Tradeshift – e-invoicing with a high valuation and big ideas

When Jason was over recently, we had the pleasure to meet Christian Lanng of Tradeshift. He’s a fascinating character – he joined the Danish civil service straight from university and was one of a small team that put Denmark at the forefront of public sector procurement and invoicing automation. From his biography:

He went on to become the youngest Head of Division in the Danish government. During this time he met the co-founders of Tradeshift and they created the world’s first open-source peer-to-peer e-business infrastructure, which became wildly popular among Danish companies – attracting more than 40% of all Danish companies in 10 months. The team went on to create an open standardized cross-border framework for e-business called PEPPOL, which today is used by more than 14 European governments.

A couple of years ago, having reached the grand old age of 30-ish, he founded Tradeshift along with Morten Lund, one of the founders of Skype, who has already made and lost a fortune or two, and who, if his Twitter and Blog are anything to go by is – well, let’s just say “eccentric”. (His blog is great actually. And Lanng has also just started his own blog here).

Tradeshift are an unusual animal for our solution provider world, taking their model much more from the world of social media than traditional enterprise software. They’re a SaaS, “cloud based” invoicing solutions provider – “manage your invoices online, efficiently and for free” as they say. They’ve obviously convinced investors that they have something special, having secured $17 million in funding last month. This values the firm at $137 million, pretty amazing for a firm that is only 18 months old!

My previous cursory look at them suggested that their big gimmick was to offer free e-invoicing. I had wondered of course how this could build a sustainable business model. So it was interesting to hear from Langg that this is not their main proposition, particularly for larger clients. They’re actively selling to large Corporates, and the pitch is very much around the functionality of their offering, for instance the ease of adoption for their clients and, perhaps more importantly, for the thousands of suppliers to the client.

Their model is also based on suppliers NOT having to pay to be part of the network, which differentiates them from Ariba and others quite strongly. That is a factor in winning clients – Kuehne and Nagel being an early win, as well as shared service operations in the UK National Health Service (Anglia Support Partnership, the shared service provider to the NHS in the east of England, and the Birmingham Primary Care Shared Service Agency).  The NHS are not usually early adopters in terms of technology or new providers, so they strike us as significant gains for Tradeshift and perhaps an indication of their potential in the public sector.

Anyway, they have some fascinating ideas, and we will undoubtedly be hearing a lot more about them in 2012. Pete Loughlin at Purchasing Insight covers the e-invoicing market far more thoroughly than we’re ever likely to, but we’ll be keeping an eye on developments in that market through 2012. It feels like it could actually become rather interesting with folk like Lanng and firms like Tradeshift around!

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