Palturai started as a conversation between friends. Now it is rapidly expanding across the globe.
Tilo Walter remembers clearly the moment Palturai became a reality. It was back in 2014. He and his friend Hans-Dieter Greb were sitting in a bar, chatting about an idea they’d been discussing for a while. Essentially, they saw a way to use big data and artificial intelligence to reveal previously hidden insights about business networks. The pivotal moment came when Walter asked what it would take to create a functioning prototype.
Greb replied that it would take three months and €50,000. “And I said, ‘Okay, then we go for it,’” Walter remembers. Seven years later, the German RegTech scaleup has just expanded into Austria and the US and achieved growth despite the pandemic. Today Walter serves as the company’s CEO and Greb as its CTO. Petra Kaul, Managing Director & Chief Product Officer, and Frank Broeker, Senior Advisor, were early supporters of the concept as well.
While the conversation in the bar triggered the push to hire developers and buy data to develop the minimum viable product, Palturai’s origins began earlier. The founders had previously worked at a German credit bureau. One of their projects involved network analysis and discovering how graph databases work. “We created a prototype at the credit bureau, but support wasn’t available for it there,” Walter recalls.
The core idea behind the startup is to revolutionize how companies analyze data, make decisions and do business – by unearthing the hidden connections within their own networks. “We founded Palturai because we saw hidden value for the business world of how to better understand customers and business partners and their networks,” says Walter. “Organizations often think that acquiring more and more data about those entities is the holy grail. But all that data still shows individuals and companies as isolated entities, not as part of a network of relationships. I believe it is critical to understand the relationships of business partners and their role in every companies’ individual ecosystem. This new way of looking at legal and business relationships can be applied to compliance and risk and fraud, as well as research, sales, and data quality use cases.”
In short, Palturai’s solutions offer a deep, networked view of the global economy and the interconnections between individuals, companies and other entities. These connections could be between people and institutions, shareholders and companies. The scaleup provides clear, revealing and actionable insights about those connections, enabling businesses to stay compliant and avoid falling victim to financial crime.
“All organizations benefit from transparency across their business networks and access to information about the people and entities they do business with,” Walter explains. “The Palturai BusinessGraph solutions allow companies to understand in great detail who they are doing business with and how close the entity may be to a trouble spot like a bankruptcy, illegal activity, or country risk. Palturai provides transparency into the interconnections of global individuals and organizations and allows companies to discover paths, structures and cross-connections which can be used not only to reduce risk, but to enhance opportunities as well.”
Having initially bootstrapped the venture, the Palturai team soon convinced angel investors to back the startup. Armed with an influx of capital, the startup began to grow.
“The first MVP was developed when we received data from a major German bank,” Walter explains. “They gave us an Excel file with 30 customers, 30 prospects, and 30 others – and we showed how they all relate to each other. We had no data, so I did the research manually, typed it into an Excel file and we created a visualization.”
The bank was impressed and that kicked off fast growth. “The challenge was that the response to the first MVP was so good and then the customers wanted us to deliver,” Walter recalls. “It was a problem because we sold the first product without yet having data sets or a system. And then we were invited to a fair at a huge German bank where you present a live demo. For us that meant that someone could ask about a company, and we type in the names and show something. It was really amazing. So, we just started. We had to deliver quickly, and as we grew the quality of the data and the product improved as well.”
Another milestone was reached in 2017 when Palturai raised €1.5m from investors. “We were self-funded until that point,” Walter says. “At end of 2016 one of our cofounders died – our head of data. So, then we had nobody taking care of the data, which was a mess. I took it over and we determined that it was best to hire more people. That was the reason we looked for investors.”
“We had funding rounds in 2017, 2018, 2019 and we finalized two investment rounds in 2020,” Walter says. “It is especially gratifying that we managed to acquire significant investment in these turbulent times because it demonstrates that people recognize the value of our solution and trust in our vision for the future of business networks. As we took on new investors, we also adjusted the Palturai’s governance. We now have a supervisory board for consultation and support which has had a very positive affect on developing our future strategy for growth.”
Despite the coronavirus crisis, 2020 proved to be a big year for Palturai as it expanded the business with new offices in Austria and the US. “Our introduction in North America and Austria is a big step forward in globalizing the company,” says Walter. “It brings us closer to the realization of our vision of empowering companies to capitalize on the value of global business relationships. We believe this will fundamentally change processes and the way companies think. The US is particularly important strategically and complements our partnership with SAP.”
The expansion plans also came with a name change. Although operating under the name Kantwert from launch, the enterprise’s leadership felt it would not work on the international stage. “The new name was not only an absolute necessity for our internationalization, but it is also a symbol of our evolution from a small startup to a successful tech company,” Walter says. “The company name is inspired by the work of Hungarian mathematician Pál Turán, and underscores Palturai’s specialization in graph intelligence.”
The company collaborated with an agency to develop the new name and branding. “The seven connected nodes of the P in the Palturai logo symbolize our vision to connect the world,” he says. “The number is based on the theory that every person is connected to every other person in the world via an average of six other people. The number seven is also auspicious within many cultures and has mystical properties in myth and folklore.”
Of course, Palturai, along with many other businesses around the globe, was affected by Covid-19. “Like most companies, the pandemic forced us to adapt quickly to remote teamwork and increased our reliance on technology,” he says. “As a globally dispersed technology company, tactically this was a fairly smooth transition. It was immediately clear that some of our planned sales revenue would be affected, particularly in the new North American office. Our planned introduction activities at major conferences and trade shows there were cancelled, and many potential customers were not able to work. We conducted strict cost management methods and developed a code of conduct of how to handle funds. Basically, we tightened our belts and carried on with our core business strategy – and adapted our marketing, presentations and interactions for the digital space and virtual events.”
At the same time, the company was able to support more customers in new ways with digitalization, boosting its reputation. “To sum it up, it had not so much influence on us,” Walter says. “Some positive outcomes, others negative. But overall, I would say everything would be much better without Covid-19 for us – and for everyone.”
With the growth and progress made over the last year, Palturai is now looking towards the future. “What is next is more integration with our software partners, and really scaling up in North America,” Walter concludes. “We’re close to introducing completely new applications of the Palturai BusinessGraph. As we expand within the industries our customers are involved with, we find novel uses for the technology.”
Copyright © 2021 FinTech Global
