AI now touches every aspect of how a company operates — from forming the core of the service itself, through to customer interactions, building new things and helping with mundane paperwork and other back-office tasks. Today, one of the faster-growing startups in the latter category is announcing a round of funding as it continues on its own path: AppZen, which builds AI-powered tools to automate functions within the finance department, has raised another $50 million in funding led by Coatue Management, with previous investors Redpoint Ventures and Lightspeed Venture Partners also participating.
We understand from sources that this funding has been raised at a $500 million valuation, which is a huge hike. For some context, the company in October of last year raised a $35 million round led by Lightspeed that put it at a post-money valuation of $175 million.
The Series C — which brings the total raised by the company to just over $100 million — will be used to continue expanding the platform and its capabilities, CEO Anant Kale said in an interview (Kale co-founded the company with Kunal Verma, who is its CTO).
To date, AppZen’s biggest product has been a service that automatically audits expenses — comparing, for example, an employee’s charges with travel that person has undertaken (along with many other data points) to see if the charges match up; as well as making sure the expenses are compliant with company policies and raising flags when they are not.
This is the product that has won the company a ton of business from huge businesses, which now number 1,500 (another point of comparison: this is more than double the 650 customers it had last October). AppZen users include Amazon, Nvidia, Salesforce, three of the top 10 banks in the U.S., four of the top 10 media companies, three of the top 10 pharmaceutical manufacturers, two of the top five aerospace companies, a number of other software providers and Verizon (which happens to own us).
Going forward, while the company continues to see a lot of traction with its existing products in auditing how a company pays out money, the plan will be to build that out to other functions of the finance department, covering, for example, other areas where the finance department makes evaluations to determine spend and money collection (billing) across the business.
“There have been so many decades where nothing new was developed for finance departments,” Kale said of the opportunity.
That’s an opportunity that is so big — enterprise IT overall is forecast by Gartner to be a $1 trillion market this year — that AppZen will be facing a large range of competitors, not just those applying automation and AI to auditing expenses but those coming from other angles like robotic process automation (RPA) that are looking to expand from their computer-vision-based tasks into a deeper set of tools addressing other back-office needs. And that’s before you consider the number of other giant businesses (such as SAP) that provide expense management software, the very tools that AppZen is helping to be used in a better way by their clients.
For now, though, AppZen is growing fast, and has secured a formidable place as a reliable partner for its customers.
“AppZen allows enterprises to do something they’ve never been able to do – audit 100 percent of their spend at scale and with the team they have, all before payments go out the door. AI lets these enterprises dramatically reduce spend, comply with policy and streamline process,” said Thomas Laffont, senior managing director for Coatue Management, in a statement. “When we met Anant, Kunal and the team, we were struck by their AI expertise and finance transformation vision, not to mention the company’s clear and rapid execution in the market. ”
At the end of the day, however, even with all the strides that artificial intelligence has helped us make, there is always a catch. In this case, automating more repetitive tasks and calculations that had been the domain of humans doubtless must reduce operational costs in an organization, and generally speed up the process, but AI is not always perfect, and sometimes replacing people with those systems makes it very hard to query results if there is a hiccup.
“Our goal is to make sure employees don’t get too frustrated,” Kale said of the learning process, words that apply not just to the companies building these services, but those organizations buying them, too.