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.
Here are some of the highlights of this episode of ‘TECHquila Sunrise’ with Supply Chain Now Host Greg White:
· Reporting updates: Manhattan, Amazon, Shopify
· Investment updates: Singapore-based Insider raised $32 million in series C funding with a growth equity deal; Mercado raised $2.5 million in funding with full support from all of their seed investors
· Emerging from stealth mode: Logistics, warehousing fulfillment and supply chain operations ‘Robots-as-a-service’ provider Dexterity
Episode Transcript
Greg White (00:00):
This week at tequila sunrise, it’s a double shot with big companies and small making big deals. It’s been a really active week and I’ll show you how a robotics company raised an unbelievable amount of money in its very first funding round. After coming out of stealth mode, you’ll learn about one acquisition by a big player, big bucks for others, and some sneaky, smart startups, all that, and the supply chain tech index. So listen up, 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 tech, startup and investment has done, who’s winning who’s waning, who’s whining and who to track and supply chain tech.
Greg White (01:14):
Join us every Thursday for another blinding 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. 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, do you think supply chain is boring? Lots of people do. My father in fact, was a retail merchandising VP back when a company called Kmart actually mattered and there was no such term as supply chain, believe me.
Greg White (02:11):
He thinks it’s not only boring, but also that procurement purchasing logistics, warehouse and transportation, people are a pain in the ass. You might feel the same way, or you might just be awakening to this thing. We love to call supply chain wondering what all the fuss is about or hoping to increase your supply chain IQ and impress your friends at your next zoom happy hour. And you want to know how you can learn more about it? Well, if you want to build your knowledge in supply chain, you need to listen to get this supply chain is boring. That’s right. Supply chain is boring with Chris Barnes. Chris is a practitioner. He knows distribution logistics, apex, and about a hundred other acronyms, but more importantly, Chris knows the who’s who that got supply chain. We are that point us to where we’re going and take us to the next level in supply chain practice.
Greg White (03:05):
He interviews creators, inventors, and innovators that made supply chain. The facet negating Lee, boring discipline. It is today. Chris challenges, every guest to convince him that supply chain ain’t boring. So you know what I’m going to say, listen up and subscribe wherever you get your podcasts. Let’s see who’s up to the task of proving supply chain. Isn’t boring. Hey, this is another supply chain now joint. So be careful. You might just find boring, interesting a really big week for deals. And there are plenty for us to talk about. So let’s see what’s going on in supply chain tech this week. First, let’s start with the deal ticker this week 238 funding rounds for $6.8 billion 76 acquisitions for 13.8 billion, both numbers down from the previous week in terms of dollars and about level in terms of the number of rounds. So activity is still going on.
Greg White (04:08):
It’s good news. Alright, look, I’ve been promising the tequila sunrise supply chain tech stock index for a while. Now, can I confess a bit of frustration putting together this stock index? I got to say a bit over my head here in terms of finding a tool that compiles tracks and reports the index. And I’m just not that motivated to make it happen in Excel. That’s my confession in any case, I’ll get there. I promise. But for now let’s focus on a couple of things. Manhattan reported earnings just after episode five came out last week and as predicted by Zach’s they beat estimates again, they’ve hardly been rewarded though, as their stock has staggered now is down over four and a half percentage points since last week. I wish you could hear me shaking my head, the stock market, right? Shopify reports on Wednesday after recording, but before release of this episode.
Greg White (05:09):
So check the markets, Amazon reports Thursday. So keep your eyes open for that. That’ll be later the day that this episode comes out, what a week of deals this week, a couple of interesting deals for companies I’m familiar with. We’re probably all familiar with, let’s talk about some up and comers first and we’ll close with a blockbuster, a round for one company. Hold on for that big one. So insider a Singapore base SAS multichannel experience orchestration company. That’s a mouthful raised $32 million in series C funding. So this is a growth equity deal. Remember so congrats to the founders. Who’ll take some duckets home and get some new duds on orchard road. The round, which brought total funding to date to $47 million was led by Riverwood capital and was joined by Sequoia Wanda and endeavor catalyst in conjunction with the funding vice president at Riverwood. Joe Pino is joining insider’s board, pretty typical for a growth equity round like this.
