Episode Summary
The ‘TECHquila Sunrise’ Series on Supply Chain Now shares the latest investments, acquisitions, innovations, and glorious implosions in Supply Chain Tech every week. If you are looking for a podcast about ‘so-and-so signed a contract with such and such,’ or ‘they just released version 20 of that same technology you didn’t buy last year,’ this is the wrong podcast for you. But if you are looking for real news and innovation, welcome to the Sunrise.
In this episode of ‘TECHquila Sunrise,’ Supply Chain Now Host Greg White provides:
· An update on the impact that the COVID-19 pandemic is having on the size and number of investment deals and strategic acquisitions
· A look inside the mind of an investor that is deciding whether or not to invest and where they place the value, and what factors influence that decision
· An update on the progress and composition of the TECHila Sunrise index
Episode Transcript
Greg White (00:00):
This week tequila, sunrise, we’ll analyze some of the deals getting done in this tough environment. Take a look in the minds of venture capitalists to learn how they value and select which companies they’ll invest in. I’ll share more about how the seismic societal disruption in response to COVID-19 has impacted tech investment funding in 2020, and we’ll view the deal ticker an index of public supply chain tech companies. So listen up
Greg White (00:43):
It’s time to wake up to tequila sunrise, where unfortunately, without the aid of tequila, we open your eyes to how venture investing ticks along with the notable investments, acquisitions innovations, and inevitable implosions focused on supply chain tech every single week. This on Holy hour of the day, if you want to know how tech startup and investment is done, who’s winning who’s waning, who’s whining and who to track and supply chain tech join us every Thursday for another full Linding tequila. Sunrise, Greg white here from supply chain. Now always happy, never satisfied, willing to acknowledge reality, but refusing to be bound by it. My goal is to inform, enlighten and inspire you in your own supply chain tech journey. In case you’re listening to us in the supply chain. Now main channel, you should know, you can now subscribe to tequila, sunrise on Spotify, Apple podcasts, Google podcasts, or anywhere else you get.
Greg White (01:47):
Your podcasts will only be in the mainstream for a few weeks more so don’t wait if you want to keep listening, subscribe to tequila, sunrise. So you don’t miss a thing. Hey, let’s kick off with a couple of quick lessons here. One an early stage startup making big moves in challenging times and the other an investment partner let’s explore them both because they’re working together several months ago, I started working with Paul Noble as an advisor to his really cool procurement startup Verisign. They’re doing great things by the way, using AI to automate data harmonization and inventory optimization for indirect MRO procurement really they’ve saved companies tens of millions of dollars in under a hundred days, really super fast and impressive results. In fact, if you want to see how winners like they are playing in these challenging times, Verisign has a webinar, July 29th at 2:00 PM.
Greg White (02:43):
I’ll include the registration link in the show notes. Paul introduced me to one of his key seed investors, biology. Openeth at Cooper of venture capital, and we really hit it off over one or two cold beers talking about what we thought could be improved in the investment ecosystem for founders Balaji shared Cooper’s visionary founder friendly investment philosophy. And it was a really refreshing contrast to a lot of ECS. And as a serial founder, I really appreciated that they’re early stage investors for companies that are, re-imagining how we work and live that are building emerging technologies for future of work industry 4.0 and now supply chain biology just mentioned to me that they are right now looking to invest in supply chain startups. So I’m sharing that with you because as we all know, it’s tough right now. And if you’ve looked into raising funds, you know what it feels like to have that really moment.
Greg White (03:43):
When you see certain deal terms, you won’t have that problem with the folks at Cobra. There are alternatives now, and I can vouch for biology and the team James McKee and the rest of the team as a good one. If you want to work with them, let me know. I’ll help you make sure you’re ready and get you connected. Or you can reach out directly@wwwdotculebra.vc. That’s K U B E R a.vc pay to contrast the good news and cool investor vibes. We just talked about. Let’s take a look at some stark realities and funding today. Crunchbase just released their North America cued to venture report funding down as expected as their title. Uh, I shared in last week’s episodes, some numbers impacting investment between mid-March and mid June. Now the official Q2 analysis is out. It’s a really deep analysis with some enlightening data from Sophia Cantara.
Greg White (04:44):
I’ll provide just a few highlights since it could take up a whole episode, but I’ll also provide the link to the Crunchbase article in the show notes. So you can dig deep funding rounds under a hundred million dollars. Meaning those in early stage companies were down 31% year over year that’s in line with what the previous report had said just in the mid March to mid June timeframe. So we’re seeing a confirmation of what we thought we would be seeing in, in Q2 also exits meaning acquisitions by other companies, commonly called strategic acquisitions. We’re down substantially in both value. And the number of deals look in truth. Many investors have been waiting around for a recession since early in 2019. So investing trends were largely flat to down. Anyway, it’s just that the S the seismic societal disruption in our response to COVID-19 simply accelerated the trend.
