Vertice has made a name for itself over the years in the crowded world of expenditure management by focusing on applying AI to optimize an area where businesses are sinking hundreds of billions of dollars annually: software and cloud spend.
The London-based startup’s business has grown 13x in the three years since its inception (similar how fast software spend has increased), and it has now raised $50 million in new funding to expand its vision.
“[Vertice] is designed to standardize companies’ processes around how they buy anything, not just software and cloud,” its CEO and co-founder Roy Tuvey (pictured above, told TechCrunch. “A lot of companies today have disparate solutions, different silos that they look at, and procurement teams are generally under a lot of pressure to deliver savings and efficiencies. They don’t have amazing technology today. So we’ve brought it all together in a unified and simplified platform.”
Lakestar, a new investor in the company, is leading this Series C round. Perpetual Growth and CF Private Equity, as well as previous backers Bessemer Venture Partners and 83North (which co-led Vertice’s Series B almost exactly a year ago) are also participating.
The startup has now raised around $100 million in total, and while it’s not disclosing valuation, Tuvey confirmed that this Series C was an up-round, valuing the company higher than the “several hundred millions” it was pegged at 12 months ago.
The size of Vertice’s customers has grown, too: Its clientele now number in the hundreds across Europe, the U.S. and Asia Pacific, including the likes of chip giant ASML, Euronext, Grant Thornton, and banking behemoth Santander.
For some more context, Vertice’s founders have a strong history of entrepreneurship: Roy and his brother Eldar previously founded two security startups, ScanSafe, which they sold to Cisco in 2009 for $200 million; and Wandera, which was acquired by Jamf for $400 million in 2021.
Gartner predicts that spending on data centers in 2025 (thanks to cloud and AI), software, related IT and communication services will increase by more than 9% to just under $5 trillion, so it isn’t surprising to see Vertice working in a crowded part of the enterprise market.
Its competitors include a plethora of platforms that offer varying levels of services like product recommendations, pricing, side-by-side feature comparisons, and more. These include Spendbase, Spendesk, Gartner and G2.
Vertice’s point of differentiation, Tuvey said, is how it integrates with a business’s data to better understand what to suggest. Tapping into the same approaches that a cybersecurity firm might use to better understand activity in a network, Tuvey said Vertice uses AI and other tools to build a picture of what a company does, how much it spends typically, and what it might need or want to buy next.
In effect, the startup has built, along the lines of a large language model, a “large software procurement model,” where the parameters are not facts and insights, but software usage. The company claims it has ingested data on some $3.4 billion worth of SaaS and cloud expenditure, as well as benchmarking data on more than 16,000 software vendors (none of these have any financial relationship with Vertice, Tuvey confirmed).
Customers essentially use Vertice to speed up the process of buying and also to save money. The startup says that purchasing cycles can typically be cut in half, yielding savings between 20% and 30%.
“We ingest all the contract information through AI,” Tuvey said, adding that it uses the tech to build co-pilots to help with purchasing, automating work that finance teams might have to do manually before. “We surface benchmark pricing insights and analytics that they need at the point of purchase. AI is really interesting when it comes to procurement orchestration, because you can learn where the company has bottlenecks in their processes.”
That, in turn, helps Vertice understand how the wider business is working, he added.
“For example, if a company is always spending a long time with certain steps, for example to check pricing but also security compliance, we can see how to run them in parallel and save time,” he said. “And you can just imagine — the more and more apps you have, the AI can learn and make recommendations.”
It’s the Tuveys’ background, how they are applying it to procurement, and the resulting growth that has had investors knocking on the door, said Georgia Watson, the Lakestar partner leading this round. At the moment, expenditure is top of mind for companies looking to bring down operational costs — especially at startups given the constrictions they are facing around funding at the moment.
“Some of our portfolio companies are using Vertice,” Watson said, citing the pressure to bring down software expenditure. “That’s been a conversation we’ve been having… and feedback was overwhelmingly positive,” she noted, adding that Lakestar had been trying to invest previously, and finally pulled it off this time around.
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Welcome to TechCrunch Fintech!
This week, we’re looking at just how much fintech startups raised in 2024, a slew of fundraising deals, Plaid’s reported revenue growth last year, and more!
To get a roundup of TechCrunch’s biggest and most important fintech stories delivered to your inbox every Tuesday at 8:00 a.m. PT, subscribe here.
Global funding to fintech startups continues to decline. According to CB Insights’ State of Fintech 2024 Report, fintech startups globally raised a combined $33.7 billion in funding last year — down 20% from the year before. Deal volume also dropped — by 17% to 3,580. But there are at least a couple of bright spots: The annual decline in funding was fintech’s smallest in three years. Plus, funding rebounded to close the year strong, reaching $8.5 billion in the fourth quarter of 2024 — up 11% compared to the 2024 third quarter. CB Insights also reported a 33% annual increase in median fintech deal size — to $4 million.
