The march to add more artificial intelligence-powered tools into the enterprise stack continues apace, and today another startup has raised a growth round to position itself as one of the leaders in is particular niche. AppZen, which has developed an AI platform that analyses employees’ expenses to sniff out when someone is either violating company policy, or actively committing expense fraud, has raised $35 million in a Series B round of funding.
Led by Lightspeed Venture Partners, with participation also from previous investors Redpoint Ventures and Resolute Ventures — the funding was made at a $140 million pre-money valuation, according to PitchBook, putting the valuation at around $175 million for the six year-old startup. AppZen has raised just over $52 million to date.
The valuation hike (it’s more than tripled versus its previous valuation) is in part due to AppZen’s growth: the company now works with more than 650 organizations, including Amazon, Citi, Hitachi, Salesforce, Intuit, Airbus, and CBS (and disclaimer: one of them is Verizon, which owns us by way of Oath).
The problem that AppZen is solving is a widespread one that has yet to be comprehensively tackled with automation, and is a key example of how AI is being used to not just make something more efficient, but to do a task that had never been done before.
“Business processes in the enterprise back office are manual, rules-based, and cumbersome, which makes them a perfect target for AI,” said Arif Janmohamed, Partner at Lightspeed Venture Partners, in a statement. “We see many AI companies that lack the context and personalization to form the foundations of Authentic Artificial Intelligence. AppZen’s team invested over five years to build a sophisticated Machine Learning and Natural Language Processing platform that is now trusted by hundreds of the world’s most demanding enterprises for expense audits. AppZen is transforming the enterprise with a practical and valuable business application, today.”
In the case of expenses, it has been tricky to try to look at these automatically because there are often a lot of nuances that go into what an employee is spending money on, which may not always be easy to track. AppZen is able to not just look at expenses, but to match them up with where an employee has been travelling, as one example, to consider if a charge is justified.
Anant Kale, AppZen’s CEO (who co-founded the company with Kunal Verma) tells me that AppZen’s tools work with the major expense software packages that large enterprises most commonly use today, and typically its biggest competitor are either in-house teams of human auditors, or more commonly, third-party teams that audit by way of business process outsourcing agreements.
“But typically no one is doing this because it’s too expensive,” he said. On average, Kale said that before signing up with AppZen, companies randomly were selecting between five and 20 percent of all expenses at random to check if they are complying with company policy. “Now 100 percent get looked at.”
And the effect on costs for the company, he said, are strong: T&E spend can be reduced by up to five percent, and the costs of auditing can go down by 90 percent (because remember: in most cases this job wasn’t being addressed at all). Finance teams, in turn, spend more time looking just at exceptions that may have been flagged.
Today, its focus is on expenses, but Kale said that coming soon, the company will also be looking at accounts payable invoices and contracts, to help organisations determine if they are being over-charged. “The goal is to address all the domains in the CFO organization,” Kale said.