Another Brick in the Wall
For decades, banks, insurers and payment processors have operated under a strategy that “bigger is better” and that acting as a one stop shop for customers is the pathway to success. At SGVC, we believe that 2008 marked a watershed event for the financial services industry as banks would later face enhanced regulatory pressures from legislation such as Dodd-Frank as well as a sustained lower interest rate environment fueled by a dovish Fed. At the same time, customers and enterprises continued to embrace digital solutions at an accelerated pace.
For a while now, I have been discussing the concept that traditional financial services firms are unable to “digitally re-imagine” themselves amid a changing customer, market and regulatory landscape. The underlying reason we see as contributing to this inability to change is that innovation is not embraced at the core business model level. It’s just not in their DNA. Banks also continue with a product-based approach to sales rather than improving their customer’s experience and as a result, lack the incentive to innovate legacy applications. As banks are now seeing the walls of their once impenetrable business models crumble, we believe that today’s FinTech companies are better equipped to pick up the pieces and serve this challenging industry landscape. We remain dedicated to the space through investments in digitally disruptive companies including SoFi, Addepar, OpenGov, HomeLight, Sunbit and LoopCommerce.
We believe that global B2B payments processing is the next business model within financial services to experience a significant change. For decades, enterprises have adhered to a human-intensive, error-prone, paper-oriented approach when managing accounts payable and remitting payments around the world. It may literally be the most antiquated business process in today’s enterprise. As the business landscape becomes more complex with respect to navigating tax and regulatory requirements as well as the nuances of doing business in a global market, traditional approaches to running AP and supplier payment operations are becoming increasingly inefficient.
Founded in 2010, Tipalti is the only global cloud-based supplier payment automation solution that manages, executes, and reconciles the entire end-to-end process of accounts payable and cross-border payments to partners and suppliers. Tipalti’s solution automates the more than 26,000 remittance, tax and regulatory compliance requirements to over 190 covered countries and enables customers to automate their entire accounts payable workflow. The end result is a more streamlined, cost-effective and risk-proof solution for tasks including supplier onboarding, tax and regulatory compliance, invoice processing, global supplier remittance, and payment reconciliation. Tipalti has attracted hundreds of digital and non-digital customers including Twitter, Vimeo, Zumba, GoDaddy and GoPro to name a few.
Tipalti has evolved from providing global remittance services in a variety of payment methods (Wire, US ACH, Global ACH, Checks, PayPal, Pre‐paid Cards, etc.) in multiple currencies in 2010, to a full accounts payable and compliance suite in 2016. SGVC sees Tipalti as a new leader in the payment processing space and believes that its focus on providing an entire end-to-end supplier payments solution will be largely adopted by an increasing number of enterprise customers.
Through 2016 and into 2017, Tipalti continues to invest heavily in product development, R&D and customer support to deliver on their vision of automating the entire supplier payments operation for fast-growing, mid-sized companies and global enterprises around the world. The Company has also attracted top-tier talent and in 2016, hired Chief Revenue Officer Steve Sovik, a former SVP of sales at leading spend optimization firm, Coupa Software, as well as Chief Marketing Officer Rob Israch, a former executive in charge of branding, lead generation, and international marketing at NetSuite.
Today, we are excited to fund a new $14MM round in Tipalti via SGVC Fund II, which follows prior investments we have made in the Company through SGVC Fund I. Tipalti fits within our core investment thesis of finding game-changing technology companies that are disrupting traditional banking business models. As part of the investment, I have joined Tipalti as the only non-founder member of the Board of Directors. I look forward to working more closely with co-founders Chen Amit and Oren Zeev in the Company’s pursuit to transform the global supplier payments operation of enterprises worldwide.