The average Fortune 500 company has a portfolio of over $212M in Tax Credits and Incentives. As large as this sounds, nearly 50% of available credits and incentives (C&I) go unclaimed each year. Incentify is the enterprise SaaS platform that lets companies manage all aspects of tax credits and incentives. While C&I schemes have been misunderstood, Incentify hopes that its platform will empower corporations by providing transparency and allowing the public to see the benefits of C&I, which includes job creation, verifiable innovation, environmental remediation, and more. Incentify’s clients such as Sony, Kroger, and ViacomCBS manage more than $31B on the platform with projections to reach north of $50B soon.
LA TechWatch caught up with Founder and CEO Laurence Sotsky to learn how Incentify is changing the narrative around C&I by providing analytics, reporting, and compliance in a centralized platform.
Who were your investors and how much did you raise?
We raised $4.25M in a strategic funding round. While we were not actively seeking outside funding, earlier this year, we began exploring a relationship with Ryan LLC. As we got deeper into those conversations both partners realized the potential of a greater relationship. In addition to Ryan, some of our original investors added capital as well. We have not yet taken an institutional round of funding, so technically we are still Pre-Series A but are also well beyond the seed phase as we have multiple Fortune 500 clients on two-year subscriptions.
Tell us about the product or service Incentify offers.
We bring tech to C&I. From discovery and compliance to monetization and audit, Incentify perfects tax credits and incentives (C&I) on the corporate side. We are cloud-based and built not only for US consumption but for any international program. Clients like ViacomCBS, Tyson Foods, Cargill, Kroger, Sony, International Paper, and many others manage more than $31B on our system already. We’re proud of that number and really excited to see it keep growing.
There’s a false narrative around C&I, and it’s hurting people all over this country and the world. That dangerously incorrect story is the one that calls C&I “corporate welfare.” That’s how you end up with the kind of situation that happened with the Amazon HQ2 debacle in NYC…or windfall if you look at it from Virginia’s perspective. There are lots of reasons that this story is inaccurate but the easiest one to understand is that welfare requires recipients to maintain a certain level of need while C&I requires awardees to maintain a certain level of achievement.
Because C&I has been so demonized, we see huge numbers of C&I failing to monetize – numbers that are in the hundreds of billions if not trillions annually in the US alone. The mistake that way too many people make when they hear these numbers goes back to the one about the false narrative: way too many people shrug and say “OK, well this already rich company did not get richer – so what?” That’s dangerously inaccurate because C&I inherently tethers to tangible pro-societal outcomes. Outcomes like jobs, verifiable innovation, environmental remediation – the big activities that we all need to happen for society to keep moving ahead.
So from a business perspective, what started Incentify is simple – there’s a huge need for technology for holders of an asset which numbers in the hundreds of billions if not trillions each and every year. But from a mission standpoint, and what really motivates me, is that making sure that the full impact of C&I is realized not for corporations but through corporations and for communities. That’s our inspiration as a company and my personal inspiration as its CEO.
How is Incentify different?
I would say Incentify couldn’t be more different because there is no other C&I lifecycle technology. While there are solutions for other assets, no other C&I solution exists which can provide clients discovery, management, extensive real-time analytics, a system of record, and all of the areas of need inherent to C&I. There is no other Cloud Solution out there for C&I.
What market are you targeting and how big is it?
The market is massive because really, the market is all companies that have or should have a C&I portfolio. While we currently work with some of the largest companies in the world, the beauty of our solution is that even a smaller company can buy a license or two and work to find, manage and monetize their C&I. Hundreds of billions if not trillions in USD are available in the US alone every year with many times over that amount available internationally. C&I is an extremely significant part of nearly every jurisdiction’s economic policy and apart from Incentify, there’s no real technology that services that market all in one place.
What’s your business model?
We are a subscription-based SaaS with customers paying for tiered functionality and the number of users. Generally, our clients begin with users in the tax and finance department but that rapidly expands to Human Resources, Real Estate, Government Affairs, and Executive Leadership. That’s because C&I is so cross-departmental both in collaborative need and ultimate fiscal impact.
Incentify creates that critical virtual office that enables that collaboration: it centralizes all documents data, standardizes and automates workflows, engages machine learning, provides analytics and APIs into any major reporting tool – Incentify brings the highest standard of SaaS to C&I. You have to remember that various C&I can take 3, 5, or 10 years to monetize – a lot can change in a company over 10 years so standardizing and centralizing all things C&I alone is a major imperative for protecting this enormous asset.