Greg White (05:49):
I’ve put the link in the show notes, so you can see the incredible wealth of information shared in this extensive quarterly report. Now let’s take a look at the deal ticker, even in this unsettling environment, deals are getting done. So this week we had two, 105 funding rounds for 13.1 billion in dollars and 68 acquisitions for 12 point $5 billion. That’s in contrast to last week, 202 rounds for 9.8 and 81 acquisitions for $27 billion. We had some big ones happen last week. And now for the latest on the tequila sunrise supply chain tech stock index, that’s a mouthful, isn’t it? Look, here’s the methodology for the tequila sunrise index. We’ll be waiting the index based on both the market capitalization, the total value of the company and the proportion of that value represented by supply chain tech. So Keith Moore has been really helpful in helping us construct this and identify things like Oracle only gets a portion of their, uh, of their revenue from supply chain.
Greg White (07:07):
So let’s say Oracle at a total market cap of about 168 billion would only weigh in at say, 32 billion. If the supply chain is 20% of their business. So we’re digging into that to get those numbers for companies like Oracle and SAP and Amazon, some of the companies that have only a portion of their revenue coming from what we’re considering supply chain. So generally stocks in the index like OpenText and a plan. Shopify can access SAP and ax, Aspen tech, by the way, a company I cannot recall coming across in over two decades in supply chain. I don’t know what they do anyway. I’m going to look into that. They’re moving in a fairly narrow range, uh, in the last week between fractions down to 7% up, mostly recapturing gains due to the fact that they got demolished on some COVID China trade and general tech scare news over the last week or so now one company that did stand out Manhattan is up nearly 12% in the last week in anticipation of earnings for today.
Greg White (08:16):
So both earnings and revenue are expected to be down around 17%, but investment analysts Zach’s appear to expect Manhattan to beat estimates. Like they have the last four quarters. I don’t know all the market indicators as well as the analysts do, but I am seeing momentum in supply chain, planning, agility, and execution technology. Those texts are in the spotlight right now with COVID-19 causing major disrupt options and companies appear to be accelerating formerly delayed decisions on those types of technologies. So it’ll be fun to see how Manhattan fares today. Okay. So as I preparing the lesson plan for you all this week, I noticed that there were some great venture capital investment lessons in the supply chain that close this week. So instead of build a whole plan, I’m going to tell you about some of these deals, some of these companies, what they’re all about, the amount that they took and give you my take on these investments.
Greg White (09:19):
And we’ll do a little bit more formal lesson next week, but this is a look into the mind of a venture capitalists and how they see these companies as they’re making the decision to invest and how much so price FX, a German provider of cloud native pricing software platform, cloud native just means built in and for the cloud, never an on premise technology, they raised $65 million in series C funding. Remember series C is typically in that venture capital range. This looks like a growth equity type investment, which we talked about before. And I’ll give you a few more updates the round, which brings it up total raised by price FX to 130 million was led by funds advised by apex digital, the growth equity team. There it is of apex partners with participation from existing investor, digital plus partners. And at the same time, this investment was made Mark beef partner of apex digital and Daniel O’Keeffe managing partner of apex digital join price.
Greg White (10:29):
FX is supervisory board pretty typical when a growth equity investment comes in, that could be a minority, a large minority investment, or even a majority investment. They don’t really reveal that in the information about this deal company. We’ll use this new funding to expand and solidify global market leadership position, accelerate their product innovation, extend his partner ecosystem and evaluate strategic acquisitions led by Marsal [inaudible] CEO and co founder price FX provides a suite of cloud based pricing, software tools from price optimization and management to configure price, quote, CPQ for B to B and B to C enterprises of all sizes in any industry. And in any part of the world in may, the company acquired French market leader, Brennis analytics, adding AI to its pricing solution. So here’s my take on price effects. I’m not a pro on the price racing aspect of the business, but it has been emerging as a key tech facility, tater in supply chain, allowing companies to adjust pricing to market demand and price elasticity all the way down to the, their marketing isn’t that strong, but their partnerships like SAP and Salesforce are.
Greg White (11:48):
So that leads me to believe they have solid technology. This is a growth equity funding, which means the founders took some of that 65 million home growth equity. Remember is that round or founders, get to tell, take some chips off the table. Okay. Congrats to the founders. And I hope to get used to their new role as evangelist or special projects and accounts leader. Another company bowl rings up 50 million for smoother checkouts. This San Francisco based company and creator of a checkout experience platform for online retailers closed a $50 million series C round led by West caps. Lawrence Tosi. The round brings total funding to date for the six year old company to nearly 140 million with participation from existing investors, existing investors, Vint capital tribe, capital Glen capital, and human capital alongside new investments from a collection of current and former executives and board members from Magento, Venmo, PayPal, Lyft, Tommy Hilfiger, Tesla, and Lulu lemon.
Greg White (12:57):
The company intends to use the funds to expand operation and its business reach. This company is led by Ryan Breslow, CEO and co founder. They provide a product that offers a checkout experience front end, along with all the full stack features and integrations that checkout touches. It integrates with e-commerce tools, shopping carts, and payment processors, including listened to these names. Big commerce, Magento, woo commerce sales force, commerce cloud PayPal, Apple pay after pay Stripe and Braintree with more coming this year. Customers include Badgley. Mischka Cara Loha DDA, hyper ice puppy spot. And polywood. So my take on bolt, first of all, cool name, love the movie. Great dog. Good dog. Anytime look, anytime you see a significant number of previous investors coming in for the next round of investment, they are seeing something good. So investors, when they initially invest in a company will typically have what they call reserves additional allocated capital for companies they put money into so that they can continue to participate if they like the way the company is going.
