Mauricio Vergara, CEO and co-founder of Kapwork, oversees the company’s operations, sales and marketing. As a former small business owner, he personally experienced the pressure of late payments to growing companies. Later, during Google and Unity, he saw the negative impact of delayed payments on creators, thus stagnating their ability to scale. He began exploring the motivation for better solutions, and began exploring the space – aware of doubt how limited funding options are for small businesses and the challenges of funders effectively supporting them.
This led to the creation of Kapwork, a platform that simplifies revenue-based financing by connecting businesses with capital providers through a transparent and frictionless experience. Kapwork aims to support the next generation of entrepreneurs to help businesses grow by turning future revenue into instant funding.
What prompted you to start Kapwork? How did your personal experience as a Columbia small business owner shape your vision to change the factoring industry?
I used to run a restaurant and a catering business in Colombia. Until today, I remember the first client walking through the door and thinking to myself, “She’s here because I have something to offer. This adds value.” It was a surreal experience that I later verified on Google.
Working directly with app and game developers, I realized that I loved helping people who could create nothing before. Like SMB owners, developers are modern artisans and women, and for me there is nothing more satisfying than helping those who create value and wealth. That’s why I started Kapwork with Pete Thomas. Technology is largely ignored by technology in the entire sector that is crucial to our economy. AI has unlocked so many transformation opportunities, why abandon any boundaries? It was a very intensive question and I was drawn to finally trying to build a company from scratch. As Peter Thiel said Zero to one: “A startup is the best effort you can master”.
You have made invoice factoring the lifeline of a small business. What is the lifeline today and how does Kapwork reshape it?
CashFlow is the lifeline of small businesses without any considerations to give them, many of which go bankrupt. In B2B, it is customary to see extended payment terms that have been reimbursed for 30 to 90 days. Imagine being at the mercy of a large company, waiting to be paid for the services and products you already provide. Without considering providing the necessary working capital, these businesses will not be able to grow and in some cases may even go bankrupt. Factoring has been around for more than 100 years to bridge these gaps, buy invoices and provide capital, but has not yet expanded. For thousands of factors around the world, it is a highly manual, risk-taking and time-consuming process.
Kapwork begins overhauling these actions. We will work on AI and automation to speed up workflows, reduce errors and scale more efficiently. This means more money flowing to the business. Decomposition helps businesses thrive, and Kapwork can help these factors and small businesses rely on them.
Kapwork’s platform includes a self-healing AI proxy. Can you explain in a practical way what this means and how it enhances the factoring process?
KAPWORK works by deploying agents on a large number of vendor portals to extract and populate data. Traditionally, for example, these types of automation are difficult to build when something changes within a web portal and are expensive to keep online. In this case, the whole process creates more headaches than benefits and causes reliability. We must develop a way to prevent this.
When we say our AI agent is “self-healing”, we mean that when an existing Kapwork AI agent causes fatal errors due to some new external changes, it can prevent it from achieving its goal, and the same agent can invoke the AI process to evaluate the content of the change and point out how it can be modified or replaced or replaced to continue working. This feature is what makes Kapwork our durability and we always retrieve the required data. When our current approach breaks down due to changes in the website, we don’t look back and come up with a new approach, but let AI do it automatically for us.
What are the biggest technical barriers to building an AI platform integrated with more than 4,000 supplier portals and financial systems?
The first major technical hurdle is that most vendor management systems (VMs) do not provide APIs, so Kapwork AI agents must be designed to browse the same VMS interfaces used by humans. These interfaces may be unreliable in automated data retrieval, with some changing forms and functions occurring every few months, so we do have to develop a reliable error correction system in our proxy framework, so despite the inherently unreliable environment, the Kapwork proxy is still durable and can seamlessly resolve errors when errors are noticed.
The second biggest technical hurdle is that every VM is different. Although debtors using Ariba and Coupa usually provide the same user interface for data retrieval, thousands of other debtors in the Long Tail do not follow interface standards and present the needs of data funders in a variety of non-intuitive, cumbersome ways. To stay efficient, we have to develop a proxy AI system that can explore portals that have never been seen before and quickly figure out where to get the data you need and how to write a reliable program to get it.
Finally, the lack of API makes it a challenging hurdle to identify responsible password management protocols to facilitate automation. Non-traditional finance is guilty of bad crypto hygiene. We often see multiple parties often sharing various account credentials to prove each other that parties and counterparty are storing the correct data in the right system. Therefore, defining compliant security protocols and facilitating best practices leads to a lot of research and discussion with operators in the field today when helping the industry automate data verification.
