Mike Katchen’s Trust-Based Approach Fuels Wealthsimple’s Success in the Fintech Landscape

Written by

Wealthsimple is one of the biggest names in the booming industry of financial technology. However, according to CEO and founder Mike Katchen, Wealthsimple is really in a different, but highly related, business — the business of trust. As a company, Wealthsimple’s goal is to help its customers manage and invest their money so that it will grow over time, assisting them in navigating the daunting tasks that come with the territory.

“I think one of the differentiators about Wealthsimple is we have always approached these services as a wealth management company first, not a trading company,” Katchen says. “Even in the height of meme stocks, when other players around the world maybe were trying to make it easier for people to bet on AMC and GME, we decided to actually surface these warnings in the app, where it’s like, you go to buy GME, we’re going to tell you, ‘Hey, are you really sure you want to buy it? This is a highly volatile stock, it’s got a lot of risk, make sure you know what you’re doing before you place this trade.’”

Wealthsimple didn’t see this as investment advice. While other brokerages might be happy enough just to accommodate the action, Wealthsimple saw this as an opportunity to provide useful knowledge and education to its customers, so that it could nurture informed behavior and help them grow as investors.

“There’s nothing wrong with wanting to invest or participate in the things that you believe in.” – Mike Katchen

“Right? It’s just always, how does it fit into a thoughtful long-term view of how to invest and how to be an investor, and wanting to make sure we provide the guardrails that enable people to do what they want.”

To understand how Katchen and Wealthsimple arrived at this philosophy — one that is both contrary to most of the fintech sector and essential to understanding Wealthsimple’s differentiating place in it — one must go back to the beginning. Katchen first started investing at the tender age of 12, when his sister entered him into a stock-picking contest for charity… which he happened to win. The top prize was a ski vacation to Whistler in British Columbia, which meant that, before he was a teenager, Katchen was able to take his dad skiing for a week.

“I thought I was the coolest kid in the world, and I fell in love with investing,” Katchen says.

This experience became surprisingly relevant when, in his 20s, he moved from Toronto to San Francisco to join a startup that he and his collaborators ended up selling. With that sale came, for the first time in their lives, money that they could invest however they wanted. And knowing his surprisingly long history with investing — a skill that he had continued to hone in the years since his first success — everyone turned to Katchen to point them in the right direction.

“I believed at the time that it should be super easy to manage your own money – that you should never hire someone to do it for you.” – Mike Katchen

“I built a spreadsheet that showed how to build a portfolio and gave it to these friends. And their feedback was, ‘Mike, we love this approach. But we’re lazy. Please just do it for us.’ And that inspired Wealthsimple.”

Katchen started Wealthsimple in 2014, entering a Canadian marketplace in which most young people recognized the importance of being smart with their money, but had no idea how to use the few “complicated, expensive, and overwhelming” tools that were available to them. He and his team utilized startup principles, especially top-tier tech and design, and they put them to work in the Canadian financial-services industry, a sector in which Katchen believed no one else was thinking in the same way. Instead, five banks controlled the overwhelming majority of the market.

“When I came back and said, ‘I want to build an investment management company that’s going to be simple and accessible and radically change the way people invest,’ everyone said, ‘Hey, that’s cute. But the banks have a monopoly on trust, so good luck to you, but you’ll never get anywhere,’” Katchen says. “We did it anyway. And here we are as one of the most trusted financial institutions in Canada, almost a decade later, serving more than one in five Canadians under the age of 45 years old, which is pretty wild.”

Trust wasn’t built overnight. Wealthsimple’s thoughtful approach to building and innovating in Canada’s highly regulated environment has been a key contributor.

In 2019, Wealthsimple launched Canada’s first commission-free trading platform. A year later, tapping into its expertise as a registered securities dealer and innovator, the company launched the first regulated crypto platform in Canada.

Wealthsimple also became one of the first securities dealers to earn membership into Payments Canada, which provides an extra layer of assurance around fulfilling, clearing, and settling payments. Membership in Payments Canada was also a factor in their next milestone: becoming the first non-bank to be granted a direct settlement account with the Bank of Canada, which gave them access to Canada’s pending payment system, the Real-Time-Rail (RTR). As Katchen put it in a LinkedIn post, he believes the RTR will let Wealthsimple “compete on a level playing field and have control over how we innovate and build, rather than be beholden to our competitors for access.”

It accomplished all of these firsts without becoming a bank.

“With all the things that have happened in the crypto industry, our clients’ assets were safe because of how we’ve built our business. To clients we can represent, we wanted to do this the right way from day one, to regulators we can represent, we wanted to do this the right way from day one,” Katchen says. “And when you think about building long-term trust with a brand and with stakeholders, that’s a really, really important proof point of what the company stands for.”

This trust has been essential in differentiating Wealthsimple not only from other fintech companies, but also from the startup industry as a whole. This differentiation becomes even more important when it comes to investment management, as there’s a core philosophy driving many startups that is probably not the best way to think of handling peoples’ hard-earned wealth.

“With fintech in particular, I dislike it when people use the phrase ‘let’s move fast and break things,’” TCV Partner David Zhang says, referencing an oft-used term that is ingrained in Silicon Valley conventional wisdom.

“This is an industry in which we are stewards of customers’ trust and their savings and their money. Value creation in fintech is not about moving fast and breaking things. It’s about building a flywheel of trust, which is at the heart of what Wealthsimple is about.”

This trust is ultimately what drew the interest of TCV, which saw the opportunity to expand on the basis of the relationships Wealthsimple had formed with its customers. Unlike many other players in the fintech sector, Wealthsimple wasn’t focused on gamifying investing, or bringing market speculation to a wider cohort, as was the case during so much of the meme-stock and crypto activity. Instead, even in the bull market of 2020 and 2021 — which is when TCV first invested — Wealthsimple sought to prioritize the long-term relationship with the customer rather than the individual transaction.

“The root of how it all came to be for us was, we had an internal thesis, or at least an insight, that the consumer relationship writ large with wealth and finance around the world was changing,” Zhang says. “We scoured the globe to find folks who were building products and businesses that were driving that transformation. It was much larger than just investing and wealth. It was about the individual’s fundamental relationship with money.”

For Zhang, Wealthsimple had three core qualities that he believed made it stand out as a potential driver of this phenomenon. The first was that it provided a great product, underpinned by robust underlying technology. The second was that it had tremendous brand awareness — to the point that one in five Canadians under 45 years of age use it. And the third was that he believed Katchen possessed the types of visionary and leadership qualities that were core attributes of some of the best CEOs that TCV had backed across multiple industries over many years.

And for Katchen, the relationship with TCV was essential in helping Wealthsimple to navigate the last year, which has been a particularly difficult one for the fintech industry and banking as a whole. Even as some banks have failed and others have been under extreme pressure, TCV has remained supportive and worked with Katchen and Wealthsimple as the company focused on the long-term.

