June 20, 2011
Sure we may have crazy money being thrown around at ridiculous startups like Color, and crazy situations like those of the billion dollar valuation club but at the same time we have rock solid and profitable businesses like KashFlow telling a sorry tale about the difficulties of raising capital. And here’s another example, one of a company that I’m even closer to as an adviser and option-holder.
News going out today that billFLO, the accounts payable lifecycle management company that I’m an adviser to has been acquired by Taulia, the discounting solution provider for SAP. I’ve known billFLO founder Ian Sweeney for a few years now – we first met when billFLO was nothing more than a concept and after developing the product and spending time talking to me about where I saw the opportunity, Sweeney asked me to come on board as one of the billFLO advisers.
billFLO started off as kind of a translation service for invoices. As I said in my review back in 2008, it kind of disappointed me that we’d need a third party offering just to transfer invoices rom one accounting product into another. Especially in this day and age with open APIs and the like it seemed that paying someone to act as the “babel fish” of data was kind of offensive to those who believe in the web being the platform.
To a certain extent I must have been right because billFLO changed tack and concentrated on providing workflow management for accounts payable – setting up an approvals process, authorizing invoices for payment and deriving cashflow projections form the invoicing process. As Ian said at the time;
We recognized relatively early on that EDI on its own isn’t that compelling for small biz. Generally speaking, they don’t want to have to “deal with bills”. That translates to “let me manage the bills to meet my goals, with the minimum of effort on my part”. Managing bills is actually quite an involved process, even for the small guys. We simplify it by creating a central repository for the bills to arrive to (bills can be a machine readable billFLO invoice or simply a pdf). The bills can then be routed to anyone in the company to be approved (i.e. to answer the questions: are they billing us for the right stuff?) and for payment to be authorized (“there are 10k in approved bills, is it ok to spend the 10k?”). The data is then synchronized automatically with the accounting system, an audit trail is stored for every invoice and an archive of every invoice is also created.
So this is a great win right? Well in some ways – billFLO certainly fills some holes in the Taulia product offering, and combined this is a pretty credible product. But in terms of the payout? I don’t have any information about the terms of the deal but I do know that the options I hold are worthless (which is fine, these things are always a long shot). So my assessment is that this comes down to a nice product fit, a great job for Sweeney, but nothing for the billFLO investors.
I’m happy for Sweeney, interested to see where the combined offering will go, but very aware that we may be in a bubble, but it’s a very unevenly distributed one… Ah well, it’s back to the drawing board….