LemFi, a London-based financial services platform designed for immigrants, raised $53 million in new funding, which it will use to fuel efforts to acquire more customers and further expand into more countries.
Recharge, a key European player in online prepaid payments, has secured a €45 million debt facility with ABN AMRO to look at rolling up the market with a round of M&A, as well as moving into fintech-style services.
French startup Hyperline wants to build the next-generation Chargebee. It raised an initial €4 million funding round from Index Ventures back in 2023 ($4.1 million at today’s exchange rate). And Index Ventures is doubling down on this investment as it is investing another $10 million in the startup.
Bench, the accounting startup that imploded over the holidays, filed for bankruptcy in Canada on January 7 revealing massive debts, documents seen by TechCrunch show. The filings — one for Bench and another for 10Sheet, Bench’s original name — show that Bench had $2.8 million in cash on hand by the end of its life but $65.4 million in liabilities. Charles Rollet does a deep dive here.
More fintech IPOs?! Trading platform eToro has reportedly filed confidentially for a U.S. IPO that could value the company at over $5 billion. Israel-based eToro, which competes with the likes of Robinhood, told TechCrunch it is “not commenting on IPO rumors.”
Amazon has agreed to acquire Indian buy now, pay later startup Axio, deepening its push into financial services in one of its fastest-growing markets.
Ex-SoftBank veteran Akshay Naheta’s Switzerland-based startup, Distributed Technologies Research (DTR), is attempting to bridge the gap between traditional banking and blockchain technology, joining an army of companies trying to modernize the global payments infrastructure.
Barclays’ Rise is shutting down in 2025.
Synctera has hired its first CFO, Matias Pino.
Mark Fiorentino announced he’s left Index Ventures to join Bain Capital as “the newest partner charged with helping to guide the next generation of growth-stage AI-native, vertical SaaS and fintech startups.”
Last year was a good year for Plaid. Bloomberg reports that revenue at Plaid Inc., which provides infrastructure to connect fintechs and banks, spiked by over 25% last year.
Cryptocurrency-wallet provider Phantom Technologies raised $150 million in a funding round at a $3 billion valuation. Sequoia Capital and Paradigm co-led the round.
Thanks for reading. We’ll see you again next week!
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French startup Karmen has secured a small funding round so that it can improve its instant financing products. The company offers short-term loans to small companies facing a working capital crunch.
It’s a €9 million equity-and-debt round ($9.4 million at today’s exchange rates) with Seventure Partners buying a stake in the small startup. Financière Arbevel and Bpifrance are complementing the round with some debt.
The startup isn’t the only company operating in this space that could be described as instant financing for SMEs. French competitors include Silvr, Defacto, Unlimitd and Hero.
The reason revenue-based financing has become a hot vertical is because banks and traditional financial institutions struggle to address SMEs at scale. It’s a highly fragmented market with small margins. That’s why tech startups are trying to fill that financing gap with a data-driven approach.
Today’s news comes just a few months after Karmen secured a €100 million debt vehicle that serves as the basis for the company’s short-term loans. Six months later, it seems like quite a few companies are now relying on Karmen to fix their cashflow issues.
Around 600 companies have used Karmen to buy inventory, pay suppliers, finance paid acquisition campaigns and more. Loans range from €20,000 to €3 million, from 2 months to 24 months.
On average, the typical Karmen client borrows €200,000 with a six-month term. But as you can see, there’s a wide diversity of financing options. Similarly, the smallest customers generate only €300,000 in annual turnover (those are most likely one-person businesses), while Karmen’s largest customer generates €160 million in revenue per year.
More importantly, Karmen has attracted some loyal customers, as 80% of the startup’s customers contact Karmen several times per year to unlock a new debt line. Clients include Maison Kitsuné, Balibaris, Les Raffineurs and Almé.
While most companies contact Karmen directly, the startup has a hybrid distribution strategy. It partners with other fintech companies so that they can offer Karmen financing products to their own clients. Some ERPs, e-commerce marketplaces and business banks like Qonto already integrate with Karmen.
This embedded financing strategy represents 40% of Karmen’s clients right now. But the company says that it hopes it can raise that metric to 75% of new clients by the end of 2025.
While most companies repay their loans without any issue, companies can sometimes struggle to repay what they owe.
“This is part of our job as a lender. But we limit these risks through our data-driven approach, which allows us to have very granular visibility into the financial and operational performance of our clients,” Karmen co-founder and CEO Gabriel Thierry said.
“In addition, we are investing heavily in our risk assessment technology tool (thanks to AI) to strengthen this approach,” he added. Hence, today’s funding round.
Karmen currently uses around 60 different financial metrics to score loan applications in near real-time. Its embedded strategy can also be leveraged to make smarter decisions — bank accounts, accounting software, ERPs and invoicing tools hold valuable data on a company’s overall performance.
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