“David’s the one who calls me and says, ‘How do we take advantage of this opportunity in the market? Yes, it’s tough. Let’s be smart about what we need to do in the short term, but we’re building something that’s meant to be a heck of a lot bigger than what it is now. Let’s put our heads together. How can we help? What introductions can I make? What companies do you want to meet?’” Katchen says. “All of that has been enormously helpful, because you want a partner who is in it for the right reasons, and for the long term, I think TCV has shown its ability to show up for us in both good times and in challenging times.”

These recent events, like the collapse of Silicon Valley Bank, also demonstrated the enormous importance of the trust that Wealthsimple had spent the last decade working to build. If Wealthsimple had waited until a point of crisis to build that trust, it would’ve been too late. Instead, it was able to lean on its longtime ethos of “keep calm and carry on” to reassure customers and get them through the first bear market in the lifetime of the company, not to mention most of its clients.

“There have been lots of scares, drops, crises in the last 10 years, and whenever they happen, we send out a very consistent message to the clients, which is, here’s what’s happened, here’s how it fits within the broader market environment, and here’s why it is important that investors play the long game, as this is all a long-term journey,” Katchen says.

“We’ve not only done that when things are challenging, but we’ve also done it when things get frothy and exciting. Remembering meme stocks, we sent our ‘keep calm and carry on’ note then as well. I think if you build consistency with your communication, that’s how you really start to build credibility with your customers and build trust for when these things happen. You have something to go back to: just keep calm and carry on. You can tell them why you’re different.”

Wealthsimple even decided to expand this messaging into its own media arm, the weekly newsletter TLDR, which now boasts over 3 million digital subscribers and is the most-read financial newsletter in Canada — further cementing the company’s reputation as a port in the storm of finance and a voice that people can trust in an increasingly fractured news industry. And it further allows Wealthsimple to capitalize not only on its core business of trust, but on the waves of young investors who have flooded the market since the pandemic.

After all, the goal isn’t just to reel in these new clients — it’s to become the most important financial relationship that they have, both in the investment landscape and in the larger sphere of financial services. In a world in which the erosion of trust has become one of, if not the, single most important problem facing society today, what Wealthsimple aims to provide is at a premium.

“Once you have customer relationships that are deeply rooted in trust, that opens up doors to new opportunities. New products and ways to delight your customers. Trust is the Holy Grail.” – David Zhang

This opens up the door to any number of moves in the future, as long as they preserve and expand on this central relationship of trust. In Katchen’s mind, this trust provides Wealthsimple with the opportunity not only to influence how people spend their money — he envisions the company shaping the industry from the inside out.

***

The views and opinions expressed are those of the author and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any of the data or statements by the author and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this interview and blog post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/

Meet Jack Newton, the Driving Force Behind Clio’s Legal Tech Revolution

Written by

When Jack Newton started legaltech company Clio alongside his grade-school friend Rian Gauvreau, it was 2008 — but based on the way lawyers worked, it could’ve been decades earlier. 

Top firms located in the most expensive real-estate in Manhattan were dedicating the bulk of their floor space to filing cabinets. Paper timesheets were the norm. And it would’ve been hard to find an office that wasn’t filled with the distinctive whir of fax machines… not to mention exhausted, overworked, and unhappy lawyers. By 2008, Amazon, Salesforce, and LinkedIn had all become major players in the corporate world; within the legal space, though, it was as if the Internet revolution had never happened. 

In the 15 years since, Clio has been a leader in the movement to modernize the legal industry, bringing an efficient and easy-to-use suite of products to bear on taking the law online. But Newton and Gauvreau didn’t set out to spark a revolution in how lawyers and law offices do their business on a daily, even hourly, basis. (And anyone who has ever encountered a lawyer knows just how sacred the hourly basis is.) Instead, they had a much more fundamental realization that guided them toward their ultimate destination — and it began when Newton started charging neighbors to shovel their snow. 

Newton grew up in Edmonton, Alberta, where he got into computers at an early age; he remembers tinkering with an Intel 8086 that his dad brought home for him. By eight years old, he was already writing programming, absorbing the remarkable implications of what it represented. “That was so mind-bending for me, especially as a young person — that you could just sit down and write some lines of code and make something that does something useful for people,” Newton says.

Doing something useful for people always played a major role in his thought process, and at the same time that he was experimenting with processors, he also started his first businesses. One of these came out of a very simple observation: in Edmonton, it snowed a lot. People needed their driveways shoveled. So he and his brothers started a snow-shoveling business — serving a clear need in their community. (Newton likes to joke that he’s always been in SaaS, except then, instead of Software as a Service, it was Shoveling as a Service.)

Fast forward to the mid-2000s. While many people assume that Newton is a lawyer himself, he’s actually a technologist: he trained in computer science as an undergrad and then obtained a master’s degree in machine learning at the University of Alberta. After working as a software developer at a blossoming medical-technology startup, he got the itch to launch his own company, and he and Gauvreau surveyed the scene around them, trying to understand what kind of business the macro environment might support.

“We saw the cloud becoming a really transformative technology that was going to, in our mind, transform almost every industry out there. It was really obvious to us, even though the cloud was fairly nascent in 2008,” Newton says. “Our question was, what is an industry that is ripe for transformation, ripe for disruption? Rian and I were two hammers looking for a nail.”

Cue the snow-shoveling wisdom. They needed to find the space most desperately in need of what cloud technology could provide — the place where there was the most snow that needed to be shoveled. At the time, Gauvreau had actually moved to Vancouver and was working for the law firm Gowlings, and he got to observe firsthand how poorly the average law firm implemented technology. They realized that the legal industry desperately needed a cloud-based service that could consolidate and streamline many of the practices that remained painfully manual. And they also saw that it wasn’t just a corporate need: it was a societal need as well. 

“It’s an important space in that the legal system is really foundational to our society, and access to justice was a huge issue where 77% of individuals do not have access to lawyers to help them see good legal outcomes for their problems,” Newton says. “We really saw that it was not only a big and important opportunity, but that legal, in a lot of ways, was the last major industry to be fundamentally transformed by technology in general, and by the Internet, in particular. Lawyers in 2008 were still doing their job like it was 1958 — they had really been almost untouched by technology in terms of how lawyers worked on a day-to-day basis.”

While the need for Clio seemed clear, Newton and Gauvreau had no sense that they were launching a company that would one day be worth more than a billion dollars and employ almost a thousand people. At the beginning, their goals were far more modest: create something that could support the two of them and a handful of other employees by making the “average lawyer’s day just a little bit better and a little bit easier to get through,” as Newton puts it. 

But it soon turned out that this average lawyer looked considerably different than he expected. As a technologist, Newton had little idea of what lawyers were actually like — and most of what he did know was based on TV. He assumed that most lawyers resembled Harvey Specter, the slick protagonist of USA Network’s Suits, working in high-end firms populated by hundreds of lawyers. He was surprised to find that, on the contrary, about 80% of lawyers turned out to be working at firms of 10 lawyers or less, and a full half were practicing solo. 

