Why We Invested in Candex
We’re very excited to announce that Craft led a $12 million Series A2 round in Candex, the “tail spend” payments platform for enterprise companies. Our investment brings the total size of the Series A round to $32m, joining previous investors Altos, NFX, JP Morgan, and Amex.
Talk to anyone on an enterprise procurement team and they’ll tell you how painful it is for their organizations to onboard, manage, and maintain tens of thousands of vendors, particularly the 90% that do less than $150k of annual billing. These non-core vendors could include a local landscaping business, a florist, an executive coach, a sponsorship, or pretty much anything. Even though these “tail spend” vendors are often small, this is a big problem. In fact, one of Candex’s multinational enterprise customers with $32 billion in revenue has $765 million of “tail spend” — extrapolate that to the Fortune Global 500 and you get $269 billion of addressable spend.
These large enterprises use procurement systems such as Ariba or Coupa to house vendor data and track spending requests, approvals, invoices, and payments. Each time an employee wants to add a new vendor, there is a trail of pain that begins. The vendor must first go through an approval process specific to that enterprise by completing questionnaires about their business and then the procurement team must enter the vendor’s data into several systems, a process that can take 2–4 months for every new vendor. If an employee needs something from a new vendor but needs it in 3 weeks, they are out of luck.
Candex has built an effective pain killer to solve this problem — and the proof is on their logo wall. Companies such as Dell, HSBC, L’Oreal, Roche, 3M, Sanofi, and Colgate use Candex to pay their smaller vendors. Not only is Candex compatible with existing enterprise procurement systems such as Ariba and Coupa, but it can also be used alongside other less common procurement software, or even when no procurement system is available. With Candex, procurement teams no longer have to add non-core and one-time vendors to their systems, and they get substantially improved compliance and speed for their buyers. Candex generates a payment processing fee on every transaction, similar to a credit card processing fee.
In addition to solving a clear pain point, one of the other things that got us excited about Candex is the opportunity for expansion within their existing customer base. All of Candex’s customers are growing quickly and have significant upside as the tool gets more broadly adopted across more spend categories, countries and use cases.
Candex has a global footprint, with subsidiaries and banking access in 34 countries allowing them to pay vendors around the world. Even today, a majority of Candex’s payment volume occurs outside the US. The company is based in the US and maintains its R&D in Israel.
Jeremy Lappin and Shani Vaza are the perfect founding duo: Shani is the technical mind and Jeremy is the hustler, and one of the scrappiest and most persistent entrepreneurs I’ve ever met. They’ve been working on Candex for years and pivoted the business along the way. Now they have all the right ingredients to build a big company: product-market fit, an impressive list of referenceable enterprise customers, an outstanding team, and a big market.
Congrats, Jeremy, Shani and the entire Candex team.