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May 16, 2011 3:41 am
An Anglo-Danish technology start-up pledging to rid the world of paper-based invoicing through the power of social networking has raised a new $7m round of funding.
Tradeshift, which counts the UK’s National Health Service and parts of the Danish and French governments among its 60,000 customers, offers its online invoicing service for free. It plans to generate revenues from business applications that can plug into its fast-growing network of users.
The service has been described as “viral invoicing” because each new company that receives an electronic payment request through the system can easily sign up as a member of the network.
Tradeshift provides businesses with a profile page on its site and the ability to comment on the invoice or change its status, much as private Facebook users do.
Notion Capital, an internet venture-capital firm, is investing $7m in Tradeshift at a valuation reported to be in the range of $80m to $100m.
PayPal, the online payments service owned by Ebay, provided seed funding for Tradeshift after it was founded in 2009.
The fresh backing will help it to break into new international markets, including the US.
“The vast majority of invoicing is still not in any electronic formatting,” Stephen Chandler, managing partner at Notion, said. “It’s very wasteful.”
An estimated 84 per cent of all invoicing globally is still done manually on paper. Much of the remaining share of the market is made up of complex and expensive electronic data interchange (EDI) systems which often require both purchaser and vendor of a product or service to install complex equipment and pay per invoice.
EDI systems are often too costly for small- and medium-sized businesses, a market Tradeshift hopes to exploit with its free cloud-based service.
It competes with much larger business software companies such as Sage, SAP and Salesforce.com. As well as companies’ attachment to paper records, it also faces challenges in explaining the complexity of e-invoicing and its own system.
However the number of businesses registered at Tradeshift has grown by 60 per cent every month so far this year.
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