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April 20, 2021

Why QED Invested in Payhawk

In the latest installment of the series, QED Investors Partner Yusuf Özdalga explains why we led the $20 million Series A round in Payhawk, a Bulgarian-born payments and expenses management platform.

Being very much a child of the eighties, I am fortunate enough to have witnessed many of our science fiction fantasies from that period become real. There are countless examples here, but one striking example is self driving, talking cars – and, yes, you guessed it – I am talking about Knight Rider here.

While the Teslas of today do not leap into the air quite the way KITT used to, and talking to Alexa or Siri one does not get the same kind of relationship and life advice like that was generously doled out by the legendary black Pontiac Trans Am, let’s face it, we are pretty much almost there.

The concept of the self driving, intelligent machine understandably holds a deep fascination for many – and in the fintech community the corollary vision is very much being able to put your money on autopilot. There are different interpretations here, but we can imagine getting a scolding look (or perhaps deep vibration) from our handheld devices as we reach for that extra pair of shoes we know we don’t really need in the first place.

Not surprisingly, tech companies big and small are working on various aspects of this vision, and while there is certainly plenty of opportunity here to create the first truly intelligent money assistant in the consumer space (we have some strong contenders in the QED portfolio such as Albert), there is also an equally great, if not greater, need for this in the world of businesses and large corporations.

In your typical company, there is that trusted individual called the CFO, that is entrusted with the proverbial strings to the purse, and sits there overseeing the ebbs and flows of money coming in and leaving the company’s bank accounts.

It is their responsibility that the bills get paid on time, that the employees of the company have the financial tools and resources needed to conduct their day to day activities of making and selling goods & services, and that the financial infrastructure of the company runs seamlessly.

A well functioning CFO organization can be the differentiator between success and failure for fast growing companies. This is even more important for innovative companies that are growing fast, and looking to scale across several geographies. These growing organizations need a finance function and back office support that is as innovative as the core product they are creating to continue fueling the rocket ship.

At QED, we believe that this vast set of activities that CFOs manage, with everything from expense management, KPI tracking, bill paying, and all those other financial back office activities is an area that is ripe for more and more automation over time. And observing our investments as well as the market over time, we have noticed that the sheer number of big companies created in the SME and corporate back office automation space is truly impressive.

To this end, we are very happy to announce our investment into Payhawk today – a company that we believe meet all three criteria for success in this space, and is positioned to grow into the preferred choice of CFOs across the globe as they look to put their back office on autopilot and supercharge their operations.

These three criteria are having product and tech in their core DNA, being regulation agnostic, and being able to scale very fast across international borders. Some more thoughts on these characteristics is unpacked below.


Firstly, the best players in this space need to be very much product and tech led. In the end, it is a crowded marketplace, and there are lots of generic technologies out there that can be put to good use to automate many back office tasks.

But as with any good tech product, the devil is always in the detail, and we find that the best companies are the ones that really obsess about the customer journey and the best technology to deliver it obsessively. Automation is simple – automation that offers a transformative experience for its users is hard.

Regulation Agnostic

Secondly, we find that in the business of back office automation, it is very important to be regulation agnostic if one wants to be able to scale like a true tech company. This means that it is preferable not to cross the dual boundaries of bank accounts and local accounting regulation. Banks are made to keep your money safe, and there is not reason to try to challenge them on that front.

Similarly, local accounting rules can be complex, so it best to do the automation up to the pre-accounting level, and then leave the exact accounting treatment to local players that know that better. Now this does not mean that there is anything wrong with being a neobank or a tech driven accounting software, but if you want to scale rapidly, it best to stick to the back office automation only.

International Scalability

Thirdly, and as a direct result of the point above, we see that the best companies can also scale very rapidly across national borders. Again, this is a direct consequence of choosing to tread a path of not touching banking and local accounting, but in addition to that, it also requires affirming and choosing international scalability as a true north star. After all, strategy is very much about what one says no to, and affirming publicly and loudly what one stands for.

A lot of product design choices then flow from this, and the end result is the company that fit this criteria end up becoming ideal choices for any company with international operations.

So in a nutshell, this is the story of our investment into leading Payhawk’s A round. And before Tesla figures out how to get their cars to jump (to be fair I recall seeing a photo of one is space) I promise to write an update to let you know how the journey is progressing.