New Enterprise Associates (NEA), Walkabout Ventures, and Altai Ventures led the seed financing round.
The funding round also saw participation from various investors including C V Starr Insurance.
Established in 2021, Functional Finance merges and automates information as well as reports functions for insurance companies.
Apart from the seed capital, the company also secured $2m in SAFE notes for future equity investment.
Functional Finance intends to leverage the funds to expedite the development of products and marketing activities for optimising back-office processes for businesses in the insurance sector.
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Its technology could be incorporated into the corporate partners’ finance tech stack, thereby delivering billing/invoicing, collection of premiums, financing, reconciliation, processing of payables, reporting and linking back to the general ledger.
The software platform also provides complete visibility at a policy or account level through automated integration.
Functional Finance CEO Rashmi Melgiri said: “At my last startup I realised firsthand that spreadsheets and emails are terribly inefficient, error-prone and costly ways for the insurance industry to manage their payables and receivables.
“You can build fast-growing businesses and take payments online but reconciling that on the back end is often overlooked and deprioritised, leaving it to intensive manual labour.
“There was a tremendous opportunity to create an automated technology solution that will make the industry move faster, and the experience should be more efficient and positive for clients and customers.”