Few problems are as much of a headache for the modern corporate worker as buying things on the company’s dime. Companies are loathe to hand out credit cards to everyone in the building, but they also want their employees to do your job without having to fill out six forms in triplicate to requisition a pencil. They also want to control spending and track who bought that $2,000 bottle of Pappy Van Winkle last month (for a very important sales meeting, of course).
Andrew Hoag, the founder and CEO of New York City-based Teampay, says that companies do crazy things to handle these problems. “We run across customers that cancel a corporate card every three months to reset it,” he explained. “We have seen customers pass around a clipboard [to purchase services], which really worries the auditors.”
That’s where Teampay comes in. The product allows companies to provide virtual credit cards to every employee, and then follows that up with a suite of approval workflow and analytics features that will make every CFO swoon and employees rejoice at the ease of buying services. The company announced today that it has raised $4 million in venture capital led by Rick Smith at Crosscut Ventures.
Hoag said he encountered the problem of procurement while running his previous startups. “People on my team were always bugging me about buying things for them. It was sort of a hard choice, since I either needed to give them a corporate card or pay out of pocket,” he explained.
Teampay’s goal is to make all expenses transparent and auditable, giving procurement analysts the confidence to allow employees to make purchases more efficiently. Procurement policies can be enforced, and they can also be updated as needed to adjust for changes in authorized spend.
Plus, the platform provides vendor analytics, so that a company can understand how much money it is spending on services like LinkedIn and ask for a better enterprise rate. “We give them reminders when they have been using something for a while, and we send them updates on their top spending vendors,” Hoag said.
Today, the platform integrates with Slack and Google Apps, and will be adding a Microsoft integration shortly. Approvals can be done in a Slack channel for instance, and Teampay also uses the directory information stored in these services to understand when an employee has left the company.
Hoag identified one of the key challenges for expenses today as the rise of the software-as-a-service model. “The market is really driven by this rise of bottoms up selling,” he said. Employees are buying more and more subscription products to do their everyday work, and yet, the tools for purchasing all of these necessary services haven’t improved.
With more and more subscriptions attached to the employee, it can be expensive to offboard a user. Hoag noted that “No one forgets their $10,000 a month SalesForce subscription, but the $15 a month Buffer subscription” often gets missed by finance, since there is no record of who got the subscription and thus, whether it was purchased by a departed employee.
A couple of bucks a month may not sound like much, but when you have hundreds of people leaving a company in any given year, multiplied by potentially dozens of subscriptions per employee, the amount of wasted expenses can be quite high. Hoag said that early customer data shows that roughly half of all transactions made by employees are recurring, with the other half being one-off.
Teampay’s focus is on the mid-market, targeting companies with two hundred to a thousand employees. Hoag said that “Our target customer is too small to have a full purchasing department, but too big to use the CEO’s credit card.” The company has several paying customers on the platform today.
In addition to Crosscut, the round was joined by KEC Ventures, Precursor Ventures, CoVenture, and a number of angel and other venture funds.