How does Kapwork use AI to verify invoices in seconds, which used to take 1-2 days of manual effort?
Because the KAPWORK AI agent works simultaneously, for example, retrieving data from 20 portals at the same time, we can verify invoice data at a large scale. The data can then also be automatically populated into the centralized dashboard for a comprehensive view. This is in stark contrast to most financial teams in today’s verification business, where one can only log in to one portal at a time, find the data you need, download, log in, log in again to their next client, etc., and continue to go to the next VM when the first client is finished. Until today, people have done all this by hand in a continuous manner and through a large number of confirmations, which can take one person’s days to complete.
What kind of data verification or fraud detection capabilities does your AI system offer, and how do they compare to traditional methods?
Regarding today’s fraud detection, Kapwork describes our unique capabilities as “anomaly detection.” We are not applying any professional AI to this problem at the moment, but relying on data summary from Kapwork AI agents to naturally establish how the two companies work together, the amount and expiration date of the value range and whether there are always patterns for purchasing orders related to collection. Over time, KAPWORK can detect possible fraud by displaying recent transactions or sets of transactions, which may not be within the scope of what is considered a “normal” business and alert customers. The human eye and normal processes may miss a lot. This is an area of exploration and we are happy to do more here in the future.
What role does AI play in improving transaction traffic and conversion rates for invoice buyers on the platform?
One factor usually takes one to three months to underwrite the invoice seller. During this time, the seller was still eager for cash, and the factor left its capital idle in the bank. Kapwork’s AI immediately verifies invoice data, gets records directly from the debtor’s system, and provides a reviewed “AP snapshot” that enables credit teams to approve or reject receivable facilities in days rather than months. The system also allows factors to verify invoices from their existing customer base without assuming additional numbers, allowing it to deploy capital faster.
You hold leadership positions at Google and Unity. What are the Big Tech courses helpful when transitioning to Kapwork’s startup life?
In three ways. It helped me realize that I didn’t want to spend more time watching the paint dry, making me a leader, and giving me the confidence to realize that I could always try to figure things out.
In the words of Marc Randolph, “If you’re willing to start and figure it out, everything can be solved.” When I first worked at Google and Unity, I often felt Impostor syndrome. I used to doubt my worth after a more modest background than the Ivy League colleagues I often do, but Google told me that if I were there, there was a reason. When I started to improve in my career, I had the confidence to know that even if I didn’t know what to do, all I needed to do was start. As time goes by, you can figure it out at any time.
Google has also made me a leader. It tells me that nothing is faster than keeping people behind the clear vision they believe. This also helped me understand what it takes to create a healthy environment where everyone can express their opinions without worrying about retribution. There is nothing to help the company grow at a speed, but a team of smart and proactive people centers around a vision willing to challenge your thoughts and commitments.
Finally, Big Tech also helped me realize that I didn’t want to see paint anymore. Hierarchical and embedded benefits are numerous, and it is always difficult to challenge the status quo. In-place systems are designed to reduce risks, and in some cases it will lead employees to become more focused on showing that they are doing good work rather than actually doing the work. I no longer want my life, especially when you see all the developments in the world that have been recently developed, the world is developing at the speed of light.
What is your vision for how AI will further change the financial services industry? Especially in the underserved SMB segment?
Heterogeneity is beneficial to society and harmful to the loan industry. I found this interesting, and the diversity among small businesses makes it difficult for them to find working capital solutions.
Literally, small and medium-sized businesses are unique and make it difficult for them to grow. Just consider the diversity of small and medium-sized businesses. On the one hand, you have a family of hardware wholesalers, and on the other hand, a boutique craftsman bakery. Both are great because their contributions are unique, but these run and operate in a completely different way. Various industries, finance and business models have made lenders unbelievably determined to get them and small and medium-sized businesses browsing through the landscape. So, how do you evaluate different businesses that are not suitable for all approaches? AI has always been the tool to bridge that gap, but it is always expensive.
I think the most interesting thing is that building solutions to these challenges ultimately makes economic sense. More affordable AI will make it possible for the financial industry to build solutions for the highly fragmented and heterogeneous SMB industry.
Thanks for your excellent interview, and readers who hope to learn more should visit Kapwork.
