Expense reporting is a time-consuming chore. Just ask the folks at Concur, who estimate that it takes 20 minutes on average to complete a single report and 18 minutes to correct an erroneous one. That’s why Anant Kale and Kunal Verma set out to find a better way with AI, which seven years ago evolved into automated expensing startup AppZen.
A little less than a year after raising $35 million in venture capital, San Jose, California-based AppZen today revealed that it recently closed a $50 million series C round led by Coatue Management, with participation from investors Redpoint Ventures and Lightspeed Venture Partners. The fresh funds bring the startup’s total raised to over $100 million, which CEO Kale says will accelerate its mission to become the top AI platform to reduce spend, comply with policies, and streamline processes.
It’s well on its way. AppZen recently surpassed the 1,500 customer mark, attracting nearly a third of Fortune 500 companies and quintupling revenue in the process. It expanded to over 200 employees last year, and it expects to increase both its domestic and overseas headcount again by 2020 following the opening of its office in Pune, India and the expansion of its San Jose, London, and Arizona offices.
“Until now, true digital transformation in the CFO’s organization has been limited,” said Kale. “Our AI technology changes that as it … learns from those data, intelligence from thousands of internal and online sources, and the collective feedback from millions of hours of finance professionals’ time. The result is the most effective spend auditing solution in the market today, powered by … a platform that has been architected to solve the most critical business needs across all of finance.”
AppZen’s Expense Audit platform, which integrates with Workday, Oracle, Coupa, Concur, and other reporting services, taps computer vision, deep learning, and semantic analysis to eliminate the need for managers and auditors to approve travel receipts line-by-line. It assigns employees a score — the AppZen Behavioral Index — tabulated from each report, receipt, and travel document they’ve submitted over the course of a trip. Taking into account thousands of internal and web data sources, Expense Audit’s Insights feature can recognize and authorize reimbursements for items within clients’ approved list (e.g., travel), and highlight possible infractions (alcoholic beverages) that warrant a closer look.
Within the Expense Audit dashboard, managers can filter expenses between policies, cost centers, and departments and quickly drill down to top spending areas and high-risk employees. And when the AI doesn’t get it right, they can mark false positives.
According to AppZen, its technology improves financial risk detection by a factor of 10 and cuts human resources required to process expense reports by up to 90%.
“The current status quo is expense report auditors sample 2 to 3% of reports submitted,” Ryan Floersch, senior director of product marketing, told VentureBeat in an interview conducted earlier this year. “AppZen Insights brings it up to 100% off the bat.”
And that’s only the tip of the proverbial iceberg when it comes to AppZen’s solutions suite. Its recently launched supplier invoice auditing product autonomously weeds out errors, fraud, and out-of-compliance spend in real time, while its contract intelligence offering analyzes key dates, terms, and pricing to highlight expired certificates and warn of potentially problematic signees. As for AppZen’s AI-powered analytics dashboard, it auto-approves low-risk expense reports and pinpoints things like incremental supplier cost increases, automatically detecting out-of-the-norm expenses or spikes in supplier costs.
AppZen isn’t the only startup applying machine learning to expensing, of course. Pleo offers a prepaid MasterCard product that tracks employee spending and categorizes transactions, and London-based Soldo’s platform lets clients lay out different expense criteria for each employee, contractor, and spending department.
But AppZen has early momentum on its side. Its customers include heavy hitters like Amazon, WeWork, Nvidia, Novartis, Charles Schwab, Citi, Hitachi, Salesforce, Comcast, Intuit, Airbus, and CBS. The company has raised $52 million in funding to date.
“AppZen allows enterprises to do something they’ve never been able to do — audit 100% of their spend at scale and with the team they have, all before payments go out the door,” said Coatue Management senior managing director Thomas Laffont. “When we met Anant, Kunal, and the team, we were struck by their AI expertise and finance transformation vision, not to mention the company’s clear and rapid execution in the market.”