“They don’t have a floor of IT people, the way a big law firm might,” Newton says. “They’re solving their problems themselves, or they’ve maybe got their 13-year-old nephew that’s good at computers helping set up their IT systems.” Moreover, these lawyers weren’t just practicing law: they were spending even more of their time running small businesses, something they had never been trained to do in law school: “The law school industry is unfortunately producing a lot of lawyers that are pretty ill equipped to do that successfully. We saw a real hunger for a tool and a company that helped lawyers understand how they can leverage their training as a great lawyer into being able to run a successful law firm.”

That meant that this modest initial goal — make the average lawyer’s life a little better — turned out to have extremely far-reaching effects, because so many lawyers were so desperately in need of what Clio had to offer. At the same time, not only was the legal industry more than ready to start this evolution: as a SaaS company — Software now, not Shoveling — it actually made sense for Clio to go out and raise external funding so that they could frontload customer acquisition as much as possible. Newton had come to understand this from analyzing other SaaS case studies, where he saw evidence of a frequent winner-takes-all dynamic, particularly in vertical spaces, where the market could really support only one major player. 

This is also what caused Clio to first come across the radar of TCV. “We look at large verticals and potential technology categories of different types and try to understand, for anything that seems like a potentially large opportunity, who are the most innovative market leading businesses in those segments,” TCV general partner Amol Helekar says. “Legal was one of those almost Captain-Ahab, white-whale types of categories for us where we felt like, wow, this is such a huge vertical.”

As Helekar surveyed the space, he couldn’t find any companies that felt truly innovative and paradigm-shifting as far as how they addressed the way that law firms run — until he met Newton at a conference and learned about Clio, which was doing exactly that, for more than 35,000 firms. At the same time, Clio fulfilled the other criteria that Helekar looks for in a successful investment, including unique and powerful value proposition, huge engagement with users and customers, virtuous cycles that could cause a chain reaction of innovation within the product category, and a visionary, growth-oriented CEO and management team. 

“It’s the same types of characteristics that we saw with some of our notable investments, whether it’s Netflix, Spotify, Facebook, Expedia, or Zillow,” Helekar says. “When we would do customer calls on Clio, which we did well in advance of investing, we heard from lawyers that they’re using the product every day, that this is the core for how they manage their businesses. It’s the first application they log into in the morning, and it’s the last one they log out of at night. That’s where they track all their time, where they store all their data. And you could just feel the passion and the importance of the product to how they manage their practices.” 

On top of that, Clio wasn’t just transforming the way that law firms conducted their operations — it was also fueling development within the whole ecosystem of legaltech. Clio now features more than 200 applications, and it exists at the center of its vertical, investing in other legaltech products as well as hosting the Clio Cloud Conference, or ClioCon, one of the largest and most influential annual legaltech conference. 

But when TCV invested in Clio’s Series D round in 2019, it wasn’t a partnership that Newton entered into lightly. At the time, Clio was on pace to become a $100 million company, but Newton was already thinking past that — how they could become a $500 million company, and then a billion-dollar company, a “really durable, generational company.” To achieve that kind of growth and presence, the fit would have to be perfect.

“Maybe second only to who are you choosing as your co-founder, the next most important decision you make as a founder is who are you bringing onto your cap table to help grow the business, and in what ways can they help support you growing the business over the long term.”

“It’s like a marriage, and a lot longer lasting than some marriages: you’re entering into a five or six or 10-plus year engagement to go and drive transformation in the company and take the company to the next level.”

What impressed Newton at first was that TCV sat down with him and other members of his management team and walked them through a detailed view of how the fund thought about the legal space and where they saw opportunities to expand, as well as the feedback they were getting from their customer calls — years before they invested in Clio. This provided both a sign of good faith as well as a preview of what their partnership might look like, and Newton found himself aligned with Helekar and TCV on the various propositions that both sides brought to the table, including a strategy for using corporate development and M&A as tools for expanding Clio’s reach and value. 

Crucial in making the partnership work, though, was that TCV understood and endorsed Newton’s forward-thinking outlook — a very forward-thinking outlook. “We talked about building a 100-year company at Clio, a company that’s going to outlast me as CEO and outlast everyone who’s currently part of Team Clio, and it’s rarer than you’d think to find investors that have the kind of long-term view that that TCV does on their investments,” Newton says. “A lot of investors are thinking about a three-to-five-year hold period, and I think TCV is exceptional in how many investments they’ve been part of for a decade. Or two.”

More importantly, Newton and Clio have fulfilled that initial goal of improving lawyers’ quality of life — once again, far beyond the scope of what he had initially envisioned. Lawyers do not live easy lives: they work long hours in high-pressure situations, often engaging with clients at the worst moments of their lives, whether it’s a divorce, a bankruptcy, or any number of other pivotal events. 

“You spend your entire day, internalizing other people’s problems, dealing with emotional stakes that are quite high to start with,” Newton says. “And then you’re dealing with structural components of the industry, all the way to the billable hour, that really encourages a mismatch between work-life balance, including a very hard-driving atmosphere at law firms where associates and more junior folks in the firms are worked extremely hard. All of this creates a profession that has some of the highest suicide rates, highest substance abuse rates, highest rates of depression of any profession, full stop.”

By helping them to manage their workloads, streamline their interactions with clients, and increase responsiveness without piling up more hours on the job, Newton and Clio have found that they’ve been able to make a noteworthy difference not just in lawyers’ work, but in their lives. In one internal survey of their customers, Clio found that its software saved them eight hours a week — a whole workday’s worth of logistical and administrative labor that no longer needed to be performed. 

But Clio didn’t spin this as time that could then be turned into more billable hours. Instead, the company coined what it calls the “Clio day.” “We really turned that around and said that the time we’re saving you is time you can go and invest in quality of life,” Newton says. “This is time that you can spend with your husband or wife or your kids — this is the school recital that you don’t have to skip and miss out on.”

It all goes back to the streets of Edmonton. People don’t pay you to shovel snow because they want to have more time to shovel snow: they pay you to shovel snow so they can do something else. Newton and Clio have applied this lesson to an industry in which the average practitioner had to shovel a lot of metaphorical snow. 

Now, there’s a company that can shovel some of that snow for them.

***

The views and opinions expressed are those of the author and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any of the data or statements by the author and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this interview and blog post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/

Modernizing hourly work: Our investment in Instawork

Written by

The pandemic has shown businesses the benefits of flexible staffing from the ability to ramp up or down labor during seasonal periods to reducing fixed costs and increasing flexibility during unforeseen macro events. Coming out of the pandemic, the US has three million fewer Americans participating in the labor force compared to February 2020, prompting the need for tech-forward solutions to better match the limited supply of workers with the growing demand.1 

The staffing market is giant, fragmented (no company >2% mkt share), and underpenetrated by technology, with most players employing people-heavy models. Legacy temporary staffing agencies are heavily people-operated. Temp staffing agencies maintain large customer service and account management teams, often manually calling or emailing/texting workers to inform them of shift availability and, on the employer side, exchanging spreadsheets or calls/emails/texts about scheduling, payment and more.

