Glean AI, a startup launched by Better.com’s ex-CFO Howard Katzenberg that provides artificial intelligence-based accounts payable software, announced raising a $10.8 seed round, according to a press release shared with FinLedger.
The round, which included participation from American Express Ventures, Contour Venture Partners, Infinity Ventures, B Capital, Portage and several other venture funds and fintech angels, will be used to accelerate its growth and improve its spend intelligence technology.
Katzenberg, who previously served as CFO of OnDeck and most recently Better.com, says that he started this new venture due to problems he found while auditing spend management processes in those roles.
He says that when he actually looked at the money being spent during yearly, manual audits, he found a slew of “zombie vendors” and “line item creeps,” that amounted to large expenses for the company – with little real value to show for it.
“if we could reduce the leakage, which was significant, we could reinvest those savings back into business to boost impact. The question I pondered was, ‘Why aren’t we capturing this waste through our normal spend management processes?’,” Katzenberg told FinLedger.
The answer, he says, comes down to the issue of data. While he could see the expenses, he did not have insight into the underlying drivers of what is being purchased and found that these spend management practices relied too much on approvals.
To highlight this point, Glean AI conducted a survey among finance leaders in 2020, that found an estimated 14% of invoices had errors and 11% of total vendor spend could be reduced with greater scrutiny of invoices and billing relationships. That translates to $130 billion wasted annually for small and medium-sized businesses (SMBs) alone.
“Purchasing invoices are very data-rich documents. Can we get those line items? Can we understand the volumes being ordered, and the unit price is being tracked? … I thought, if we could capture that on our business spend, you can generate a whole slew of new analysis and recommendations, in real-time, that will help you detect this leakage,” he added.
Due to these leakages, which are notably present in small and medium-sized businesses, the company has set out to fix the way organizations deal with B2B relationships and cash flow issues. Since Glean AI launched with its first customer in June 2021, the company has helped businesses uncover savings insights on more than $500 million in vendor spend through its machine learning technology.
In addition to catching this leakage, Glean AI goes a step further by providing business owners with metrics and KPIs to understand their spending, such as month-over-month changes to vendor licenses, budget versus actual spend and how cost is driving ROI.
The company accomplishes this through widget-like insights, that the company playfully calls “Gleans,” which provide this information. While these Gleans currently handle current spending habits, Katzenberg said the company plans to introduce new features that can help businesses plan their future spending.
“Right now like Glean is primarily focused on spend commit, like current spend, but we really want to start getting FEMA teams more involved to focus on future spend. Aligning, ‘What is the right spend in the future with this vendor’, and not just analyzing the current spend. Then, we also want to scale the go-to market activities from a marketing, sales and partnership perspective.”
Glean AI currently has about 30 team members, which Katzenberg says is almost double its size last year. He also said it plans to continue hiring those go-to market sales and marketing roles, as well as engineers and data scientists.
In the end, he says he wants Glean to be the primary software platform not only for finance teams but also for everyone in an organization who manages vendor relationships, so that all employees can collaborate and align spend expectations and hold each other accountable for return on investment.
He says that while intelligent accounts payable is an important component, it is only a feature of the platform, which is being built to help CFOs access data, centralize contracts and create efficiency through greater organizational collaboration.
In other recent proptech news, CoFi completed a $7 million seed round for its construction finance platform that helps builders access loans and pay workers quickly. App-based personal assistant and rental service program Alfred also raised $125 million in funding and completed its first property management acquisition.