Greg White (14:16):
And when they doubled down like these are there’s reason to believe there’s significant upside here, keep an eye on bolt. I can’t help by the way, notice the absence of the biggest player in e-comm checkout experience Shopify listed in their partner integration. So their play is likely to enable all these other tool sets better competitiveness versus Shopify. Look, any of you who know me know I’m a big fan of competition. So I’m liking this player and their challenge to the established leaders. Next is crisp a New York based food data company. They closed a $12 million series, a round of funding. So that’s their first real venture capital round. Remember post seed round this round brought a total funding to 24 million was led by first Mark capital with participation from investors like spring and swell, spring and swell capital. Uh, the company intends to use the funds to expand its supply chain technology offerings and build an open data platform.
Greg White (15:21):
Connecting thousands of companies across the food industry founded by [inaudible] who previously founded first market supported tap pad acquired by Telenor for $360 million. And also thumb play. Some might know as iHeartRadio. Chris works with food companies, including suppliers, producers, brokers, distributors, and retailers to gather and verify data, integrate hundreds of separate data sources break down the silos, analyzed data and provided recommended actions that result in less food waste and more profit. Great cause this cloud platform brings in all of the sales data, standardizes it and delivers critical insights and alerts about sales, inventory levels, products, locations, and more in order to optimize supply and demand. This company has had rapid growth in several areas since publicly launching the platform, which wasn’t that long ago, by the way, its initial success in the produce and dairy industries has expanded into nearly every vertical, including beverages, bakery, CPG, flowers, meat, and poultry.
Greg White (16:33):
Current customers include brands such as Gilberts craft sausages, Brazy bites, new Ono’s Creamery, rowdy bars, and good culture. My take on crisp here’s the bottom line. This is not a new application for this industry. Not by a long shot. People have been in some measure, accumulating and normalizing data in the food supply chain. So there are a lot of solutions that have been there, done that in the industry for some time. The interesting thing, and what makes me think there’s something worth seeing here is that this is a serial founder who’s been successful before, who appears to have convinced the industry players to share data. And that’s something that’s really unusual in this market. Even the solutions that came before struggled to pull this off. So repeat founders often have a knack of identifying opportunity. It’s really a gift, an insight that is almost intuition and one that really makes money.
Greg White (17:36):
Look, you learn a lot from having done it before. And investors love to bet on a previous winner, which is why this company is getting money. In fact, investors are so good at betting on a previous winner. I bet every one of them would have picked Patrick Holmes right after he won the super bowl. A couple of other deals, not as much learning here, but notable because it’s good to see that money is being spread around. Tophi am a London based, uh, Imperial college spin out that optimizes product designs for three D printing raised a million pounds in seed funding, a Zio tap, a global provider of customer intelligence raised $42 million in series C funding. So either a second or third venture round or possibly a growth round, they don’t go into detail on this particular company and track street, a Santa Barbara based brand protection.
Greg White (18:34):
Software’s a service platform close 5.1 million seed two. Remember we talked about seed plus funding rounds. So this is their second seed round. So you’re getting a good flavor of all of the ways that companies can invest and the ways that investors, or at least this investor looks at them. So if anyone has another point of view knows a little bit more about any of these companies, I’m glad to hear it, but knowing what little I know about these companies, this is my take on those. And this is what I think we can take away from how those companies have been funded by investors. All right. That is all you need to know about supply chain tech for this week. Hey, we’re considering a couple things like a monthly live stream and possibly moving the show to video. So of log to make the tutoring a little bit more easy to understand accessible.
Greg White (19:32):
So let me know your thoughts on that please, and do not forget to get to supply chain now, radio.com for more supply chain now, series interviews and events. And of course, every Monday, I want you to get your buzz on with me. Join 10,000 or so of your fellow supply chain professionals for the supply chain news of the week at noon Eastern time on Mondays with Scott Luton and me, and remember to keep an eye out for more series that we’re spinning off. The main channel, for instance, supply chain is boring or is it anyway, Chris Barnes, great series. He finds some of the foundational leaders and some really interesting people. So I guess technically supply chain, ain’t boring. We’re also about to start a new blog series with Jamie Alvidrez. If you don’t know who he is, where have you been? Jason is going to talk about transportation and just general goodness in supply chain, always up this guy. So you want to tune into that one. And of course, Karin bursa and I go into a deep dive into supply chain tech solutions. So we’re going to talk about those and how
Greg White (20:48):
They impact business on tech talk. Hey, if you’re listening and you haven’t subscribed, please commit already subscribed to tequila, sunrise, wherever you get your podcasts. I sure appreciate it. Thanks for spending your time with me and remember acknowledge reality, but to never be bound by it.
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