This disjointed and often analog process results in mismatched expectations, frustrating experiences, and suboptimal matching of labor supply and demand, worsened by high turnover and frequency of hiring. An employer running a catering business or warehouse operation,  often faces 100%+ full time employee turnover on an annual basis. 

Instawork offers a mobile-first job marketplace and workforce management platform for skilled temporary workers, bringing flexible work to hourly workers at scale.

Instawork makes it easy for employers to list shifts and for workers to discover and book them, along with facilitating payment and creating trust with transparent/public performance management for both sides.

Pros have fast access to quality jobs, a transparent booking and payment experience, the ability to build their skills through a two-sided review system, and the capability to receive recognition and rewards for their performance. Instawork offers flexibility that hasn’t previously been offered to Pros; they can set their own hours and can change their work preferences each day, week or month as well as earn more for urgent requests and peak times.

The value proposition to partners is reliability, quality, and convenience. The underlying data model plays a critical role in properly matching skilled workers to available shifts and the performance of both the partner and worker is tracked for future matching success. 

The flywheel is working: fill rates (% of positions listed that are filled) have increased over time and no show rates have decreased over time with scale, demonstrating how Instawork’s data-fueled matching system has funneled increasingly reliable and quality workers to employers, resulting in high satisfaction from employers and workers. To date more than4M Pros have joined the Instawork platform and partners are increasingly pulling the company into new geos across the US and Canada.

Our partnership with Instawork

We’re thrilled to announce that TCV has led Instawork’s Series D. In this round, Instawork has raised $60M of capital from TCV and other investors including Benchmark, Spark, Greylock, Craft, 9Yards and more.

We have a deep belief at TCV that strong and fitting company cultures result in great experiences for customers. While learning about Instawork, we heard that the team had a saying “Inches off at launch means miles off in orbit.” It’s exactly this detail orientation and product obsession that we think can give rise to a novel marketplace platform for hourly work. We’re incredibly excited to partner with Sumir and the rest of the Instawork team on their mission to shape the future of work.

1https://www.uschamber.com/workforce/understanding-americas-labor-shortage

Our investment in Avalor: Solving security’s data problem

Written by

Companies of all sizes frequently deploy new security tools to address the evolving threat landscape. Recent research suggests the average mid-sized company has deployed dozens of security tools. These figures are even higher among enterprise companies. But do more tools, and thus more investment, really lead to better security outcomes? Statistics around the industry’s talent shortage aren’t improving, the attack surface is expanding rather than shrinking, and ransomware is intensifying in both frequency and severity. So, where’s the disconnect?

Over the years, we have spoken to hundreds of security practitioners. Most of them leverage tools that have their own purpose and taxonomy, which means the data generated by them is often siloed or disjointed and very hard to correlate. So, while these tools may provide essential coverage over critical assets, they can also create a data nightmare for security teams. How well this data is or isn’t organized, prioritized, and actioned determines the effectiveness of a security program. Today, the disconnect between security outcomes and how much is spent on tools is data-driven, and this is where Avalor enters the picture. 

Avalor addresses security’s pervasive data problem and helps security teams make faster, more accurate decisions. The company takes aim at this problem through a differentiated data fabric that acts as a source of truth for assets, controls, identities, vulnerabilities, security bugs, and other related data points. Importantly, we believe the company’s data fabric can power several applications over time, starting with Vulnerability Management (VM).

Starting with VM

VM, broadly defined, has become a mainstay of security over the past decade. Unlike many other security product categories, it’s also one that has a very well-defined budget and buyer. Incumbents like Qualys, Rapid7, and Tenable have all scaled to hundreds of millions in revenue and provide excellent vulnerability data, relying on scanners, CVSS score metrics, and potential impact measures to improve a company’s security posture. However, while existing VM solutions are helpful in telling companies which vulnerabilities generally pose heightened risk and need attention, they’re often blind to business context and other data sources. Understanding the actual risk posed by a given vulnerability is a data problem; it depends on a variety of factors related to the impacted asset, not just one. This is where Avalor’s initial application or “use case” comes into play, normalizing and de-duplicating data from multiple sources to generate a single, contextualized view on vulnerability risk management and prioritization. Avalor’s data fabric automates what has traditionally been a highly manual process, significantly reducing the total number of critical vulnerabilities (often from tens of thousands to hundreds) and facilitating faster remediation across IT, DevOps, and Security.

Built by data experts

Raanan Raz and Kfir Tishbi founded Avalor with the not so simple mission of solving security’s data problem. Undaunted, Raanan and Kfir have spent the past year assembling a founding team with a near-decade-long track record of working together, including at Datorama, a data intelligence company which Salesforce acquired in 2018 for $800M. Following the acquisition by Salesforce, Datorama became a pillar within Salesforce Marketing Cloud and solved key data problems for thousands of customers globally.

The most disruptive security companies often aren’t built by security experts. Finding an innovative solution to an old problem, especially one as onerous as data, requires a new set of eyes. We’re confident we’ve found this at Avalor. Whether it’s Marketing or Security, we believe Avalor’s team of data experts is uniquely qualified to address a problem that others have tried and failed to solve.

Our partnership with Avalor

We’re thrilled to announce that TCV is leading Avalor’s $25M Series A round alongside our friends at Cyberstarts, and Salesforce Ventures. At TCV, we gravitate towards founders that are culture and product obsessed. Raanan and Kfir blend humility with a deep understanding of solving data problems at scale, and we look forward to supporting them on the journey ahead. If you are interested in learning more about Avalor, please visit the company’s website.

Our investment in Allica: Full-suite SME banking that customers love

Written by

Financial services is one of the largest industries on the planet, making up several trillions of dollars of annual revenues. Despite its outsized importance in the global economy, the industry is dominated by incumbents that struggle to innovate, weighed down by legacy tech, heavily manual processes, and costly physical branch networks. As a result, customer experience is consistently poor, cumbersome and frustrating. Tech-enabled products and services have made other facets of consumers’ lives easier and frictionless and they’re hungry for financial products that do the same. This has opened the door for tech-forward, customer-first challengers across the financial services industry.

Over the last five-plus years, we’ve doubled down on this opportunity with two specific focus areas: Digital Banking and SME Financial Operations Tools, and have been fortunate to partner with the likes of Revolut, Nubank, Brex, Qonto, Toast, Xero, and Razorpay. While each of these companies is disrupting different segments of financial services in its own specific way, each has benefitted from tailwinds associated with these two macro themes. The worlds of technology and finance continue to merge, with SaaS companies extending into payments and lending like Toast and Xero, and with banks being built from scratch underpinned by a modern, unified technological core and an obsessive approach to product experience like Revolut, Nubank, Qonto – and now Allica.

