We are excited to announce we led a $9M seed investment in Monto, an AI application that helps solve the B2B payments challenges created by modern ERP and procurement solutions.
I have written about our work focusing on trends and markets to identify the great companies that we invest in. Thesis work is often described linearly from brilliant insight to future success. The truth is that we have little more ability to see into the future than others, and frequently do immense amounts of research that results in no economically tangible product – an actual investment. But this work is not wasted. It means we’re prepared to move quickly when we meet the right founders and team.
Our investment in Monto illustrates this alternative, potentially less sexy path that our thesis-driven work can take. We’d been interested in the accounting space for a long time, but it wasn’t until meeting the Monto team that we saw a clear path from brilliant idea to venture-backable outcome.
Accounting is many things but three of the most important surface areas we like a lot are how do you get paid, how do you pay people (BILL), and how do you reconcile everything (Klarity). We also really like procurement (ScoutRFP) which is simply the massive gray area between two companies deciding who to buy from, how to actualize a transaction, and how to reconcile the components of a transaction.
The technical term for “how do you get paid” is accounts receivable. This workflow has changed a lot in three decades, from mailing physical invoices to faxing them to sending them via email. It’s a human-labor intensive process that at scale can turn into a boiler room. Accounts receivable also has a direct connection to business outcomes, including how much cash you have and understanding whether a customer is creditworthy. Surprisingly, a lot of companies are actually bad at this, which is insane when you think about it from a business perspective: you do all of this great work for someone, only to get paid very slowly, very late, or, at worst, not at all.
We’d looked at a few different categories, like co-pilot-like automation for AR accountants, reporting and analytics on the quality of your AR function, and complicated payment mechanisms to ensure payment. Each of these avenues has resulted in some startup success, but none to the caliber that warranted our investment dollars.
When I met Maya and Yoav at Monto they understood all the avenues I had gone down, but they went further and discovered a problem that in hindsight is so much more obvious and significant. Specifically, they keyed in on the increased ubiquity of payment portals pushed by procurement departments as the preferred or mandated path for accounts receivable teams to submit invoices. These portals have many advantages, but they also create custom and one-off workflows for accounts receivable teams, which become increasingly difficult (and expensive) to manage. In one extreme case, a company hired four accountants to deal with the monthly task of managing this cumbersome data entry process.
Monto is the first company to exclusively focus on this pain point. They deliver a marketplace of integrations that allow those accounts receivable teams to automate payment portal submissions in the same workflow as any other e-mailed invoice. Incremental value is then created by providing a visibility layer across all your payment portals, showing status of submission, potential rejections, and payment processing. Not only does this create a more secure payments workflow, but it also reduces hours of follow-up and confirmation. Like so many great software companies before, Monto is taking messy, heterogeneous data flows and converting them into a single, magical interface.
Within minutes of the initial pitch I had incredibly high enthusiasm for this opportunity, not because I was actively looking for solutions for this problem, but because a decade of work made me a prepared buyer. These types of investor-entrepreneur conversations are the best because you can quickly expand to the big vision. Today Monto is solving a simple but expensive problem, and I’m very excited to be joining their board in delivering that product, but we’re not stopping there. We’re already looking to the next horizon as we tackle broader opportunities in B2B payments.
