Tipalti Raises $270M, Valuation Quadruples to $8.3B

Tipalti Approaches Decacorn Valuation with $270 Million Funding

Tipalti, formerly recognized as a fintech unicorn, is rapidly advancing towards decacorn status.

The company, specializing in automated accounts payable solutions for mid-market enterprises, has announced a $270 million Series F funding round. This new investment values Tipalti at $8.3 billion, a significant increase from its $2 billion valuation during its $150 million Series E round in October 2020.

Streamlining Financial Operations with AI

Essentially, Tipalti leverages artificial intelligence to assist businesses in managing suppliers, invoices, purchase orders, tax compliance, payments, billing, and other crucial accounting functions through a unified cloud platform.

The company asserts that its system can diminish a company’s operational burden by up to 80%, enabling swift payments to partners and vendors – often “within minutes.”

Focus on the Mid-Market

Tipalti specifically targets mid-market businesses, defined as organizations with annual revenues ranging from $10 million to $1 billion.

Within the United States alone, these mid-market companies represent over a third of the total employment and contribute approximately 40% of the nation’s GDP.

In contrast, Bill.com, a competitor in this space, primarily focuses on small and medium-sized businesses (SMBs). Bill.com became a public company in December 2019 and currently trades at $254.76, considerably higher than its initial public offering price of $22 per share.

Market Opportunity and Growth

“I believe the market now fully understands the scale of the market opportunity before us,” stated Chen Amit, CEO and co-founder. “Our valuation multiples have risen over the past year due to this increased recognition.”

G Squared spearheaded Tipalti’s latest funding round, with substantial contributions from new investors Marshall Wace, as well as funds and accounts managed by Counterpoint Global (Morgan Stanley). Existing investors, including Zeev Ventures, Durable Capital Partners, and 01 Advisors, also participated. This financing brings the company’s total funding to $550 million since its founding in 2010.

A Leading Private Fintech Company

Tipalti’s elevated valuation – more than four times its previous one – positions the San Mateo, California-based startup as one of the most highly valued private fintech companies globally, according to CB Insights.

Several factors have contributed to this substantial growth, as outlined by Amit.

Key Growth Metrics

Currently, Tipalti processes over $30 billion in annual payments, representing a 120% year-over-year increase. The company has also surpassed 2,000 customers, including prominent names like Roblox, Amazon Twitch, GoDaddy, Roku, WordPress.com, and ZipRecruiter.

For comparison, during its Series E raise in October 2020, Tipalti reported a transaction volume of $12 billion, an 80% increase from the prior year, and a customer base of approximately 1,000.

Notably, Amit revealed to TechCrunch that the company maintains an exceptionally low customer churn rate of just 1%.

“We have not lost any of our top 200 customers in the last three years,” he confirmed.

Expansion and New Capabilities

This year, Tipalti expanded its global presence with new offices in London, Plano, Texas, and Toronto, Ontario. Its workforce has grown to 720 employees worldwide, compared to 350 last year.

The company also introduced “enhanced capabilities,” including the acquisition and integration of Approve.com, a cloud procurement solutions provider, along with improved multi-entity AP functionalities, virtual cards, mobile access, and new integrations with other financial technology providers.

Future Outlook

According to Amit, this is merely the beginning of Tipalti’s growth trajectory.

“This latest investment will empower Tipalti to significantly expand our product lines and capabilities over the next 18 months, exceeding our progress over the past decade,” he stated. “The overarching challenge of financial operations for rapidly growing and mid-market companies presents numerous problems and opportunities for us to generate revenue.”

Tipalti will allocate its new capital to enhance customer operations and pursue global expansion. The company also intends to hire across its product, engineering, sales, and marketing teams.

“We anticipate doubling our go-to-market team in the coming year,” Amit informed TechCrunch. “The addressable market currently comprises around 700,000 companies, with limited competition between us and a few other players. We aim to reach a larger segment of these potential clients.”

Investor Confidence

Larry Aschebrook, founder and managing partner of G Squared, expressed his firm’s belief that “Tipalti is fundamentally changing how businesses manage their financial operations.”

“Their growth and exceptional customer retention rates demonstrate their commitment to solving critical challenges for their clients,” Aschebrook added. “We recognize a substantial opportunity within the currently underserved target market.”

He further noted that Tipalti has successfully addressed a complex and traditionally low-tech area of essential business processes, “meticulously developing a solution characterized by its simplicity.”