How has COVID-19 impacted the business?
COVID-19 has hit so many organizations and people hard. While we have been fortunate to actually be growing during this time, we are extremely sensitive to our clients’ needs and the greater climate. If there is a silver lining in terms of our business, many CFOs are now driving every department to find new sources of revenue and savings. Companies ranging from 4 people SMBs to enormous multinational conglomerates have come to Incentify since COVID-19 struck.
What was the funding process like?
We are privately funded and were not actively exploring any outside investment, so I’d qualify the process as easier than funding rounds in which I have been involved at other companies previously. The corporate development team at Ryan was outstanding and Brint Ryan himself took a major role in the process. From my perspective, I’d say the hardest thing to get through was how much money we wanted to take. It’s always complicated to counterbalance cash and dilution.
What are the biggest challenges that you faced while raising capital?
Saying no to great VCs! We want to be in the strongest position possible before we take a round of institutional capital in a true Series A. That said, there are a lot of very smart and very persuasive VCs that are interested in being a part of our story and not being involved with them is a very hard thing to turn down. In the end, though, we know that limiting the external investment now helps decrease the dilution for all of our shareholders.
What factors about your business led your investors to write the check?
Not to answer for Ryan, but I think they see the bigger picture for C&I. They know that C&I is at once a gigantic asset for thousands upon thousands of organizations and that no major lifecycle technology has yet permeated the market. As Ryan looks to continue growing and take on the Big 4, having Incentify as their technology provider is a major differentiator. From a high level, that’s what I would guess led Ryan to invest. In terms of the other investment community as a whole, I think they see Incentify as an established technology with multiple Fortune 500 clients addressing a significant total market in a significant asset class.
As Ryan looks to continue growing and take on the Big 4, having Incentify as their technology provider is a major differentiator. From a high level, that’s what I would guess led Ryan to invest. In terms of the other investment community as a whole, I think they see Incentify as an established technology with multiple Fortune 500 clients addressing a significant total market in a significant asset class.
What are the milestones you plan to achieve in the next six months?
We are currently at $31B in C&I on the system and we would love to get to $50B soon – at our current trajectory, I think that we could hit that number by March 2021 or even earlier if things swing our way. As a business, we are obviously aiming for greater ARR and standard business objectives. But I would go back to our overall purpose and say that our biggest objective is to really drive the true conversation of C&I. It is all too often mischaracterized as corporate welfare or some nefarious act of corruption when nothing could be further from the truth. C&I is the embodiment of the public-private alignment structured such that real communities benefit and in some cases, survive. We all need to work together to get through COVID-19 and whatever comes next – C&I is a big part of how we do that.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
Different business models function differently so certainly there is no one size fits all when it comes to raising capital. As far as B2B SaaS goes, I would say that entrepreneurs should focus on building a platform that works well and can sustain itself with minimal outside investment. Limit your spending in the early days so you don’t need to raise significant capital out of the shoot. Focus on driving tangible value to clients and growing in accordance with your base rather than your dream. Listen to your customers! They are the best source of new ideas and will ultimately be the ones who help sell your product to your pre-sales customers if you take great care of them. The allure of running fast is strong but depending on external capital from the get-go can put you under tremendous pressure. That pressure can ultimately warp the organization’s path.
The allure of running fast is strong but depending on external capital from the get-go can put you under tremendous pressure. That pressure can ultimately warp the organization’s path.
Where do you see the company going now over the near term?
The next six months are all about rolling out across Ryan’s client base and continuing to onboard our own direct customers. We also see the US Presidential Election as an opportunity to drive the real message of C&I. After all, as divisive as our political climate is right now, C&I is actually something upon which both sides of the aisle agree. Clinton, Bush, Obama, and Trump have all used C&I to move forward meaningful pro-societal initiatives. We think that is a very meaningful reality.
What is your favorite restaurant in LA?
I love it! Great questions! Number 10 on 3rd Street in West Hollywood. Not only am I a huge fan of authentic Italian food, but I’m also the father of three boys in a massive soccer fan family. Italian Legend, Alessandro Del Piero, is a big hero to my eight-year-old aspiring center forward especially. I love that he’s often in the restaurant and will sit and talk at your table. The Michelin Star chef he brought from Italy ensures the food is always top-notch. Order the Branzino, it’s to die for and try one of their pizzas or pastas for sure!
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