Why We Invested In Payable
Software that automates payment operations and money movement
Software eating the application stack
The last two decades have seen software penetrate many layers of the enterprise application stack — Customer Relationship Management and Human Capital Management are the most obvious ones that come to mind. Of late, the CFO office is the topic du jour; although digital transformation of this key function has lagged behind, there is growing consensus that the office of the CFO is on the cusp of a software revolution that will radically reposition the CFO office from a cost centre to a strategic pillar of the organisation. That promised land awaits software vendors attacking from various angles, from expense management to accounting to AP automation.
In the abstract it’s easy to appreciate the breadth of responsibilities that fall under the purview of the finance function, as is the logic of software automating rote tasks and enabling workers to focus on needle-moving tasks. We can intuit the cost savings, productivity increases, and perhaps most importantly, the ability to focus on your core business. In addition to these acknowledged benefits is the evolution of this function from a cost centre to a strategic partner to the C-Suite, acting as the source of truth that drives decisions running the gamut from resource allocation to treasury management.
The zeitgeist of every company becoming a fintech is another significant tailwind. Let’s take marketplaces and vertical SaaS companies. The heavy lift of embedding different types of financial services products to grow Customer Lifetime Values has been lightened by the various API point solutions which have sprung up to help you embed every type of product– be that payments, lending or insurance. That said, the implementation experience of the Product and Finance teams are dramatically different. Whilst Product teams have a seamless developer-first experience launching a new fintech product, Finance teams face a massive challenge handling the complexity of new payment flows for every additional product. Equipping them with the tools needed to harmoniously synchronise with their Product colleagues on new product lines is a massive opportunity.
Payment Operations
The category that fits this billing to a tee is Payment Operations. Companies across verticals that move large volumes of money on a frequent basis experience a range of pain points, from reconciling received and sent payments to bank statements, manually initiating payments with convoluted approval processes, having limited visibility of the status of payments, and a Payment Ops department that scales linearly with the volume of payments. To give you a sense of the scale we’re talking about here, platforms account for $36 trillion in payments volumes annually. Embedded payments are $1.1 trillion globally.
Before the Salesforce’s and Workday’s of the world arrived, most companies contrived internal tools to do the job of CRM and HCM software. These products came along and completely upended the enterprise application stack and replaced manual workflows. In a similar vein, why are Finance and Operations teams continuing to build internal tools to manage EBIC files and reconcile transactions ?
What if instead of logging payments manually into a CSV file and uploading those into a banking portal, you had a unified banking API that would allow you to initiate bank payments across any payment rail (e.g. FPS, SEPA)? What if you were able to spin up ledgers in minutes, to build new payment products and have a disaggregated view of payment flows, perhaps by different customers and categories? Instead of laboriously reconciling transactions with your bank statements and accounting/ERP software, what if it was possible for it to be entirely automated?
This is software that turbocharges companies, increasing velocity of growth and product launches without the commensurate overhead. The value proposition extends further into intelligence and insights, through a dashboard that empowers finance teams to have complete transparency and control over the money moving in and out their business.
The first company to propel this category into wider consciousness was Modern Treasury in the US. Other teams have emerged across Europe who recognised the size of the opportunity and the unique nuances to building the product in a market with more widespread instant payments.
Introducing Payable
In the summer of 2021, I attended the very first This Week In Fintech event in the UK. I was fortunate to meet several impressive entrepreneurs and operators, but the one conversation that I remember well was my first encounter with the eventual Payable CEO, Daniel Yubi. Daniel was working at Checkout at the time, and was regaling me with anecdotes of all the things that are still broken in payments, both in his native Mexico and in Europe. What most struck me was Daniel’s animated voice as he managed to display his command of the myriad complexities marketplaces have vis-a-vis their payment stack, whilst distilling this knowledge down for those less steeped in the payments world. I knew this was someone that people would want to work for.
Daniel and I stayed in touch with each other and when we learned of his ambitions to build a solution to the very same problems he was facing day-in, day-out at Checkout, we knew this was the team to back. CEO Daniel Yubi and CTO Razvan Musca worked together at Checkout, building Checkout’s payments solution for marketplaces and platforms. In the process of serving customers, they discovered their colleagues in Finance performing the same rote tasks every day, slowing down the pace of product velocity. Having heard peers in the industry relay the same frustrations, Daniel and Raz recognised that they had to build a solution.
Naturally, we were not the only ones to come to the view that this was the team to back. A frantic weekend of back and forth with Daniel culminated in Earlybird Partner Tim Rehder flying in from Berlin and all three of us sitting down together on a Sunday evening to hash out how we would help Daniel build the category-winning product.
We’ve been impressed by the caliber of talent Daniel has managed to recruit for Payable, with experience spanning companies such as TrueLayer, Curve, Stripe, and of course Checkout. We couldn’t be more excited to back Daniel and the team to realise a new vision so any product team can build any products that move money without worrying their CFO — a single API and a dashboard for payment operations.
