Ever heard of an exciting, fast-growing procurement company attracting one of the biggest SaaS funding rounds this year? Chances are, you probably haven’t – but that’s exactly what Zip is. In 2020, Rujul Zaparde and Lu Cheng co-founded this innovative startup with the mission of shaking up the enterprise procurement landscape, and their efforts have now culminated in an impressive $190 million Series D funding round. This funding was led by BOND and joined by heavy-hitting investors like DST Global, Adams Street Partners, and Alkeon Capital, marking the largest investment in procurement tech in over two decades.
This massive funding reflects the huge opportunity Zip sees in solving the complex challenges that have always plagued procurement teams across industries. The company is gearing up to expand globally and enhance its AI-driven solutions, positioning itself as the future of how businesses manage their spending and procurement. In an area that’s often overlooked, Zip is quietly emerging as a game-changer ready to revolutionize how enterprise procurement works.
“Getting this funding shows how much trust our customers have in Zip to transform their procurement processes,” said Rujul, Zip’s co-founder and CEO. “We’re all in on innovation. We’re ramping up our R&D, launching an AI lab, and focusing on expanding in regions like EMEA, where we’ve seen over 200% growth in the last year.”
Indeed, Zip’s holistic approach to procurement orchestration has already yielded impressive results for industry leaders like OpenAI, Prudential Financial, Snowflake, Instacart, and Discover. The company currently processes over $107 billion in spend, works with 3.9 million suppliers, and has helped its customers save more than $4.4 billion.
The Procurement Paradox: Too Many Cooks in the Kitchen
At the heart of Zip’s mission lies a deep understanding of the inherent complexities that have long plagued the procurement landscape. As Lu Cheng, Zip’s Co-founder and CTO, explains, the procurement process has become increasingly decentralised, with more employees empowered to make purchasing decisions than ever before.
“Employees often face challenges understanding accounting terms like cost centres and commodity codes,” Cheng said. “The procurement process requires multiple intakes and spans different teams and systems, making it one of the most complicated workflows in all of business.”
This decentralization has been compounded by the growing need to manage a wide range of risks, from cybersecurity and data privacy to regulatory compliance. As Cheng notes, “It’s not just about the dollars and cents of the purchase. It’s about the management of risk. That introduces cybersecurity, data security, ESG, privacy, legal, and IT – all these different teams signing off.”
The complexity of the procurement process varies depending on the category of spend, further exacerbating the challenge. As Cheng explains, “If you’re trying to purchase software, it’s very different than if you’re trying to hire a contractor or bring on professional services. Depending on where you are in the world, you may be under different regulations, like CCPA in California or GDPR in Europe.”
Addressing the Procurement Paradox: Zip’s Innovative Approach
Zip saw all of these issues and created a new approach it calls “intake and procurement orchestration.” It’s essentially a way to simplify and centralize the procurement process for large companies.
“We created a new front-door experience for any employee in the business that needs to buy something,” Zaparde explains. “They go to Zip, answer only the relevant questions, and then see a crystal-clear visual workflow of their request and where it sits between finance, legal, IT, and security.”
By integrating with existing enterprise systems like SAP and Oracle, Zip becomes the “system of engagement” that automates and programs the complex procurement workstream, replacing manual processes like email, messaging, and phone calls.
“We just replace incredibly manual processes,” Zaparde said. “People are tracking this stuff in manual Excel files, and we bring software to manage and automate that workflow.”
This comprehensive approach has resonated with enterprises, as evidenced by Zip’s rapid growth. The company was recently recognized as a leader in the IDC MarketScape: Spend Orchestration 2024, solidifying its position as a category creator and innovator in the space.
Zip product: Intake to Procure screenshot
The Future of Procurement: AI to the Rescue
With the recent funding boost, Zip is well-positioned to take its innovative solutions to the next level, particularly in the realm of artificial intelligence (AI).
“We’re setting up an AI lab to really double down on our AI efforts,” Cheng revealed. “Once we have all the data centralised in one place, we can leverage AI to make assessments and recommendations, automating some of the review processes that have traditionally been manual.”
Cheng envisions a future where Zip’s AI capabilities can provide guidance on supplier selection, security assessments, and other critical procurement decisions, empowering enterprises to make more informed, data-driven choices.
“If you take something like a security review, we can actually leverage AI agents to say, ‘Hey, based on all the data we have about this supplier, here are the specific aspects of the security assessment flagged for review,'” Cheng explained. “The goal is to automate steps in the procurement process so employees can focus on the strategic work.”
This emphasis on AI-powered automation aligns with broader trends in the enterprise technology landscape, where companies are increasingly seeking ways to streamline operations and free up valuable human capital.
The Procurement Renaissance: Elevating a Vital, Yet Overlooked, Function
Beyond the technological advancements, Zip’s success also speaks to a growing recognition of the critical importance of procurement in the modern business landscape.
As Cheng points out, procurement and supplier spend are often the top or second-highest expenses for enterprises, second only to employee compensation. Yet, the function has long been overlooked and underappreciated, often relegated to the “back office” of business operations.
“Procurement really is the backbone that keeps businesses running smoothly,” Cheng said. “Everything from buying goods and services to strategic planning, negotiating contracts, and making the right software decisions – it all flows through procurement.”
Zip’s rise, coupled with the substantial investment from renowned venture capitalists, suggests that the tide is turning. Procurement is finally being recognized as a vital, strategic function that deserves the same level of attention and investment as other core business operations.
“We feel like the category we created around intake and procurement orchestration has really been elevated to front and centre,” Zaparde said. “Especially as we attend procurement-focused events and conferences, intake and procurement orchestration is the number one topic, even ahead of AI.”
This shift in perception presents a significant opportunity for Zip and other procurement technology providers to help businesses unlock new levels of efficiency, cost savings, and strategic decision-making.
Looking Ahead: Zip’s Big Ambitions
As Zip looks to the future, the company’s ambitions extend well beyond the immediate goals of its Series D funding. Zaparde and Cheng are committed to building a “generational company” that can stand the test of time and become the global standard for enterprise business spend orchestration.
“When Lu and I started the company in 2020, we were very clear that we only wanted to work on something that will still be around in 2040,” Zaparde said. “We want to have the privilege of working on something that can be a generational company and that will be around for a very long time.”
This long-term vision is reflected in Zip’s plans to maintain its high-velocity, high-urgency culture as the company scales. Zaparde acknowledges that this will be a significant challenge, but one that the company is determined to overcome.
“How do we scale our team? How do we maintain the culture that we have?” Zaparde asked. “We have a very high-velocity, high-urgency type of culture, and how do we not lose that DNA as we rapidly scale over the coming years? That’s something that keeps us up at night.”
With the new funding, Zip is poised to continue its trajectory of innovation and growth, cementing its position as a leader in the procurement technology space. As enterprises grapple with the complexities of modern procurement, Zip’s vision of orchestrating the flow of business, and empowering companies to have a greater impact on the world, is set to become a reality.
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