The underserved middle

We believe Allica is the only digitally-native UK bank that is building out a full-suite offering – inclusive of commercial mortgages, asset financing, savings accounts, current accounts and more – for the underserved middle of the “established SME” segment. Established SMEs are businesses that have 10-250 employees, a segment that we estimate to represent roughly one-third of the UK economy.1 These established SMEs sit awkwardly between mass market businesses – retail and micro-SMEs – who can get by with relatively simple, automated banking self-services, and large corporate entities that banks service manually given their high revenue potential.

In contrast, lending to established SMEs combines high complexity – they have a wide range of legal entity structures, shareholders, security types, loan features, etc. – with high volume and lower ticket sizes. Credit is mission-critical to these businesses, yet incumbents fail to serve the segment adequately because of slow, manual and legacy technology and processes. Other fintechs haven’t entered the segment because they lack domain expertise. The result is many credit-worthy SMEs are unable to secure loans in a timely fashion, or at all. There is a gaping need for a bank that can deliver mass-customisation combined with great customer experience at low marginal cost.

Enter Allica and its proprietary, cloud-native banking platform that is specifically suited to handle the complexity associated with established SMEs. Allica’s platform digitizes and automates many components of the end-to-end lending journey, which drives significant operational efficiency and enables best-in-class decision turnaround times, a deeply valuable proposition to SMEs and the growing UK broker community. We are excited to support Allica’s ambition to build a full suite of modern financial products over the coming years. The company’s recent launches of a market-leading business current and savings accounts are the latest steps on this journey.

Allica has shown strong momentum in the three years since being granted a banking license. The bank is profitable and growing quickly: it has surpassed £1 billion in lending to SMEs and its Q3 2022 revenues were up more than 700 percent year-on-year compared to 2021. We believe the opportunity for Allica to be sizable: the total lending flow to UK SMEs is approximately £60 billion a year and in our view Allica has already shown it has better economics than its incumbent competitors we have reviewed, with more room for improvement as the team further digitizes the lending journey. These achievements are a testament to the strength of the product, value proposition to customers, and highly impressive execution.

Our partnership with Allica

We are thrilled to announce that we have led the £100M Series C round of Allica alongside existing investors Warwick Capital Partners and Atalaya Capital Management. We have known the Allica team for many years and couldn’t be more excited to support them and their vision to become the seminal UK SME fintech. We have also worked closely with Allica’s CEO Richard Davies over the last three years at our portfolio companies Revolut and Zepz and are delighted to back him in this partnership. 

We believe Richard has built a talented and dynamic team that shares a collective passion for SMEs, deep expertise in credit, and a track record for building tech products customers love. We believe the team’s collective experience and drive uniquely position them to execute on their ambitious vision for UK SME banking. We can’t wait to roll up our sleeves to support them in turning that vision into reality.

***

 1 Source: ONS, UK Finance, Finance and Leasing Association, British Bankers’ Association.

The views and opinions expressed are those of the author and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any of the data or statements by the author and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this interview and blog post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/

Our investment in Grow: Behavioral health’s independent practice platform

Written by

The mental healthcare industry in the U.S. is at an inflection point: Patients can’t easily find help while therapists are overworked, underpaid, and frustrated with traditional employment options. Therapists are increasingly dissatisfied with the groups they are employed by and 80% are looking for a new way to engage with patients.

Launching one’s own practice is hard. Self-employed therapists must navigate complex payer relationships to offer in-network coverage, tap channel and referral networks to build their book of patients, manage burdensome administrative work, and cultivate a network of peers for collaboration and support. The industry’s antiquated practices are directly impacting patient outcomes and clinical quality.

Grow’s B2B2C platform enables therapists to launch their own independent practice and in doing so, enables therapists to expand access and better serve patients.

With Grow’s complete ‘practice-in-a-box’ solution, self-employed therapists can offer affordable insurance-covered care to patients without having to worry about patient acquisition, overhead, or other administrative burdens that often fall on independent private operators (e.g. EHR, scheduling, invoicing, payment collection, note taking tools). Grow also provides a community for therapists to engage and connect with other providers in the field. 70%+ of providers use the Grow Community weekly and many cite this feature as a reason for their success on Grow. 

For patients, Grow offers a convenient path to find the right in-network behavioral health provider, book time instantly on their calendar, and access confidential secure care either virtually or in-person. 

Team on a mission.

The idea for Grow came from CEO and Co-Founder Jake Cooper’s experience with the difficulties of finding in-network behavioral care. After many dead-ends, Jake decided to pay out-of-pocket for a provider not covered by his insurance. While he had the resources to tap a provider out-of-network, Jake knew most Americans did not.   

Jake partnered with co-founders Alan Ni and Manoj Kanagaraj, as well as a broader team with deep experience across technology, healthcare, and payments, to build a mission driven company which empowers therapists to launch their own independent practices that are: 1) covered by the largest number of insurance providers in the industry, 2) easily discoverable by patients, and 3) scalable due to full-stack supporting infrastructure. 

Our partnership with Grow.

We’re thrilled to announce that TCV has led Grow’s Series B. In this round, Grow has raised $75M in equity and debt capital from TCV and other leading investors including Signalfire and Transformation Capital.

At TCV, we look to partner with founders who are building category-defining, generational companies and we’re incredibly excited to partner with Jake, Alan, Manoj, and the rest of the Grow team on their mission to create the largest and most accessible behavioral health platform in the country. 

Machine learning observability built for practitioners: Our investment in Arize

Written by

We’re still in the early innings of AI adoption, yet we’ve already seen it transform industries. Companies like Netflix, Spotify, and Uber have scaled internal teams from a handful of data scientists and machine learning (ML) engineers to hundreds. These teams, and the models they built to inform business and product decision-making, have shaped how consumers watch television, listen to music, and hail rides.

As AI use cases abound, ML teams face growing challenges around how to build, deploy, and maintain their models. Practitioners demand the flexibility to optimize each component of a model and, like software development, use specific tools to address the various phases of the model development lifecycle. In an attempt to bridge the development gap in ML, a new framework called MLOps has emerged. MLOps is derived from core DevOps principles and represents one of the fastest growing markets in technology today. 

To date, MLOps has largely centered on data preparation, model training, and model deployment; however, building and deploying models is only the beginning of the journey. What happens once a model is running in production? The reality is most companies still lack the necessary tools to scalably monitor and understand their live models. Moreover, as these models become more complex, troubleshooting issues gets harder and both upstream and downstream problems compound. 

In order for AI to achieve long-term sustainability, companies must improve model transparency, understanding, and performance. Enter Arize, a ML observability platform built by practitioners to help unpack the proverbial AI black box and optimize the performance of models in production. 

Shaping the future of AI infrastructure

As the various components of the model lifecycle standardize, many companies have started to orient away from expensive in-house builds and less flexible integrated platforms. Instead, practitioners are opting for best-of-breed MLOps solutions from focused vendors like Arize to gain additional control over their modeling workflow.

