Why We Invested: Arkham
Financial reconciliation remains a well-established headache and dreaded pain point for too many enterprises across Latin America. Siloed and highly fragmented banking data has made invoicing and reporting a time-consuming and convoluted manual chore for finance teams working to maintain a handle on their financial data while remaining compliant.
I’m always looking to back high impact companies designed to fundamentally change the industries they address, which is why I’m particularly excited about our investment in Arkham, the Data and AI platform designed to automate the financial and back-office operations of LATAM enterprises.
With a well-documented nearshoring boom underway in Mexico (80% of the country’s industrial production is destined for the US), and sustained economic growth predicted for LATAM enterprises more generally (the IDB estimates nearshoring in Latin America and the Caribbean will boost global exports by $78b annually), the need for tech innovation in LATAM business operations can’t be overstated.
So, as LATAM enterprises become a new, driving force of commerce in the Americas, Arkham is ready, built to support this very transition. Its platform was designed to tackle the specific data challenges LATAM enterprises face in automating their financial and back-office operations — enabling them to eliminate manual processes and achieve unprecedented productivity.
Currently, LATAM teams still find themselves relying on fragmented data warehouses, BI tools, and manual reporting to create reports and derive insights. It’s a slow, chaotic and needlessly expensive process, generating not nearly enough insight and strategic analysis for the amount of work it requires. Teams working manually are reactive and therefore also limited in their predictive capabilities (to perform an OPEX calculation, a team member must manually export data from their ERP, download all invoicing data, and then manually create spreadsheets to reconcile each transaction.) Closing the books using this kind of manual reconciliation can take companies 15 FTEs as long as 10 days. No bueno.
Source: company presentation
But Arkham is giving LATAM enterprises a new way forward. The Arkham platform automates both the processes of expense management and invoice reconciliation. Its expense management module uses real-time OPEX calculations by connecting to ERPs, electronic invoicing, and bank data and analysis by category (payroll, G&A, maintenance, and so on), while its AI-driven platform ingests financial data, running machine learning models to transform the data into actionable insights through user-friendly reporting and analytics dashboards.
Arkham’s platform also allows for additional predictive, insight-driven action, with a suite of Time-Series forecasting and anomaly detection tools designer to detect changes in recurring invoices. And a forthcoming customized GPT-4 model will give finance teams the opportunity to use natural language queries to derive other business insights from their data.
I don’t think it’s hyperbole to say, for AR and sales teams used to manual reconciliation, Arkham is an utter game changer.
Co-founders Mau Sepulveda and Hec Monarrez are savvy, nimble executors and second-time founders, with a proven and stellar track record. As previous co-founders of Astro, and both coming off successful key roles at Konfio, Mau and Hec know how to work as a venture-backed company, and they know how to do it together. Their complementary skill sets (Mau previously served as CTO and CPO of Konfio and was Head of BD and GM for LATAM PayPal; Hec directed Engineering at Konfio) have helped them ship products expertly and expeditiously.
It’s still early, but the Arkham team has already signed key customers, and we feel strongly about the overall market opportunity here (there are about 10k+ companies within the initial two markets of enterprises in Mexico and companies in the US with significant Mexican operations). While there are regional complexities around accounting practices and electronic invoicing in LATAM, these problems largely persist across the region and represent logical room for expansion. And though other companies are playing in this general space, very few are attacking the problem in the same way Arkham is. Because of that, as Arkham continues to develop its solution for financial operations automation in LATAM, we see serious opportunity for product expansion — with potential avenues in treasury management, payments operations, FP&A software, and other back-office automations.
We are thrilled to invest in Arkham’s pre-Seed round, helping them build out their initial team, finalize platform and model development, go live with their early customers, and support their ambition of playing a central role in the future of Data, AI and Automation in LATAM.
