AI is an imperfect technology, but one task at which it excels is identifying patterns in vast amounts of data. That’s perhaps why a number of startups have sprung up in recent years offering AI-powered products aimed at automating accounting tasks, like redacting sensitive info in paperwork and filing forms across different departments. Simply put, it’s low-hanging fruit.
That’s not suggest accounting-focused AI isn’t profitable — on the contrary. As something of a case in point, Vic.ai, which bills itself as an accounting automation platform, today announced that it raised $52 million in a Series C funding round led by GGV Capital and ICONIQ Growth with participation from Cowboy Ventures and Costanoa Ventures.
The new cash brings Vic.ai’s total raised to $115 million, which CEO Alexander Hagerup says is being put toward customer acquisition in North America and adding purchase order match, payment execution and “spend intelligence” capabilities to the Vic.ai platform.
“In this next stage of growth, Vic.ai will capitalize on the market’s urgent need to automate other elements of finance by expanding its AI solution to manage and analyze all these tasks,” Hagerup told TechCrunch in an email interview. “‘AI’ has been a hot concept for many years, but large enterprises are just now getting to the point where they’re ready to adopt at scale, and they’re doing so with a focus on specific functions such as accounting and finance.”
Vic.ai was founded in 2017 by Hagerup and Kristoffer Roil, both Norwegian entrepreneurs. Prior to co-launching Vic.ai, Hagerup founded the Online Backup Company, a European backup and disaster recovery service provider. Roil spearheaded the founding of Telipol, a wireless carrier in Norway that was later acquired by Hudya Group, a Nordic fintech company.
Hagerup and Roil say that they built the first iteration of Vic.ai by training the platform on historical accounting data and processes from tens of thousands of public companies. The training data set contained accounting documents and corresponding journal entries that were reviewed by accountants at consultancy firms, including PricewaterhouseCoopers. This “live usage” helped to train Vic.ai’s machine learning algorithms over time, according to Hagerup, enabling it to provide nearly “complete autonomy” for transaction processing.
Vic.ai primarily handles invoice processing, leveraging the aforementioned algorithms to select invoices and expenses that meet a certain confidence threshold and automatically send them to approvers. The platform also determines the number of steps in an invoice approval process and automatically decides which employee needs to review each step.
Hagerup says that Vic.ai uses the invoices that it processes for customers to improve the performance of its algorithms. Data on the platform is retained for seven years, but Vic.ai maintains a “strict separation” of U.S. and EU data to comply with GDPR and makes an effort to discard personally identifiable information, he says.
Unlike some AI vendors, Vic.ai has the good fortune of occupying an industry that’s beginning to embrace automation. A 2021 survey of roughly 200 companies and financial institutions found that, while management priorities and IT availability remain the top blockers to automated workflows, just over a third of respondents said that they planned to spend “more or significantly more” on accounts payable automation technology within the next two years.
Vic.ai’s customer base reflects this. According to Hagerup, the company now has 60 enterprise customers, including HSB, Intercom and Armanino, with an active user base that’s grown 280% compared to 2021. Vic.ai’s contracted annual recurring revenue tripled in 2022 as compared to 2021 ($5 million), he added.
“As a true AI company, Vic.ai is changing accounts payable automation into true autonomy. While some of our competitors offer solutions based on rules and templates, our unique approach sets us apart from the status quo,” Hagerup said. “Moving operations from on-prem manual routines via email or spreadsheet into a cloud based solution with audit trails and compliance features is favorable to IT C-level managers … We’re well positioned for an economic downturn.”
Vic.ai competes against vendors such as Upflow, Glean AI and Quadient-owned YayPay in the accounts receivables management and automation space. (For context, the accounts payable automation market alone is estimated to grow from $1.9 billion in 2019 to $3.1 billion by 2024, according to MarketsandMarkets.) Tipalti is perhaps the most formidable, having raised $270 million at an $8.3 billion valuation last December.
To beat back its rivals, New York–based Vic.ai has expanded rapidly — it tripled its headcount to 106 employees this year — and invested in building out its AI-powered purchase order matching technology, which it sees as a key differentiator.