Arize sets itself apart as one of the few platforms that sits at the center of production ML. Within MLOps, there has been a flood of investment in tools addressing data preparation all the way through to the model deployment stage, but few tackle the reality that all live models face over time: degradation. Without real-time monitoring and observability, ML teams spend countless hours pouring over anomalies and trying to understand problems in the data, software, and / or model itself. Arize’s observability platform seamlessly plugs into any MLOps stack and provides a scalable solution to monitor the performance of models, explain what the models are trying to do, and diagnose data and drift issues without going back to square one.

In speaking to Arize’s customers, which include many of the world’s most sophisticated ML teams, it’s clear observability is seen as a core pillar of AI infrastructure and represents a natural progression in how they think about model lifecycle management. There’s a reason adjacent observability solutions like Datadog and Monte Carlo exist in other areas of IT, and we believe ML will be no different. 

Built by practitioners

Arize’s founders, Jason Lopatecki and Aparna Dhinakaran, first met at TubeMogul, where Jason was a founder who helped build out the company’s ML team and Aparna was a data scientist. Jason would eventually guide TubeMogul through a successful IPO and sale to Adobe while Aparna went to work for Uber as part of its famed Michelangelo team. 

Jason and Aparna stand out in a MLOps space where many founders hail from academia. Both draw from deep practitioner roots and have experienced firsthand the heartache of spending months building and training models, deploying them to production, and having no insight into how the models actually performed once deployed. Independently, they came to the conclusion that something was fundamentally missing in the MLOps toolchain. Together, they are now focused on bringing transparency, understanding, and performance to production ML through Arize’s dedicated observability platform. 

Our partnership with Arize

We’re thrilled to announce that TCV has led Arize’s $38M Series B alongside our friends at Battery Ventures, Foundation Capital, and Swift Ventures. 
At TCV, we gravitate towards founders that are culture and product obsessed. Jason and Aparna blend multi-stage company-building experience with firsthand knowledge of a real customer pain point. We’re incredibly excited to partner with the Arize team on their mission to make AI work and work for the people. If you are interested in joining Arize for the journey ahead, please visit their website to learn more about current career opportunities.

Empowering physicians with AI to improve patient outcomes: Our investment in Aidoc

Written by

For investors deeply passionate about healthcare, there is no dearth of excitement and inspiration in contemporary times. Specifically, we are now seeing modern technology platforms being developed on the back of transformative progress in computer vision, computational technologies and methods, and the ability for systems to interconnect, in addition to sophisticated data modeling capabilities, among others. This innovation has served as the foundation for a new generation of healthcare software companies to take on massive industry challenges, including high-impact areas such as democratizing patient access, improving the quality of care, reducing drug discovery and development timelines, enabling frictionless payment and collections, and driving efficiencies in business processes and operational workflows. Aidoc is one such healthcare technology company with a vision to be the intelligence layer for medical imaging diagnostics and care coordination.  

Aidoc was founded in 2016 by CEO Elad Walach, CTO Michael Braginsky, VP of R&D Guy Reiner and CMO Gal Yaniv who met while serving in the Israeli Defense Force’s Talpiot program, an elite technology program focused on Artificial Intelligence (AI) and Machine Learning (ML) research. The company’s platform consists of 20 medical applications, including 15 FDA-cleared algorithms, designed to drive speed, efficiency, and accuracy of diagnosis in medical imaging and multidisciplinary coordination of care in the context of more complex episodes – stroke and pulmonary emboli, specifically. 

Medical imaging represents a massive component of overall healthcare spend – the U.S. spends approximately $118 billion on imaging services annually, and expenditures are projected to grow approximately 7% per year for the foreseeable future. For complex patient cases, clinical personnel across multiple medical specialties must be engaged in order to determine the appropriate treatment. Historically, this coordination of care across stakeholders has proven challenging, lacked systemization, and been performed largely via offline methods. As healthcare providers have introduced more multidisciplinary programs and increasingly look to standardize the provision of care across them, technologies that enable care coordination and provider collaboration across specialties have become increasingly important.

Aidoc’s mission is to leverage AI and workflow software to drive multidisciplinary care coordination and deliver the right diagnosis, at the right time, to the right physician. To that end, Aidoc has developed a technology platform that applies the company’s 15 FDA-cleared algorithms – with many more on the way – to a radiologist’s queue in order to prioritize and triage patient cases. Further, the company’s growing repository of millions of annotated medical images is used to continually improve its algorithms over time. Importantly, Aidoc’s AI is “always on,” and the platform applies the company’s algorithms to every case simultaneously, allowing cases in more urgent need of intervention to be elevated for review regardless of where they fall in the queue. Following triage and diagnosis, Aidoc’s software also enables clinical personnel to coordinate the downstream provision of care by facilitating information sharing and communication across multiple stakeholders. Finally, and perhaps most impressively, the company’s platform integrates seamlessly within the existing operational workflows and clinical protocols of its customers.

Aidoc’s customers include a number of large health systems in the U.S., including HCA, Northwell Health, The Mayo Clinic, and Cedars-Sinai. The company also has a meaningful presence internationally, with customers that include Antwerp University Hospital, Netherlands Cancer Institute, Sheba Medical Center, and Alfred Health, among others. Finally, Aidoc also has partner relationships with leading radiology service providers, including Radiology Partners and Everlight Radiology.

The company’s customers derive value from Aidoc’s platform in terms of: a) increased diagnostic efficiency, b) improved prioritization and triage of the most complex or urgent cases, c) higher-quality diagnoses and reduced diagnostic error-rates, and d) more systematized, streamlined coordination of patient care. The company’s compelling value proposition, coupled with its reputation for high-velocity, relentless innovation and above-and-beyond customer delivery and support, has engendered customer delight. As evidence, Aidoc boasts an average net promoter score of between 80 and 90. 

TCV’s healthcare team has spent the last several quarters prioritizing companies that provide AI technology across various applications for the healthcare industry. Most recently, this focus led to our investments in BenchSci, a provider of AI software for driving productivity in preclinical research for the life sciences industry, and Syllable, a provider of AI technology for provider business process automation (and soon payor and other healthcare sub-sectors). 

Our Series D investment in Aidoc, completed in partnership with our friends at Alpha Intelligence Capital, General Catalyst, Square Peg Capital, and Emerge Ventures, represents another illustration of our thesis, this time for diagnostic and care coordination use cases. The Series D funding is intended to help Aidoc expand the company’s AI and ML software platform into additional applications, rapidly scale headcount, and forward invest in future growth initiatives. We are particularly excited about Elad’s vision for both the business and future of patient care, in addition to the company’s recent momentum that has established Aidoc as an emerging leader in the category. Elad has also lined-up an impressive team of advisors and experts to advise the company, including TCV Venture Partner Anita Pramoda.

“Of the various AI and ML use cases in healthcare, Aidoc’s is the one that I’m particularly excited about – their technology immediately improves patient outcomes and drives efficiencies for clinical personnel,” says Anita Pramoda, TCV Venture Partner. “Exponential patient and provider value will continue to be realized as Elad and the team roll out new algorithms, software applications, and integrations. In the future, instant diagnosis of conditions will transform patient care as we know it, and most importantly, save lives.”

