Founders: Oded Zehavi and Eran Katoni
Investors: Alpha Wave, Tiger Management Global, TLV Partners and Entrée Capital
Year founded: 2018
Employees: 150, of which 100 in Tel Aviv
Capital raised: $123 million
Revenue run rate: $40-50 million (estimated)
The global pandemic made one of the biggest problems in company management particularly painful: employees scattered in their homes across the globe, making important decisions and using their company credit cards without adequate supervision and control. They don’t lack justification for doing so: booking business trips, purchasing software for development, management or design, and paying suppliers. Each purchase has its own good reason, but the CEO or CFO is not always made aware of it, nor does it necessarily align with the organization’s goals or budget.
For the fast-growing high-tech companies of the Covid-19 period, which recruited many employees and focused on growth at any price, a solution like the one offered by Mesh Payments - founded by PayPal and Payoneer veterans Oded Zehavi and Eran Katoni - was needed more than ever before. Instead of using the CFO or CEO’s credit card, Mesh offers a separate virtual company credit card to each employee, sometimes even several cards per employee for different purposes, such as multi-channel marketing or managing different suppliers. Each such card is issued for different purposes, with a different order of priority, and different credit lines, but are all managed using a single program that allows for transparency between teams, and, above all, better supervision by management.
This year, with the growth-at-any-price trend behind us, Mesh is benefiting from a new trend: cost savings and budget cuts. "We’ve turned a product operating in an area that’s hot to a product that solves a significant problem," says CEO and co-founder Zehavi. "Companies want to save, and even though they may be cutting costs by between 20% and 50%, the rate of companies joining our service has remained constant. Companies that had delayed transferring their payment management system to us have actually accelerated their transitions, and today we are growing at 2021 rates."
Underlying Mesh’s growth during hard times is the need on the part of high-tech company finance departments - perhaps the last to benefit from genuine innovation - to stop chasing after out-of-control spending. "We are eliminating this problem," says Zehavi. "The system helps them put an end to waste, and the CFOs get peace of mind. There’s a new generation of young managers in senior positions who no longer need an explanation about a product like ours. They just get it."
Winning investor confidence
The fact that product installation is free-of-charge with no monthly fee is an advantage. Mesh derives its income derives from a commission on the processing fees charged for each credit transaction.
Mesh has been validated by investor confidence. In stark contrast to prevailing industry trends, the company managed to increase its value last September. Even Tiger Management Global joined the funding round, despite being among the funds most damaged by the economic crisis, and continuing to sustain huge losses on its public and private investments, and suffering from partners leaving. Tiger held on to its investment in the Israeli company largely because even during a period of economic crisis, Mesh has managed to triple its revenue, apparently to some $40-50 million dollars a year.
At the same time, Mesh does not feel immune to the crisis. Like the vast majority of high-tech companies, it too has stopped recruiting new employees. This is not surprising, since Mesh began its journey as a software supplier mainly to high-tech companies such as Monday.com, Riskified, Papaya Global, and Melio. "Fortunately, we use our own product," says Zehavi. " We have total visibility of the entire organization, and we can see that the company is now in a position of having no excess fat."
Only 2% of the market uses similar products
As part of the $60 million funding round last September, Mesh decided not to cut back on innovation, but to expand development and, after years in which it was comfortable serving medium-sized companies, to aim its marketing strategy at giant corporations. For those huge enterprises, it is currently developing payment management systems for departments such as business travel and technology procurement. Among other things, it has announced a payment management partnership with Israel’s Papaya Global.
Mesh is optimistic about 2023: the coming year will be chancy for those competitors that have not managed to raise large amounts of capital, while the market is still mostly greenfield: only 2% of the target market has adopted similar products, and the company believes it will be able to compete successfully, not only in payment management systems, but also against similar systems provided by giants like SAP and American Express.
The Most Promising Startups rankings are part of the annual Enterprise Technology Summit held by "Globes" and JP Morgan.
Published by Globes, Israel business news - en.globes.co.il - on December 14, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.