Greg White (06:19):
Here’s what’s cool about this company. Insider provides an AI powered platform that enables enterprise marketers to connect customer data across channels and systems predict their future behavior. And with an AI powered intent engine orchestrate and deliver individualized experiences to customers. It’s also worth noting that this approach of, as I say, forecasting, the customer needs to transfer from marketing. Who’s been doing it for a while to supply chain, to planning, inventory optimization and agility. Don’t worry I’m on that. You may see that in the market soon enough Mercado, a Dallas, Texas based international supply chain platform connecting global supply with global demand, raise $2.5 million in funding. This company founded in 2018 and led by Rob Garrison, their CEO and founder Mercado provides an international supply chain for importers to improve their business operations drive greater automation, collaboration, transparency, and predictability, lots of keywords there. This round though led by iron spring, which was joined by new investors, supply chain ventures company.
Greg White (07:37):
I’ve not heard of, but I’m going to have to take a look at this. Investment comes after Mercado closed at 3.2 million seed round in November, 2019, led by live Oak partners with participation from schematic ventures, story ventures and amplifier. Here’s why this is interesting. I’m saying this in all capital letters, all of the seed investors who had previously invested in Mercado participated in this round with full support. That’s big. That shows an incredible amount of faith in the company, in the marketplace. And particularly in the leadership team though, they will have a new board member, uh, iron spring ventures managing partner, Thai Findley will join the board. Here’s another interesting freight tech smart hop drives a new truck dispatch tool with a four and a half million seed round smart hop secured the round to develop a tech enabled dispatch tool to help small trucking companies grow their businesses.
Greg White (08:44):
The seed round smart hop’s first venture funding was led by the way, leading an investment round. Here’s a lesson for us. Leading an investment round means writing the biggest check. That’s how you lead. And usually the lead investor in any investment round is who takes the board seat. If a board seat is given. So this first venture funding was led by equal ventures with participation from gray Croft and Los Olas VC. The investment will be used to build out the company’s team, particularly engineering and marketing, pretty common at this stage of company, especially engineering and the founders have some history with big players like Nestle and Latin America. This quote from Guillermo Garcia CEOs is since 2018, we have really been testing the waters last year was about building the technology, talking to customers and iterating our message. Then we went through Techstars in New York to understand our business model love to hear that getting outside guidance is always a smart move by founders and tech stars is a great incubator slash accelerator organization to help companies get to the next level.
Greg White (09:59):
Okay, here come a couple of the big ones, Scottsdale Arizona based blue yonder, formerly known as JDA software. I wish you could see me shaking my head acquired Yon tricks, a SAS provider of commerce and fulfillment microservices. The idea there being to combine Yon tricks, real time fulfillment systems with supply chain planning, forecasting and fulfillment solutions by JDA blue yonder to power commerce. The amount of the deal was not disclosed. It is worth noting here that blue yonder in may took an estimated $1.1 billion investment from Panasonic valuing blue yonder at 5.5 billion post-money meaning after the investment and giving the electronics maker a 20% stake. So there’s value there. I don’t know how big [inaudible] is. They really hit the market. It seems like relatively recently, but they did land target and Petco, Nike, and a few companies that are, um, fading, no fault of their own JC Penney.
Greg White (11:12):
And I can’t remember what the others were. Okay. We’re going to go deep on a couple of deals this week. So there are some lessons in these deals. Um, one is, if you haven’t had your head buried in the sand freight waves, and if you don’t know who freight waves is there a daily media streaming network and a data provider for the global freight market Friday last Friday raised $37 million in two rounds of funding. So we’ll talk a little bit about how that happened. The Chattanooga based startup SAS platform, sonar provides data intelligence and analytics to transportation and logistics providers, shippers financial traders and analysts. So they can make data driven decisions on exposure and pricing. Kane partners fund led the round providing $30 million in capital for growth opportunities. The Cain partners fund investment comes after an unreported insider 7 million investment round that took place in April.
Greg White (12:19):
When leadership chose to raise funds from existing investors, eight VC pro logis Fanta Nolis Hurst revolution, ascend Pritzker, and Craig fuller himself. The two new rounds give freight waves, a total of $75 million in capital raised since its inception in 2016. Freight waves. Last venture raise was in February, 2019 at 21 million series B round led by eight VC. According to Crunchbase data, Freightways said Kane partner’s investment was a minority non-control investment. This is relevant, a minority non-control investment, and that the funds managing partner and co-head of growth equity Nishita Cummings will join its board common. For, as I said before, for the lead to join the board interesting that they chose to stay, that it was a non-control investment. So we’ll talk about that a little bit more later. Cain partners is really active in the freight tech space with investments that include other tech software companies, such as drive wise and decisive.