Value proposition and momentum notwithstanding, what also impressed us is the humble, high-learning, and customer-centric culture Elad and his team have developed that permeates throughout the organization. Starting with Elad, it was clear during our diligence that the Aidoc team is mission-driven and firmly committed to using their team members’ talents to develop technology that improves patient outcomes through AI-driven care coordination. The results speak for themselves – Aidoc is a top-ranked employer on Glassdoor.

“With healthcare institutions facing labor shortages and navigating difficult economic situations, the future is predicated on value-based care that is enabled by automation technologies like AI and ML,” says Aidoc CEO Elad Walach. “But AI and ML are not enough in singular use cases – they must be applied across the entirety of a healthcare enterprise in order to deliver value-based care to the extent that would make a deep impact – an intelligence layer covering the entire patient lifecycle. That’s where we believe our AI Care Platform will transform healthcare. Partnering with TCV – a team that truly understands the importance of value-based care – gives us the support we need to manifest our vision.”

We are off to the races in our partnership with Elad and the Aidoc team, and are incredibly excited to help build a category-defining, generational software company that helps improve patient outcomes through AI-driven care coordination.

***

The views and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified, if any, are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this interview and blog post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/

Improving the patient experience with AI/ML software: Our investment in Syllable

Written by

Digitization of healthcare provider business processes and workflows is one of our healthcare team’s key investment themes. Our focus on this theme is a derivative of several industry dynamics affecting hospitals and physician practices, including reimbursement headwinds that are pressuring already slim operating profit margins, workforce shortages and high employee turnover, and a reliance on manual, labor-intensive, and / or paper-based methods to facilitate key business processes, among others. Put simply, across front, middle, and back office applications, we believe healthcare providers will increasingly adopt automation software to drive operational and financial efficiencies, increase workforce productivity, improve employee retention, reduce burnout of clinical personnel, and, perhaps most importantly, improve the patient experience.

In baseball terms, we believe the healthcare industry is in the “early innings” with regard to software adoption. While provider organizations have spent the last 10-15 years adopting electronic medical records (EMRs), they continue to lag other verticals in terms of software adoption for managing and / or automating various business processes. As one example, healthcare providers have only recently begun implementing customer relationship management (CRM) software platforms, while most other industries have had CRM systems for decades. To this juncture, automation software (often termed “robotic process automation” or “RPA”) adoption in healthcare has largely focused on back office applications – revenue cycle, specifically. However, we believe automation of front-office workflows through technology – healthcare’s “digital front door” – will have the most profound impact on the patient experience, while also driving significant operational and financial value for providers.

It is against this backdrop that we are delighted to lead Syllable’s $40M Series C financing in partnership with our friends at Oak HC/FT, Section 32, and Verily Life Sciences. Our investment in Syllable is intended to help Syllable expand its artificial intelligence and machine-learning (AI/ML) enabled software platform into adjacent applications and use cases, penetrate new healthcare customer segments (e.g., payor, pharmacy, etc.), rapidly scale headcount across all functions, and forward invest in future growth initiatives.

There has been a lot of “buzz” recently regarding the healthcare industry’s “digital front door,” which we define as simply the technology-enabled mediums via which patients engage with the healthcare system. This is largely a function of the growing consumerization of healthcare and corresponding emphasis on improving the patient experience, and numerous technologies have emerged to help facilitate digital interactions between patients and providers. Having said that, our research – and data from Syllable’s customers – indicates that the dominant modality for patient engagement with providers remains a telephone call; in our view, this is a derivative of the uniqueness of an individual patient’s circumstances and needs, in addition to the complexity of the healthcare system and its historically limited or non-existant digital channels. As a result, we believe the technology platforms best-positioned to automate front office workflows must offer solutions that address both voice and digital mediums.

Enter Syllable and its CEO, Kobus Jooste. Kobus founded Syllable in 2017 with an initial vision to build a software platform capable of removing high-friction barriers between healthcare providers and their patients. Prior to founding Syllable, Kobus spent several years in engineering leadership roles at Google, the most relevant of which was his leadership of the engineering team that developed and launched Google Assistant. Given Kobus’ background in conversational AI and natural language understanding (NLU), we believe that he is well-positioned to build a platform capable of automating both voice and digital patient-provider interactions. More specifically, Syllable’s technology platform leverages AI and NLU to automate inbound patient interactions with providers via phone, web, chatbot, and SMS text. As 95%+ of all patient interactions with providers presently take place via phone call, healthcare providers invest heavily in call center operations – anecdotally, some of Syllable’s customers field 15M+ patient phone calls per year, and invest hundreds of millions of dollars in their own call center personnel and operations. At the same time, providers are also investing significantly in digital applications to facilitate more efficient patient engagement.

Despite this level of investment, the healthcare industry continues to lag others in terms of consumer (i.e., patient) experience. As one datapoint, healthcare’s average net promoter score (NPS) is approximately 27; an NPS of 50 to 70 is generally considered “good.” As another, healthcare providers have call abandonment rates close to approximately 30% (per data from Syllable’s customers) – one of many reasons underpinning a poor patient experience. For providers, a poor patient experience negatively impacts their revenue from multiple vantages; for example, calls abandoned may represent lost revenue opportunities, and a poor experience with a provider reduces the probability of a repeat visit. Properly and efficiently engaging patients is incredibly challenging, as any digital mechanism for managing interactions needs to be highly approachable for patients, must incorporate healthcare-specific contextualization in terms of the intent of the interaction, requires immense scalability (e.g., large systems have 15M+ inbound phone calls annually), and, to reiterate, must facilitate engagement across both digital and voice channels.

That’s precisely the problem that Syllable is out to solve. Syllable’s technology platform leverages conversational AI and NLU technology in tandem with the company’s purpose-built digital applications to automate inbound patient interactions with healthcare provider organizations. Across the company’s current customer base and use cases, Syllable’s platform is capable of automating the majority of inbound patient inquiries, and those inquiries it cannot drive to a conclusion without human intervention are routed to the customer’s call center personnel for further triage. Common use cases include routing calls to the correct endpoint, appointment scheduling, and referral and medication management, among several others. What’s more – Syllable’s ML technology trains its AI on those interactions it cannot automate such that the company’s automation percentage improves with incremental volume and customer utilization. Syllable’s data suggests that its platform drives hard ROI for customers across multiple dimensions, including a significant reduction in call abandonment rates (to zero with Syllable’s platform) and wait times, a 2x+ or greater increase in first call resolution rates, and higher appointment scheduling conversion rates, among others – all of which result in an improved experience for patients.

Syllable’s compelling value proposition, coupled with its reputation for relentless innovation and top-tier customer service, contributed to engendering customer delight, and the company boasts an NPS of 80+. Its customers include numerous healthcare provider organizations, including Parkview Healthcare, Shannon Healthcare, New York Presbyterian, Weill Cornell Ambulatory Care Network, Houston Methodist, and Mass General-Brigham, among others – a particularly impressive roster given the company only began marketing its platform in October 2021. In 2021, Syllable interacted with 39.7M Americans in text and voice about primary care, specialty referrals, vaccinations, and general practice information. Based on Syllable’s sales momentum, the company will more than double its revenue in 2022, particularly as Syllable scales product and technology resources and continues to add to its go-to-market organization. 

