Tech Finance

The Silicon Valley Way to Pay

Taulia. The future of billing? Source: Brian MacStay
The future of billing?
  • Why it matters

    Why it matters

    Taulia has attracted scores of large U.S. firms keen to save money on supplier contracts.

  • Facts

    Facts

    • The financial start-up was founded by four Germans in 2009 in San Francisco.
    • It has plans to expand further into Europe and Asia.
    • Taulia’s CEO hopes for an initial public offering in 2017 or 2018.
  • Audio

    Audio

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The numbers are so big that they could be from a well-established financial services provider. This year alone, companies will pay bills worth $150 billion (€120 billion) through the platform to about 300,000 suppliers.

But they characterize the success of the tech start-up Taulia, which was founded by four Germans just five years ago in San Francisco. CEO and co-founder Bertram Meyer told Handelsblatt in an interview: “And we already know that next year will double to $300 billion.”

What separates Taulia from the multitude of electronic billing platforms out there is that it allows suppliers to get their money considerably sooner, directly from the ordering customers. In return, the customers receive a variable discount depending on how fast they pay.

“Taulia is interesting because it sits at the intersection of banking and information technology. We see the convergence of these two streams as the future of banking.”

Thomas Whiteaker, Chief Executive, BBVA Ventures

The supplier accesses its digital invoice online through the platform and can track its status. As soon as the bill is released, the supplier can arrange payment of the invoice by the customers, even if the payment deadline is still weeks away. But it doesn’t have to.

Taulia touts that everyone profits through this in the end: The purchaser pays less, the supplier doesn’t have to wait a long time for payment, possibly avoiding expensive bridge financing. And Taulia receives a small portion of the discount. Suppliers have already decided on early payment for bills totaling $75 billion.

The business model is clearly popular. Taulia is growing rapidly and already counts 65 of the 500 largest U.S. companies, including Coca-Cola, and many of their suppliers as clients. It wants to win over a further nine large companies in the fourth quarter. Revenue in the third quarter of 2014 was up 185 percent from the previous year, according to information from the company. But CEO Mr. Meyer does not want to disclose the exact amount of revenue.

“We are growing so quickly that each number that is on the market is quickly outdated,” he said.

Wrong numbers could confuse investors, said Mr. Meyer. Since Taulia’s growth eats up a lot of money, the young company constantly needs more. Investors have already put $70 million into the start-up – $40 million of which came in recent months. That is expected to help expedite the expansion in Europe and Asia. Taulia has had a subsidiary in Germany since its founding. “That was primarily our development center,” said Mr. Meyer. Now the company expects to broaden its distribution there with fresh money. “We are currently in negotiations with two of Germany’s 50 largest companies,” he said.

“An initial public offering could happen in 2017 or 2018.”

Bertram Meyer, Taulia co-founder and CEO

The Spanish multinational bank BBVA took part in the most recent financing round for Taulia. Like the Royal Bank of Scotland, RBS, it has a strategic interest in the start-up. RBS will recommend the Taulia services to its corporate clients in the future. BBVA is planning to do something similar.

“Taulia’s business model is unparalleled,” said Thomas Whiteaker, chief executive of the investment arm of the bank, BBVA Ventures, after the bank got onboard with the start-up. “Taulia is interesting for BBVA because it sits at the intersection of banking and information technology. We see the convergence of these two streams as the future of banking.”

Mr. Meyer sees Taulia’s future on the stock exchange. In two years, the company with barely more than 200 employees aims to have a positive cash flow for the first time.

“An initial public offering could happen in 2017 or 2018,” said Mr. Meyer.

He and his co-founders, Martin Quensel and two former SAP employees Markus Ament and Philip Stehlik, still own a significant share of the company, but the investors now hold the majority. The last round of financing valued the start-up at about $200 million, according to information received by Handelsblatt. It is a figure that Taulia neither confirms nor denies.

 

Grischa Brower-Rabinowitsch is Handelsblatt’s New York bureau chief. To contact the author: Brower@handelsblatt.com

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