Leading Tennr’s $3.25M Seed Round: An Investment in Founders

When we led Tennr’s $3.25M seed investment in May 2023, the company was still iterating on product and didn’t have any revenue. Eight months later, Tennr surpassed $1M ARR. The rapid growth trajectory is a testament to the team, the company’s focus, and the urgency of the problem they’re solving.

Tennr is an automation platform for healthcare and financial services operations. It’s building in a space that I’ve studied for nearly a decade—RPA (robotic process automation). In the early 2000s, RPA promised to replace mundane and repetitive tasks with software bots. The industry had isolated cases of success, but overall adoption plateaued, falling short of becoming the enterprise-wide solution McKinsey prophesied in 2017 and 2019. It’s estimated that 30-50% of RPA projects fail, and even if they succeed, scale is difficult: only 3% of organizations scale the digital workforce with RPA. 

Up until recently, the vast majority of RPA solutions used rules. They were brittle, costly to implement, and lacked AI. Even the ones that used AI only dealt with structured data (like spreadsheets). Recent advances in LLMs have led to a huge change in the industry. Today, LLMs can analyze unstructured data like complex documents, code, and emails, opening up the possibilities of what can be automated—and we believe 10x the market opportunity as a whole. 

Investors recognize this, which has led to some recent frenzy. But I have personally been (and Foundation Capital as a firm!) investing in these RPA companies for years: I invested in business procurement automation tool Tonkean in 2019, and my partner Ashu Garg, invested in Ikigai in 2021, an AI platform for structured data. We also have another investment in stealth. These companies are able to focus on one or two processes and do them really well—and at a time where the technology is advancing, and more and more processes are ripe for automation, focus is how winners will emerge. 

Before investing in Tennr, we spent eight months helping the team sharpen that focus. 

They were obsessed with automating work people hated doing, but each time we met with Co-Founder and CEO Trey Holterman, he had a different approach that wasn’t quite working. We turned him down multiple times, but it was clear he and the team were maturing quickly. They iterated to understand what created value for customers; in one meeting, Trey told us he’d learned customers were so interested in Tennr’s approach that the company could charge $500 for customized product demos. In a short time, the team went from struggling with GTM to turning a demo into a revenue stream. 

In another meeting, we brainstormed product positioning, realizing that not all customers were getting the same value by automating workflows. Healthcare and financial services did, so that’s where they focused. It’s an industry with massive document-processing needs—billing, claims, referrals, explanations of benefits, PDFs, hand-written notes—which takes a lot of time because the information is messy and input is done manually. Breaking down the automation steps was a process Trey and Co-Founder and CPO Diego Baugh recognized; as former professional rowers, it was like they were breaking down a training regimen. 

Foundation Capital invests in amazing founders. Trey, Diego, and Tyler Johnson (CTO) were that and more. They brought innovation and dedication. We supported with expertise and networks: helping establish Tennr’s seed positioning, building its team, introducing them to customers, and finding advisors and investors. An early-stage company’s success is built on its founding team—and we’re there to support them. 

Looking more broadly, there’s a sea change on the horizon in the RPA space and of applying AI to verticals. The combination of new technology and rote processes are leading to the emergence of new possibilities. If you’re an ambitious founder thinking about what’s next, I’d love to learn more about what you’re doing: jchen@foundationcap.com. It’s never too early.