Candex, a startup that aims to simplify procurement — specifically vendor management and payment processes — for businesses, today announced that it raised $45 million in a Series B investment led by Goldman Sachs with participation from WiL (World Innovation Lab), Altos, NFX, Craft, JP Morgan, American Express and Edenred.
The tranche brings Candex’s total raised to $85 million, and will be put toward expanding the company’s presence in Asian markets and a forthcoming product tailored to customers with “high-volume, small payment” needs, CEO Jeremy Lappin told TechCrunch via email.
“Candex saw growth as a result of the pandemic, as companies moved to automate and digitize more areas of their business — including purchasing,” Lappin said. “Candex has also been insulated from the tech slowdown for some of the same reasons, plus the stability of a client base in the Global 2000 and a revenue model that grows over time in our clients. We believe we will continue to win new logos and grow our business powerfully no matter the economic headwinds faced by the broader economy.”
It’s big talk, to be sure — but perhaps there’s something to it. Candex has been doubling its size every year over the last four years and is on track to more than double revenues again this year, according to Lappin. And Candex’s current runway is “easily over a decade,” he added. This writer can’t argue that sounds like a healthy place to be.
“The entire investment … was made at a very substantial up-round from the Series A,” Lappin said. “We chose to partner with Goldman Sachs because we believe their involvement sends a strong signal about our financial stability and our focus on the highest levels of compliance in all our operations. Goldman has been a major client of Candex for several years — a front-row seat for their investors that helped give conviction on the value we provide. We added WiL to our investment group because of their ability to help us succeed in Japan, which is a very important market for Candex.”
So how’d Candex get to here?
It all started in 2011, when Lappin and Shani Vaza-Wahrmann, who met through a mutual friend, built software to help companies in the process of purchasing from recruitment vendors. Lapin previously founded BountyJobs, a marketplace to connect businesses with headhunters, while Vaza-Wahrmann managed R&D at real-time market data platform SuperDerivatives.
In 2017, Lappin and Vaza expanded the software’s scope to cover purchasing from any vendor and spend category. Today, Candex covers most “tail spend,” or unmanaged expenditures across product and services.
Lappin claims that Candex’s platform — which is designed to work with third-party procurement and enterprise resource management software — enables businesses to pay vendors in “minutes” rather than weeks by cutting down on the administrative and operational challenges that come with engaging and paying vendors, streamlining data management and generating insights on spend. One of the ways Candex speeds up workflows is by employing AI models to verify that invoices are correct, Lappin says, and ensure that transactions are being taxed appropriate in countries where a business operate.
“Purchasing cards or credit cards enable corporations to make purchases in an automated way, but they bypass the core payment-to-payment process required by large organizations for their purchasing,” Lappin said. “Another way for companies to solve [the procurement] problem is business process outsourcing. But these models tend to be based on offshoring activities to lower-cost countries — which are heavy to implement and can create additional compliance and accuracy issues as opposed to the automation Candex relies on.”
New York City-based Candex’s customer base of around 100 brands includes Sanofi, HSBC, Dell, L’Oreal and Colgate — an impressive collection, to be sure. To service this base, Candex plans to grow its 120-person team by more than 50% next year.
“The modern enterprise has a supply base that’s extremely global, requiring compliance with myriad local laws and regulations including sanctions, anti-money laundering rules and of course taxes. This makes tail spend management extremely difficult to do well, and can often result in both buyers and suppliers wasting time and money,” Lappin said. “Profitability is not a focus [for us] yet, with such a high growth trajectory — but a round of this size in this environment shows just how efficiently we are performing against all the usual metrics. Our goal here is to build a very global and enduring business.”