leveraging technology to “light up” the business graph and better connect businesses through their accounts payable and accounts receivable, it became easier to underwrite individual transactions compared to underwriting an entire business. To Fuloria, this transition provided several potential benefits. First, when compared to underwriting an entire business, lending for individual transactions inherently carried less risk, simply given the size of the loan. Second, by understanding a customer's entire graph, Fundbox could leverage data on both the buyer, their accounts payable and receivable, and sometimes even the product, to better ascertain the credit worthiness of an individual transaction.

The Fundbox management team wondered how this shift from lending on the business scale to lending on the transaction level would impact their business model. Fuloria mused:

Lending doesn’t have the kind of network effect that transactions have—it doesn’t have the same kind of stickiness. If I’m a small business and I’m using Fundbox, and somebody else comes along with a better technology and gives me access to credit at lower costs, there’s a chance I’ll switch. However, if I’m using something for my business to business transactions, it’s part of my workflow, and that’s much harder to stop using.

Fuloria and his team looked back where the Fundbox journey had begun—as a solution to the working capital crunch many small business owners faced on a daily basis—and compared it to the new B2B payments platform that him and his team were creating. He began to wonder how the company could continue to use its graph of small business transactions to get to the core of the matter and solve the working capital issue that so many small business owners faced, as he explained:  “What if we could not just remedy the symptoms, but actually move closer to curing the disease?”