2 min read May 2023 — AvidXchange is a software company that specializes in automating invoicing and payment processes for midmarket businesses. Invest: spoke with Co-Founder and CEO Michael Praeger about the highlights of the past year, the great avenues of disruption and his near-term outlook.
What have been the key highlights for the company over the past 12 months?
We are a leading provider of accounts payable automation software and payment solutions for middle-market businesses and their suppliers. We went public in October 2021. Despite the current stock market dynamic, the process of going public just makes you a better company related to a lot of the rhythms around reporting and raising the bar and the standards related to everything we do. From that perspective, it’s almost like an artificial catalyst to help you be a better business. We’ve also experienced robust growth and believe that the current macroeconomic backdrop makes it easier to grow as other companies look to save, automate and be more efficient.
What challenges are you strategizing around for the near term?
In January, we held our annual summit with the top leaders across the business. As part of our discussions, we reviewed our current level of success and identified areas for improvement. While we are a leader in the middle market, we recognize that we currently only hold a 2% market share. It’s taken us over two decades to achieve this percentage, but we are committed to growing our presence and increasing our market share in the years to come. We believe that significant white space exists in our market and for me, the question is how do we double our market share in the next five years? This is what we’re thinking about in terms of how that relates to extending our existing products, new product innovation and adding talent and skill sets to tackle future growth opportunities. In terms of challenges, there’s a war for talent. Since I started AvidXchange 22 years ago, I’ve always said that culture does matter and is measurable by recruitment and retention efforts. In the 1990s, power was all in the hands of employers and now it’s more with the employees. They can choose where they want to go and what type of company they want to work for. When you get past the compensation-related metrics, it’s all about culture. It’s about the flexible working environment. That dynamic has changed a lot and it’s for the better. It forces companies like AvidXchange to not only be great in terms of delivering our software products but also how we add value to our communities. It’s the best time to be able to see the impact of companies that have a differentiated culture versus those that have not focused on culture.
Where do you see some of the greatest avenues for disruption and what will that look like in five or 10 years?
In the current environment, any business process that requires manual data entry also requires paper-intensive processes. In today’s environment, there are lots of technologies, like AI and machine learning, that can significantly advance, automate and make those business processes more efficient. It doesn’t require new technology. Those technologies are already there on the market. We execute B2B payments, but in every aspect of a company, whether you’re a real estate company on the tenant leasing process or a healthcare company and managing medical forms. Those are significant high return on investment initiatives. There are lots of use cases on how other companies have already been successful in doing this. At AvidXchange, we’ve implemented and helped 8,800 companies across the United States in this business process therefore, we’ve pretty much seen everything. A new customer who hasn’t yet embarked on automation in the accounts payable area — which there are many since the middle market remains slow to adopt these practices and still prefers paper checks — should have very high confidence that in working with AvidXchange they’re going to be successful.
What makes Charlotte a great place to set up a firm like AvidXchange?
It starts with great weather, beaches and mountains. Then you combine those with the talent level that’s in the market already. UNC Charlotte, for example, is offering data analytics and big data-led classes. Also leaning into Charlotte being a banking center, talent is flooding here to support banks with data analytics, data scientists and fintech initiatives. Charlotte’s cost of living is also low and it’s a great place to live. We’ve also seen strong people inflow. We saw a significant migration from New York and Boston and also from the West Coast during COVID. Charlotte is a great place to build a career and have a great life.
What is your outlook for the near term?
In the current environment, we’re leaning heavily on innovation across our products and how we can continue to maintain and accelerate our growth. We’ve been on an incredible growth run for the last 10-plus years. How do we continue that for the next 10-plus years? It gets harder because to grow at north of 20% when you’re a $300-$400 million company is a little different than when you’re a $20 million company. We are looking at growing the market segments that we’re in and executing that plan throughout 2023 and beyond.
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