After bootstrapping for 10 years, Fintech enterprise venture HighRadius raises $50M
Saturday September 16, 2017,
5 min Read
Hyderabad-based HighRadius, a player in cloud-based integrated receivables software space, announced that it had raised $50 million in growth funding from Susquehanna Growth Equity. Founded in 2006, this is the first external funding round that HighRadius has raised in its journey and the company aims to leverage it to grow its global footprint and also expand the team.
YourStory spoke to Sashi Narahari, Founder and CEO of HighRadius, to understand more about the company and its recent developments. Here is their story.
Story so far
Led by Sashi Narahari and Bhanu Bobba, Managing Director, HighRadius India, the Hyderabad-based and US headquartered venture operates in the Fintech enterprise space. Narahari, an IIT alumnus and an enterprise technology veteran recalled that back in 2006 HighRadius started out in the receivables management space, with the aim of helping companies get their payments processed faster. He said,
We started out with about 20 clients and the market was severely undeserved back then and there was only one competitor.
Fastforward to 2017, HighRadius works with hundreds of Global 2000 companies, including brands like Adidas, Starbucks, Procter & Gamble, Johnson & Johnson and Warner Bros. Their integrated receivables platform optimizes cash flow through automation of receivables and payments processes across 6 categories- credit, collections, cash application, deductions, electronic billing and payment processing.
To make the processes more automated, HighRadius recently launched their proprietary platform- HighRadius initially incorporated artificial intelligence and machine learning for their cash application solution. However, once the company saw that it increased automation from 60 percent to 90 percent, they felt there was a market to develop and leverage machine learning and AI for other use across the other five categories.
So now as a cloud-based product company, HighRadius applies artificial intelligence and machine learning to all aspects of accounts receivable operations.
Their other complimentary product, RadiusOne B2B payment network, allows suppliers to digitally connect with buyers, closing the loop from supplier receivable processes to buyer payable processes. Narahari compared this to a LinkedIn for buyers and sellers to connect.
HighRadius currently employs over 500 people across US, India, and Europe. Narahari explained that USA is currently their largest market, with about 90 percent of their business concentrated there and a small percentage in Europe. While India isn’t a big market yet, he believes that Asia and India will catch up in the next two to three years. Talking about their client base and how they plan to utilise the funding, Narahari said,
We have more than 350 clients on our Integrated Receivables platform powered by our Rivana Artificial Intelligence engine and the RadiusOne B2B payment network. This funding will help us accelerate our platform to thousands of companies globally."
Revenue model and personal philosophy for growth
HighRadius solutions claims to have a proven track record of optimising cash flow, reducing days sales outstanding (DSO) and bad debt, and increasing operational efficiency so that companies may achieve a strong ROI in just a few months. Talking about their client base and revenue model Narahari noted that their typical clients include companies that have anywhere from a hundred million to more than a billion dollars in revenue and don’t want the hassle of dealing with on premise solutions. HighRadius solutions work with simple subscription models and Narahari said that their two main solutions – Integrated Receivables and the RadiusOne B2B Payment network- are complimentary in nature.
Having bootstrapped for over a decade, Narahari noted that most startups follow the formulaic approach of raising seed capital and then progress to raising Series A, B and C rounds etc to grow their business. He said,
I feel that is a very inefficient way of building a business. Multiple board members could bring in multiple agendas. Generally leads to artificial growth before product market fit….. We raised funding now to fuel an existing product-market fit.
Narahari admiited that while this $50 million round is technically a Series A round, the cheque size is comparable to a Series C growth fund. This was possible because the company didn't take the traditional route.
Sector overview and future plans
Amir Goldman, Founder and Managing Director of Susquehanna Growth Equity believes that integrated receivables is an $11 billion market in the early stages of adoption. In conjunction with the investment, Goldman and Ben Weinberg from Susquehanna Growth Equity will join the HighRadius board of directors. He said in a statement,
We love backing bootstrapped companies like HighRadius, which has never raised outside funding, has grown at a 70% CAGR, and continues to be cash-flow positive.
Talking about their future plans, Narahari shared that the company has a 'five dimensions of growth' strategy to move forward.
- Expand and double down in core markets, like USA.
- Expand to other global markets like Europe and Asia.
- Leverage RadiusOne network to get more suppliers and buyers on to their platform.
- Expand into other channels and partner with companies. HighRadius recently partnered with Bank of America Merrill Lynch to explore synergies and solutions.
- Expand the offerings of their integrated receivables solution.
Adoption of integrated receivables technology is expected to match that of Accounts Payable automation by 2020. The opportunity is further supported by the size of the B2B payments market, which is five times larger than the B2C market, yet under-served today.