CHARLOTTE — AvidXchange, which sells accounts payable and payment automation software, started working in January on the huge $225 million financing deal it just closed with an impressive syndicate of other investors, says CEO and co-founder Michael Praeger. “We hadn’t raised capital in a long time, but we really liked the approach of the Bain Group,” he says.
“We have a terrific syndicate of investors, a mix of different types.” That brings a wide range of expertise to the company, he notes. Other investors in the financing include Durham-based Square One Bank, TPG Special Situations Partners, Foundry Group, Nyca Partners, and KeyCorp.
Praeger says the simple answer to what AvidXchange does is: “We eliminate the paper invoice and the paper check for businesses.” It’s much harder for banks to do that for a business than for a consumer, he points out. Businesses have a variety of bill payment processes and a large variety of accounting systems that don’t make it easy.
We’re a software company
In fact, AvidXchange spent a good part of the last 15 years since its founding in 2000, building its Payment Network, which connects to 120 accounting systems and continually adds more. The company has more than 250,000 vendors and 5,200 customers using the network.
While AvidXchange gets lumped into the FinTech sector, “We’re actually a software company at the core,” Praeger says. Historically, our type of company has located in Boston or Silicon Valley, and in NC, in the Triad and the Triangle. We haven’t seen that many in Charlotte.”
The Queen City does have advantages over those areas, though. “The cost of living is lower,” among other factors. The only disadvantage Praeger notes is access to talent, but the big banks in Charlotte have brought some to the city and “We can piggyback off that and attract still more talent.”
The 420 employee company plans to get to 600 staffers in four years, hiring 180 in 2015 alone. It seeks software developers, support personnel, and sales people and will add a significant number of new employees this year, Praeger says. The company told the state it would have those 600 employees in four years when the company did the tax incentive program.
With the new financing in hand, the company will not only build its team, but will also enhance its product and integrate to even more accounting systems and refining other elements. It will also continue building out its already substantial Payment Network. “Over the next several years we want to grow it from 50,000 vendors to 200,000,” Praeger says. “We’ll need infrastructure and support for that growth.”
The company pays a great deal of attention to customer support, retaining 98 percent of its customers.
Getting AvidXchange to this point felt like a “15-year sprint,” Praeger says, noting that most successful software companies take decades to build. “It feels like a different company now with the capital available and who we’ve attracted, new board members who are luminaries.” He’s referring to the expertise from the investors who now hold board seats.
Impressive tech career
The company doesn’t have some specific competitors, Praeger says. Most firms competing offer more limited services such as integrating with fewer accounting systems. Praeger says AvidXchange is far enough along that it would be difficult for a competitor to catch up now.
Praeger has had an impressive career in the tech and venture capital sectors. He was Co-Founder of PlanetResume.com, a technology career enhancement and recruiting site that successfully completed its merger with CareerShop.com and CareerTV.net in November 1999.
Prior to that, he was Co-Founder and CEO of InfoLink Partners and InfoVentures. He also served as an Associate with Summit Partners, a Boston-based Venture Capital and Buyout partnership with more than $1 billion under management. He received a B.S.B.A. in Finance from Georgetown University. He a graduate of the “Birthing of Giants” executive entrepreneurship program at MIT.
Praeger is currently active in the Entrepreneurs Organization (EO), as well as the Young Presidents Organization (YPO). He is also currently serving on the advisory board of the North Carolina Technology Association (NCTA), and on Comdata’s Customer Advisory Board.
On the Web: www.avidXchange.com
WRAL TechWire’s report on the $222M funding: https://wraltechwire.com/avidxchange-closes-225m-financing/14901812/