Today, we’re delighted to announce that Bain Capital Ventures led the Series A funding round in Airbase, supporting Thejo Kote (Founder & CEO) and his team in building a modern, all-in-one solution for spend management. We’re honored to be joining our fellow investors and friends Freddy Kerrest (Co-Founder/COO of Okta), First Round Capital, Box Group and Village Global.
To highlight our thesis, we wanted to share some charts and figures illustrating our conviction in the opportunity.
Software Spending Is Increasingly Decentralized
Whether you call it consumerization of the enterprise, shadow IT, or bottoms-up software, the reality is that more and more software is sold directly to the end-user, rather than through traditional gatekeepers at the C-level and in IT.
Across both modern companies and legacy incumbents, information workers have been empowered to find the software tools they need to solve their business pain points. However, this explosion in bottoms-up, decentralized spending, has created a control, visibility, and budget reconciliation challenge for companies, their finance teams and for functional and business unit leaders.
As more and more purchasing has moved away from centralized, top-down spend (which by definition is easy to budget, control and report on) to a decentralized model, companies are struggling to manage this spend while still supporting the speed at which businesses need to operate today. Airbase has built an elegant software solution that seamlessly allows end users to receive pre-authorization for specific vendor spend while at the same time, automatically reconciles this spend at the end of the month for the budget owners thereby solving this issue.
B2B Payments Moving To Card/ACH/ Virtual Cards
For the past few decades, the movement to digital has been a sea-change in commerce. Independent surveys have consistently validated the compounding impact digital technologies have had on payment methods, with precipitous declines in cash and check payments. Moreover, as employees buy small recurring licenses for software and cloud services, more of these types of payments are ending up on corporate and personal cards, rather than formal invoices.
This digital payment movement has created a set of challenges that add up to significant pain for finance leaders. Without flexible controls, corporate cards may either default to declining or accepting payments, leading to under- or overly strict policies. When employees leave their companies, they need to have their cards closed, but this also endangers any critical systems that are tied to those digits. As the number of subscriptions increase, it’s easy to lose track, leading to recurring payments for software that’s no longer in use.
Airbase Is The All-in-One Solution
Airbase is solving challenges both strategic and tactical — from making sure that employees don’t leave and cause critical payments to bounce off their (then-deactivated) cards, to codifying and enforcing budgets and approval flows for spending. Rather than purchasing separate tools for billing, accounting, budgeting, and more, Airbase’s unified spend management platform saves everyone time and frustration.
You may have seen Airbase’s billboards and signs around San Francisco, showing how CFOs are smiling from all the time and money that the platform is saving them. Needless to say, these aren’t just ads; in talking to customers during our diligence process, we heard glowing reviews of Airbase’s integrated workflows, time savings — and high praise for the team.
Thejo Is The Real Deal
In one of my meetings last summer with Thejo, I had the privilege of joining him for a long coffee near his office in Burlingame, during which he recounted the ups and downs of his prior journey founding, growing, and selling Automatic.
Automatic was trying to pioneer the notion of an app ecosystem to enable the concept of the connected car. The business was tough as the market wasn’t quite ready: the OEMs were tough to sell to and moved very slowly, and the app space became increasingly dominated by Apple and Google. In the face of these challenges, Thejo demonstrated incredible perseverance and grit, battling through six tough years of fundraising, deals with major retailers like Apple, Best Buy, and Amazon, and eventually to an acquisition by SiriusXM for $115M. He took the lessons learned from that first startup, and began working on Airbase.
As we got to know the company, spending time with the Airbase product and customers only reinforced to us that Thejo is a world-class product leader. Reviews steadily affirmed that Airbase’s product is best-in-class, and the first to truly re-imagine the workflows associated with spend management and accounts payable in today’s modern world. This feedback was echoed by the dozens of Airbase customers we spoke to, who loved the solution and very much believe in Thejo and the roadmap he’s building.
For Bain Capital Ventures, this was a terrific collaboration between our business software and fintech teams. Our partners Matt Harris and Keri Gohman, who lead our fintech practice, were instrumental in helping us understand the dynamics in the AP automation space, and ultimately build conviction behind Thejo’s vision. Matt has published his thinking on the convergence of software and payments, and Airbase is an early example of this next wave.
Every once in a while in the venture business, we have the exceptional fortune to work with a proven founder, building a game-changing product in a massive market. We couldn’t be more honored and excited to be on this journey with Thejo and Team Airbase.
-Kevin Zhang and Ajay Agarwal