Chen Amit started Tipalti in Israel to help small-to-midsize companies everywhere manage their financial transactions.
Chen Amit Saw Fintech Opportunity in What Everyone Else Thought Was an Insoluble Problem
In 2010, Chen Amit co-founded Tipalti, an Israeli company that promised to make worldwide payments easy for firms of any size. Everyone told him that the complications of international transactions made this almost impossible for companies that weren’t in the Fortune 5000.
Today, Amit is CEO, and last year Tipalti, headquartered in San Mateo, California, automated more than $36 billion across 200 countries, double the amount in 2020 (the name comes from a Hebrew expression for “we handled it”). Its thousands of enthusiastic users even include big innovators such as GoDaddy, ZipRecruiter, Roku, and Amazon Twitch.
“If you want to launch a really successful startup, look for a big point of pain and come up with a solution,” Amit told Startup Savant. “It might seem unsexy at first, but you will develop a passion for it when it takes off.”
Amit grew up in Tel Aviv, where his father was a lawyer, his mother worked for the state airline El-Al in sales, and his brother taught him programming on an early pocket calculator. By 16, Amit was working as a programmer, writing educational software for the Commodore 64.
Looking for social interaction, he took a job at a cafe, starting in the kitchen, and then was promoted to waiter. He met a fellow waiter, Danielle, they married, and he decided to return to tech.
Amit attended Technion, the revered Israel Institute of Technology, where he studied both software and hardware, graduating in 1990.
He took a job as a junior product developer for a high-flying Israeli tech company, and his first major team effort was so successful that he was made chief architect for a new business line.
Then in 1993, he took a break to study at the Sorbonne campus of INSEAD (Institut Européen d’Administration des Affaires) for his MBA.
He returned to his prior employer to start a new business line. “This is where I really saw the importance of analysis and education through data, which showed how the new product design would be a radical and successful departure for the industry,” he explained. “This became a multi-billion-dollar business, my first experience with market leadership.”
“That’s where I learned one of the key business principles I still think about to this day, that strategy is nothing without data,” he said. “It’s more obvious today with the abundance of data, but it was eye-opening for me.”
Chen was an entrepreneur-in-residence and partner at two venture capital firms, eager to learn from other tech entrepreneurs. Through this experience, in 2003, he co-founded and was CEO of Verix, a provider of business intelligence software.
In 2007, he was asked to take the place of an outgoing CEO for a 200-person company, Atrica, an ethernet carrier that a few months later was sold to Nokia Siemens.
In between entrepreneurial gigs, he played poker to make a modest living.
“I learned how to take measured risks because if you want to be successful in poker and in business, one key is to manage your bankroll through volatility,” he explained. “You develop the discipline to know the amount you can lose before you have to walk away.”
Addressing Accounts Payable Pain Points
Chen designed the first supplier payments system for a friend whose ad-tech firm was having challenges with payments across different verticals. Online companies often had lots of invoice-less transactions with customers and vendors in many countries, involving numerous currencies that might be volatile, regulatory issues about data formats, anti-money-laundering and fraud laws, tax and bookkeeping requirements, and each company’s proprietary methods for determining how much should be paid for products and services.
Addressing these issues remains extremely difficult for small-to-midsize firms, while large corporations can develop sophisticated systems to manage the process and assign vast teams to do the tedious drudgery of manual entry requirements. It’s no wonder that in 2010, B2B fintech was still in the digital Stone Age for most companies.
Chen decided there was a big opportunity and began working on an AI-powered, cloud-based Software as a Service platform that launched in 2011. Oren Zeev, his co-founder and now chairman, provided most of the Series A funding of $3 million.
Tipalti’s first major customer was SeekingAlpha, a content service for financial markets. “I was a “one person company” for the first year, and I was thrilled when they agreed to use our system, despite their consideration of a competitor that had 400 people,” Chen recalled. “It was my own David vs. Goliath moment, and it was an extremely empowering recognition that we were offering something valuable and unique.”
In the second year, he interviewed all the initial employees to be sure they were a cultural fit for a tiny company with ambitions to revolutionize global transactions. This meant rewards for outstanding performance and great ideas while quickly correcting mistakes.
At first, it was a tough sell targeting small-to-midsize companies. Most thought addressing the issues was too daunting. Converts came in slowly at first, but reviews were very positive as the service became more sophisticated and could handle more types of transactions.
Tipalti’s current technology can help any organization, but its primary marketing is focused on mid-size firms, where the need is greatest, but resources are limited. Yet even the largest corporations find working through international banks to transfer money a cumbersome process, Chen said.
“Looking back, if we had known how hard it might be to do this, we might have given up,” Chen told the PYMNTS podcast.
There were several key process innovations that propelled Tipalti’s growth, including automating many tasks, having vendors do much of the onboarding work, and collaborating with banks and governments to make sure it had the right licenses.
But by 2014, they were processing about 300,000 transactions annually worth $1 billion to $1.5 billion. That year, their Series B attracted $9 million.
In 2018, Tipalti made the Inc. 5000 list of fastest-growing private companies for the first time and announced in August that its platform was processing $5 billion in annual payments for three million payees. A year later, it had surpassed $8 billion, and in July 2021, its annual volume reached $23 billion and is growing fast.
Powering Growth by Empowering Finance Leaders
“Since our core value is our commitment to customers, evidenced by our 99% retention rate, customer advocacy is our best method of marketing, though we do use public relations, social, advertising, events, and so on,” Chen explained.
An example is a Canadian, non-digital software company that empowers users to execute social media strategies across their organizations to transform messages into meaningful relationships. It needed Tipalti to support multiple tax codes and entities in order to create great efficiency in invoice processes.
“It wasn’t initially impressed with our solution because they had to review and recode invoices, but we were able to offer them an additional service where we were able to do the coding, saving them time and money, and now they’re one of our major advocates!” he said.
It was no wonder that when it was time for Tipalti’s Series F funding in December 2021, $270 million was invested with a valuation of $8.3 billion.
“In the coming 18 months, we plan to invest more time in product and innovation than we did in the previous 11 years combined,” said Chen. “We have several initiatives that are big enough to be companies, even unicorns, on their own, and we plan on solving more of the challenges facing high-growth and mid-market finance leaders.”
Tipalti moved its HQ to San Mateo because that made it easier to approach the tech companies that would be its most likely early adopters. It now has nearly 1,000 employees, with other offices that have all the sales and operational functions in Plano, Texas, Vancouver, Toronto, London, and its R&D unit in Glil Yam, Israel, which remains its center for engineering.
“We’re on a journey to transform financial operations, relieve finance leaders from those mundane, cumbersome, risky tasks, free them up to focus on higher-level mission critical activities, and elevate the financial capabilities for high velocity organizations to rival those of the Fortune 5000,” Chen told Forbes last December.
