Recent news reports that Taulia has raised $20m came just weeks after the company unveiled its new Polaris product, which uses artificial intelligence (AI) to help guide early repayment strategies. In an SEC filing in September the company stated that the money had been raised in new equity, but the formal document shed no light on who the investors were or to what use the funds would be put. But in an exclusive interview with SCFBriefing.com, Cedric Bru, Taulia’s CEO, explained all.
The latest fundraiser – the first since December 2015 – brings to $155m the amount of money that Taulia has raised in recent years. Investors in the most recent tranche were a combination of new investors and old investors coming back for more, as well as a mix of institutions, growth funds and “strategic” investors – players in the field. “Everyone is very interested in fintech,” says Bru. “We’ve been able to benefit from the high interest from all those investor classes.”
Taulia’s strategic investors include EDBI, which is the corporate investment arm of the Singapore Economic Development Board, Propel Ventures, which is the venture investment arm of BBVA, and the Japanese payments company GMO Payment Gateway. “Those strategic investors back Taulia in order to make returns, but also to help us go into those markets and help us work with their parent companies,” Bru says.
He adds that, while the September 2017 fundraiser achieved its target of finding $20m in fresh equity, Taulia may raise a further $10m, “if there is a fit with what those strategic investors want to do. But that’s not a requirement for us: we’ve raised the amount of money we need to pursue our journey and become profitable. The rest is more ‘Nice to have’.”
The big new game-changer
The money is largely earmarked for product development. The cloud and deep integration with ERP systems have been priorities, but the big new game-changer is Polaris, Taulia’s AI-driven product. “Polaris has completely changed our lives at Taulia,” Bru says. “And more important, the lives of customers. We rely on this infrastructure to manage and run the programmes for our clients. It’s completely embedded as part of our operations.”
What that means in practice is that Taulia’s client managers are able to use the tool to help advise companies how to achieve their working capital goals. And for clients that want real-time access themselves, Polaris is available as a premium product.
“If a customer said, ‘I need to unlock $50 million of our working capital,” the tool can tell us the different scenarios and the most likely scenarios to achieve that. The tool makes recommendations about the steps to take,” Bru explains. “If a company said, ‘I have $100m of excess cash that I want to deploy in my supply chain to capture a yield out of it by capturing early payment discounts,’ again we are able to make recommendations and predictions about the best steps to take with those suppliers in order to achieve those goals.”
The tool recognises not only that every buying organisation is unique, but so, too, is every supplier. A $20m construction company in London is different from a $200m marketing company in New York, and so the terms, the timing and the messaging have to take that into account.
“For that construction company in London, we may contact the CFO on the first week of the last month of the quarter with a message that talks about the benefits of getting an advance in order to improve their free cash flows,” Bru explains. “To the marketing company, we may talk about an early payment to an accounts receivable clerk on the last week of the quarter at a different rate. All of this logic – who we contact, when we contact them, the message we use and the rate – are all automatically driven by this artificial intelligence engine.”
The hockey stick inflection point
While shying away from giving precise figures, Bru is very excited by the level of customer interest being shown in Polaris. “Taulia has always been strong around early payment products, because this is the core of what we do, this is what we invest all our investment money in, this is why our customers love us,” says Bru. “But if I showed you the adoption curve that we have, while it was pretty strong in the past, we had an inflection point about a year ago almost like a hockey stick – and that is due to the great people we have at the company and the customers who are believing in it, of course, but a lot of that was really fuelled by this solution.”
Developing an artificial intelligence product is not cheap – hence the fundraiser. But money alone can’t buy what it really needs to work: data. If Taulia had been able to wave a magic wand and develop an AI product back when the company was founded in 2009, it wouldn’t have worked. It needs to feed on years of data – not simply to succeed as a product offering, but to use as a testbed as the product’s logic routines are developed.
“Today, we’ve seen more than a trillion dollars of B2B spend go through the Taulia platform, so we have a ton of data that we can use to understand if our product logic is accurate or not,” Bru says. “Data significantly speeds up the development time.”
Even then, it’s been three years in the making. Taulia didn’t want to rush this, preferring to work at a more measured pace. “Anything rushed creates expense,” Bru says. “But we were committed to making it happen – to make the investment over three years, so that it can yield something that is very solid.”
Partners and rivals
Where this new product positions Taulia in the market is the $64,000 question. Banks are regarded by Taulia as the main competition – “It’s an interesting relationship: we compete with them and partner with them at the same time” – but Bru has seen no signs that the big banks are investing in AI to develop their supply chain finance programmes. “So we have a pretty large head start against them,” Bru believes.
While game-changing developments such as Polaris potentially enable Taulia to grab market share, the fact that this type of technology is sparking so many more conversations about supply chain finance is in itself a good thing for the market as a whole. Bru doesn’t believe, therefore, that it would necessarily be a bad thing if a fintech rival were to develop any kind of similar product before long. “A tool like this one – whether it’s Taulia’s or one that our competitors will announce and launch at some point – will help corporations to answer the question, ‘How do I efficiently and quickly manage and execute all my [supplier finance] programmes?’”
The point, he says, is that corporate attitudes towards supply chain finance have moved on in recent years from a need for basic education about the concept, towards a recognition that it can help the business achieve strategic goals. but now, he says, the conversation is more about how to start and how to scale an early payment programme. “Those questions can be incredibly hard to answer, because those corporations have very complex supply chains,” Bru says. AI tools can help – and the SCF market as a whole will benefit.
“Educating the marketplace can be fun and it will always be necessary, but I think we are at the point now where people understand what it is, and it’s more about, ‘Tell me what I need to do to be successful; tell me the best practices; tell me the tools I need to use to avoid having a project that doesn’t work.’” Bru says. “I think that, in this world that is going at 200 miles per hour, people don’t have any patience to toy with something and try something new: they want something that works, they want something that brings results tomorrow and not in two years. But if people are looking for best practices, I think it’s an exciting time for you to explain that to people, and it’s an exciting time for us to be able to do it.”