Candex is a fast-growing payments company with operations in the US and Israel and customers all over the globe. They allow Fortune 500 companies to pay 10,000’s of long-tail vendors. Those small vendors receive 80% of the large corporations’ number of payments but less than 20% of their overall dollar spend. It’s a procedural nightmare for these large companies, particularly around compliance and taxes. Candex simplifies the process.

NFX led Candex’s seed round. The company just announced their Series A, led by Altos Ventures, also the lead investor in Roblox and Outdoorsy (which NFX also seeded Outdoorsy).

When we were Founders ourselves, we rarely got an inside look at how investors made decisions. That’s why for the benefit of the Founder community we’re making known the three reasons we invested in Candex at Seed.

1) Unusual knowledge

This team has been working on this problem for many years, and knows esoteric invoicing information few know: the different workflows within procurement departments; the compliance and tax rules in 100’s of payment types and jurisdictions; how to facilitate delicate software rollouts in complex, dynamic procurement organizations, etc. It’s not a topic many people are passionate about, but this team is. They’ve done the work of coding their knowledge into software figuring out how to actually support change management inside large finance organizations.

2) Proven sales process to Fortune 500 customers

We invested in Candex’s pre-seed because of the team and the idea, but we led their Seed with $2.5M once they closed one big customer — Dell — with what looked to be like a repeatable process. Since then, it has proven to be repeatable, with Sanofi, Roche, Cargill, Colgate-Palmolive, 3M, L’Oreal, Danone, and many others coming on board the Candex Network.

For us as investors, we can confirm that these Fortune 500 companies have chosen Candex to handle vendor payments because the system must be what they need. Further, other potential customers should have more confidence in choosing Candex, reducing the sales cycle. This has proven to be true.

3) Network effects

As the number of Fortune 500 customers goes up, they each bring in 1000’s of vendors into the Candex network. And as the vendors get bigger, many of them start paying money to Fortune 500 companies, making the network go both ways. Candex starts as a workflow SaaS product for payments, then bridges into a market network, and potentially a direct network… the possibilities for invoicing are staggering.