Israeli fintech company Tipalti, founded by CEO Chen Amit and chairman and investor Oren Zeev, has raised $60 million in its fourth financing round. Leading the round were Oren Zeev's Zeev Ventures and Group 11, both of which have invested in Tipalti since it was founded. Other participants in the round were Advisors 01, a fund run by former Twitter CEO Dick Costolo, and Greenspring Associates. Tipalty has now raised a total of $100 million to date. The company also announced a $16 million debt issue, after having previously raised and repaid $20 million in debt.
Amit and Zeev founded Tipalti in 2010. Zeev originated the company's idea, and has been its biggest investor. The company's name, which was originally meant to be a temporary joke, was later made permanent. The company currently has 215 employees: 75 in its development center in Herzliya and the rest in Palo Alto. Following the financing round, Tipalti plans to expand to 400 employees by the end of 2020, including 75 additional employees in Israel.
Tipalti management of payments by companies to the suppliers with whom they work. The company has 600 customers conducting deals totaling over $8 billion a year on the platform. Tipalti charges its customers either a subscription fee or according to use, currency conversion charges, and invoice financing. Tipalti's customers are medium-sized companies or medium-size departments of large companies, such as Amazon sub-subsidiary Twitch. Tipalti also has large customers, such as Twitter, Airbus, Vimeo, Foursquare, GoPro, GoDaddy, and Amazon. Tipalti does not disclose its revenue, but reports that only 1% of its customers leave each year.
"In Twitter, we began in one department, and now we already work with the entire company," Amit tells "Globes." "We don't just solve one big problem; we solve many medium-sized problems: recording suppliers, recording tax forms, preventing money laundering, proposing means of payment, support for currencies, recording invoices, coordinating between invoices and the procurement department, closing books, relations with a customer if a payment fails, and invoice financing." In order to do this, the company needs many regulatory approvals, and contracts with various financial service providers to make all of these actions possible on its platform.
"We make more sophisticated services accessible than what our customers are capable of consuming without us. Medium-sized companies will usually not make payments in different currencies and means of payment, and will not usually use services such as invoice financing. When we meet customers, we see that everything is done manually. This isn't done in this way in large companies. There are many solutions for handling this problem. In a small business like the neighborhood café, on the other hand, it means signing checks on the weekend. Medium-sized businesses that already have a CFO are stuck in an intermediate situation: they realize that there is a problem, but they don't get enough resources from the enterprise to solve it," Amit says in explaining Tipalti's focus on medium-sized businesses with 20-1,000 employees.
Zeev got the idea after investing in a medium-sized company that had problems managing its payments to suppliers. "They told themselves, 'Let's look for a third-party solution for this payments process and outsource it," but they couldn't find such a solution. I was the company chairman, and when the entrepreneurs told me about the problem, I got this idea, because I realized that other companies probably had the same problem, and that if no solution was available, it might be possible to create one," Zeev previously told "Globes."
According to Amit, who has been Tipalit's CEO from the beginning, the payments platforms needed for a regulatory license are close to those of a bank. He says, "There aren't many companies trying to do this process. It will be difficult for startups to become a financial concern, and large financial companies won't become a software company - they aren't able to move fast - so we have very little competition: not from banks, not from software companies, and not from payment companies. We just look at the customers and what they need, and we aren't worried about any competitor. All of the players have known us for years, and not a single one is getting anywhere near our direction, because it's very, very difficult."
Amit adds, "There are companies that touch almost every one of these things, but the medium-sized companies market needs one solution that will do everything from end to end. In order for our customers to be able to use this with no effort, we do most of the work between them and the supplier."
Published by Globes, Israel business news - en.globes.co.il - on September 24, 2019
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