CEO Kobus has assembled an impressive team of advisors and experts to advise Syllable on the healthcare industry’s needs and complexities, in addition to AI and ML technology. With this in mind, we are excited to have TCV Venture Partner Anita Pramoda support Syllable as the company takes-on new challenges in the healthcare industry.

“Syllables compresses the delay between needing and accessing care,” says Anita. “With Syllable, healthcare providers can now bring reliability, repeatability, and ubiquity to access – foundational tenets of good health. I’m honored to partner with Kobus and the entire Syllable team as they scale their platform and offer better care for all patients.”

Growth metrics and accolades aside, what perhaps impresses us most about the Syllable team is its unwavering commitment to approaching the healthcare industry with humility and respect. For a brief anecdote on this front, please refer to this segment with Joe and Syllable’s CMO, Adam Silverman, on a recent episode of the company’s podcast.

“Syllable is at a crucial point in its growth trajectory. As one of the most transformative platforms for health systems, our vision is clear. We want to help as many patients navigate hospital and primary care, while lowering the cost of access to care and the burden on front office staff and clinical staff,” says Kobus.

Syllable was also recognized as a most promising startup in healthcare for 2022 by CB Insights, picked as a leader in the private market from a pool of 7,000 companies – chosen based on R&D activity, proprietary Mosaic scores, market potential, business relationships, investor profile, competitive landscape, team strength, and technology novelty.

We are off to the races in our partnership with the Syllable team – including newly-appointed COO Catherline Krna, who joins Syllable from the Chief Administrative Office of Ambulatory Care and Service Lines at Stanford Health Care. We are incredibly excited to help build what we believe is a category-defining, generational software company that engenders patient delight while driving operational and financial efficiencies for healthcare providers.

***

The views and opinions expressed are those of the author and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any of the data or statements by the author and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this interview and blog post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

TCV invests in Evisort to deliver scalable, AI-powered contract management

Written by

Contracts are at the heart of business, enshrining a company’s rights and obligations across areas ranging from sales transactions and supplier relationships to employment agreements and beyond. Resulting from this centrality, rising contract volumes and legal complexity have made contract management unmanageable without leveraging technology.

Evisort delivers end-to-end contract intelligence software that turns contracts into data. Customers use a simple, intuitive interface to extract critical context from contracts, integrate that data into other enterprise systems, and automate a wide range of legal and operational workflows – themselves codified in contract data. Evisort’s platform is powered by award-winning AI that is purpose-built for contracts and trained on over 10 million documents, thereby driving a differentiated customer experience and rapid, tangible ROI.

We are thrilled to announce TCV’s Series C investment in Evisort. We believe that contracts have been both an under-managed source of risk and under-explored source of value for companies, and that Evisort’s AI-powered Contract Intelligence Platform solves increasingly important pain points for businesses of all sizes, ranging from the Fortune 500 to mid-sized companies alike.

Evisort was founded in 2016 by lawyers and technologists who saw the need for automation in contract management.  The platform started as an intelligent analytics engine that extracts clauses and metadata to index contracts and their contents, making them easily searchable and manageable without manual data entry. Evisort’s AI further contextualizes the contract, indicating what type of contract it is, identifying counter-parties, flagging auto-renewal dates, and more.

More recently, Evisort has been adding workflow capabilities – relevant for coordinating contracting processes and operational workflows across the business. Evisort’s end-to-end approach ensures that all contract data is located in one repository, minimizing security risks, reducing the number of required integrations, and allowing the system to apply learnings from previous contracts to new ones.

More than any other contract management software business we’ve evaluated, Evisort’s AI platform supports a wider range of teams, industries, and use cases. Sales teams use Evisort to drive sales and renewals by reducing contracting friction and speeding time to agreement and revenue recognition. Legal departments use Evisort to drive compliance, quickly find and report on critical information, and act as a single source of truth. Procurement and sourcing organizations rely on Evisort to accelerate purchases, negotiate stronger agreements, and manage supplier risks more effectively. In all cases, Evisort drives efficiency by reducing reliance on manual legal review – a major bottleneck in many contracting processes.

Transforming the future of contract management

Evisort’s Contract Intelligence Platform has three main capabilities:

AI-Powered Contract Analytics and Insights: Evisort extracts data from contracts, produces critical insights, and reports on those insights in an easy-to-use dashboard, so that users can focus on higher value tasks. This contract intelligence is then used to generate workflows across the organization. Evisort is focused on delivering the intelligence layer between core operating systems such as customer relationship management and enterprise resource planning platforms.

Intelligent Contract Lifecycle Management: Evisort provides contract request intake, contract drafting, approvals, version control, and repository (storage, search, reporting) features. Evisort’s platform creates a source of truth so teams can centralize knowledge, collaborate easily, and simplify contract administration.

Central Contract Repository and Integrations: Evisort’s no-code platform lets legal, sales, and procurement teams self-serve, taking the burden off of IT teams and providing immediate configurability. Evisort easily integrates into existing systems to minimize the need for data migration and accelerates deployment because employees can work from the systems they already use.

Why now: A big market waiting for the right end-to-end product

At TCV, we have invested extensively behind the digitization of the legal industry – having backed innovative legal technology industry leaders such as Clio, LegalZoom, and Avvo. As part of our work in this space, we have been closely following the evolution of the CLM market for nearly a decade. In that time, customers consistently indicated a desire to manage both new and existing contracts in the same place – in other words, a true end-to-end platform. Over the last several years, our conversations in the space increasingly indicated that Evisort’s founders Jerry, Jake, and Amine had built exactly that and Evisort’s platform was seeing accelerating adoption in a largely greenfield market.

Evisort customers – which include our portfolio companies such as Netflix – typically start with analytics use cases to understand existing contracts, and then add pre-signature workflow to more efficiently generate new contracts. From there, thanks in part to Evisort’s ease of use, usage often quickly expands to additional teams and stakeholders within their organization. For customers, the results are industry-leading time-to-value, implementation speeds, self-service analytics, and flexibility to apply contract-based insights to a wide range of business functions. For Evisort, a cohesive and forward-thinking strategy appears to have translated into an innovative and fast growing company in an exciting market.

Looking Forward

As we look to the future, we are incredibly excited about the tailwinds strengthening Evisort’s value proposition for its customers. Businesses of all sizes have more contracts and a greater need to manage them than ever before. The compliance and regulatory environment also continues to evolve, requiring businesses to maintain constant visibility into their contract corpus. And companies are increasingly leveraging the data embedded in contracts to drive business processes across sales, procurement, operations, and finance.

Given that robust backdrop, we are incredibly excited to work with Jerry, Jake, Amine and the rest of the Evisort team to maximize the opportunity for AI applications in contract management.