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What is driving Tipalti’s $2 billion valuation? 10 reasons AP Automation is such an attractive market

10/07/2020 By

Yesterday, Tipalti announced it had raised $150 million at a cool $2 billion valuation. (See Spend Matters’ coverage of Tipalti below.*)

What is remarkable about this raise and the valuation is that Tipalti, which focuses on accounts payable automation and payments, is still a relatively small firm in the procurement and finance technology sector, even if it is growing at a strong clip.

While I don’t have current financials on the firm that I can share, Owler lists them (erroneously low) at $15 million, and applying the ever-convenient $200,000 or $250,000 per employee multiple based on LinkedIn employees still places them materially below $100 million in revenue.

So regardless of how you slice it, we likely have a private company here — and one that was founded outside the U.S., in fact, that can sometimes hurt comparative valuations — valued in excess of 20X top line.

For an outsider to this sector, barring truly off-the-chart growth metrics (beyond even top-performing cloud application norms), this might seem anomalous. But it’s not, given a number of variables at play here in the AP automation and B2B payments market.

In this Nexus column, I will share the “inside baseball” 10 reasons why AP is such an attractive market for firms and investors — and why Tipalti is smack dab at the center of any rationale investment thesis in this market (including a contrast with superior functional solutions for AP such as Basware, which is comparatively uninteresting from an investment vantage point).

* See Tipalti’s latest Spend Matters coverage and ratings below:

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and business strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter. Disclosure: Azul Partners has advised numerous sponsors and firms in support of M&A strategy and due diligence in the accounts payable automation and B2B payments sector.

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