When you think of the term “expense management” in a business context, people may think of software like Concur, which tracks your spending on travel, entertainment, and other work-related activities; or software used by finance teams. Software to help track expenses across operations. You might even think this is a largely “solved” problem.
But today, a startup called Vertice, which is announcing $25 million in funding after strong growth, is taking a more granular approach to a specific area of spending: software spending. The Series B shows both market demand and how the field is evolving with the rise of artificial intelligence and other tools.
The round was co-led by 83North and Bessemer Venture Partners, which also co-led the London startup’s previous $26 million funding round.
Roy Tuvey, co-founder and co-CEO of the company with his brother Eldar, said this is an all-internal funding round so they can continue to work with the company they know and love. Investors maintain close relationships. While some internal funding suggests that startups need a little help during tough times, that’s not the case here: Tuvey says the company is now valued at “hundreds of millions of dollars,” which is impressive in the current market and that’s The low dilution is illustrated, as Vertice has only raised $51 million to date.
He declined to disclose specific revenue figures, but noted that annual recurring revenue is now in double digits in the millions and ARR will grow sevenfold in 2023.
Another important factor may be the brothers’ track record: Previous exits include security startup ScanSafe, which they sold to Cisco for $200 million in 2009; and Wandera, which was acquired by Jamf in 2021 for $400 million.
The issues (and opportunities) pursued by Vertice focus on SaaS and cloud spending, which according to Gartner forecasts are the largest and fastest growing areas of global enterprise IT spending (will grow 11% to 14% this year). Year depends on product).
Simply put, the products available for purchase and use in the cloud are growing faster than the tools to track how those products are purchased, used, managed and planned. It leads to a lot of overlap, and often the product isn’t actually used in an optimized way.
“It’s all about helping companies track and optimize their spend,” Toovey said.
“The problem is very obvious for companies because they invest so much in this area. I don’t think any company we spoke to thinks they will be spending less on software three years from now than they are now. Fact , it’s very complex to manage, there are hundreds of different licenses. So what we did is build a platform that allows them to track everything they buy. It’s really important that they can run a centralized approval process because you call it Expense management, but from a procurement perspective, a lot of companies end up buying a lot of tools. There’s no discipline behind it… If you think about CRM, HR tools, and cybersecurity and merging them all together, it’s going to be a big deal projects. After physical offices and payroll, software spending is the largest fixed cost for businesses.”
The company’s approach combines automation, human assessment and a suite of artificial intelligence tools that look at spending and usage trends among the hundreds of customers who already use Vertice, and who have tracked more than $1 billion in spend through Vertice. platform. The insights it gains can be used to help the finance teams it targets better understand what is being spent and where it is being spent. Users can also drill down to get more details on why and how certain expenditures may be red flags because they are for products that are no longer in use or have been superseded by other existing IT contracts.
An example of how automation, AI, and human engagement can work together: There might be a team using a premium Zoom subscription, while a larger enterprise already has a Google Cloud Platform contract that covers video: it can be tagged, and a conversation can happen to determine Is it necessary to have both.
I mentioned Google Cloud Platform, but that’s really just an assumption: Currently Vertice only tracks AWS cloud spending and cloud usage. The plan is to add Azure and GCP to the mix in the near future, but for now Amazon’s cloud platform is the only platform it tracks: Vertice can alert users when execution entities are no longer cost-effective for the company, or overlap with execution entities Other purchases made by other teams. This is actually a very interesting area, and you can see it developing itself around areas like artificial intelligence: as companies buy more computing power to run models and artificial intelligence services, they will inevitably have to figure out How to make ballooning expenses as efficient as possible. That said, if artificial intelligence proves to be what many believe it will be, it could become a huge force in the long run.
It’s not just about cost: the fact that the brothers have IT security backgrounds also gives the platform a very strong angle and focus on security. One of the tools it built with Expense Management can track how different software packages align with a company’s security compliance profile.
It also illustrates the types of companies that will emerge as Vertice competitors: They include not just expense management giants like SAP and other startups that track software usage and spending, but also companies that track software for any kind of policy compliance. technology companies.
As far as investors are concerned, it’s worth noting that Bessemer continues to remain active in UK investing as bigger news has emerged over the past few months that other companies such as Ormes and Cotto are pulling back. Alex Ferrara, a partner at BVP, said part of the problem was the company itself rather than the location, and that Vertice was actually targeting priorities emerging from the current market environment.
“One of the reasons we’re excited about the investment is that when we bring Vertice to our portfolio companies” — which include not just small startups but also these large tech companies, he said — “we start from the CEO We’ve gotten really, really good feedback from financial officers saying they’re able to realize savings and they really like the product. $200M revenue startup doesn’t have an on-site procurement team [and] They’re all under a lot of pressure to make their money last longer, and this is a great way for them to reduce non-payroll expenses. You know, it could be years before they don’t have to lay off people. “