Greg White (13:30):
There are couple things about this investment that interests me. Remember, disclaimer, this is my opinion. And arguably my association with supply chain now could be considered competitive with freight waves. So take what I say with a grain of salt, but this is one person’s opinion I’m speculating, but the $7 million round was likely a bridge by current shareholders to carry the company through short term cash was due to COVID-19 or possibly due to the cancellation of the two freight wave live events that made up 50% of first half revenue in 2019. Still the company’s revenues increased by 50% over first half of 2019. So good news there and also freight waves did not take any PPP money from the federal government. So here’s another interesting take, let’s say Kane, the VC who invested solely in this growth equity round took as little as 20, a 20% stake for $30 million invested typically 20 to 25% would be the least equity stake, an investor, a growth equity investor would take.
Greg White (14:50):
So a 20% stake post-money on a $30 million investment means freight waves. Valuation could be as much as $150 million. Feel free to check my math out there, but it’s not likely higher than that. A couple of other interesting points since freight waves felt compelled to say the Cain stake was a non-control investment, which should go without saying at this stage of the company growth equity is almost always a minority stake and a non-controlling investment. It makes me wonder if Cain acquired a significant minority stake, which would indicate that the valuation is lower than $150 million and $75 million in total investment in a company with only a hundred myth, $50 million in valuation at this point would be troublesome for investors because of their target on returns to investment. Now let’s acknowledge that wording can be tricky, but it matters. The point is it did not need to be said that the investment was a minority stake.
Greg White (16:04):
So it makes me wonder why they said it sometimes messages like these inadvertently tip us to a subconscious thought. This is something I learned to look out for in these kinds of indicators from tech contract negotiation, great and partner emeritus at Morris Manning and Martin, and the person who literally, and I mean literally wrote the book on technology licensing, uh, Larry street, also a professor Ameritus at Emory university. So that’s my wild eyed analysis from that standpoint. Here’s what’s key that value in the company is in my opinion, in the subscription services generated by sonar, which provides the data intelligence and analysis to the freight market. As stated before one final statement made in Chattanooga business trend also gave me reason to pause just again, wording, and maybe I’m over analyzing both of these things, but the statement is most of the data on the sonar platform is proprietary and offered exclusively by freight waves.
Greg White (17:16):
It’s this word most that stood out to me could mean nothing. And it’s common to get data from outside sources, but it makes me wonder what data and how much that matters when as part of their valuation freight waves is staking their claim to the data territory they make mention of being the freight equivalent of Bloomberg. That’s a mighty tall bar, but I sure like the idea if that is in fact their main focus, that would be a really cool business. Finally recall. This is a growth round. Remember likely means that some of the funds went to founders and key shareholders in addition to putting cash on the balance sheet. So I believe congrats are in order for Craig fuller. He probably got to take a check home and that’s good. He’s invested a lot of time and effort into this company, blue yonder, freight waves, and some of these other deals, especially blue yonder and freight waves. Those are big companies, big deals. And I can’t believe with the big deals done by those companies and especially companies that most of us have heard of that. This is the one that stood out to me, but it is a biggie. So bear with me, I’m a bit staggered by the sheer scale of both funding and the application. So here goes dexterity headquartered in Palo Alto, raised a fee
Speaker 2 (18:38):
56.2 million,
Greg White (18:41):
$10 series, a round of investment. So they may have had some seed investment. There is no SI other seed investment on the records that I can find anyway, by the way. And it’s worth noting that this investment came from some heavy hitters. So it was led by B 37 ventures start X, which is Stanford universities fund and other heavy hitters like Lightspeed and Kleiner Perkins. Who’ve invested in some of the biggest, very biggest names in tech and Kleiner. Perkins has been around since the seventies and there were nine total, a round investors. So I’m not even naming five of the others that are involved. So let’s talk about what dexterity does they offer robots as a service solution soup to nuts, uh, sorry, American colloquialism. That means the whole thing from start to end. They do the whole thing. So these robots are for logistics, warehousing fulfillment and supply chain operations.
Greg White (19:52):
The company, especially excels in fulfillment, kitting packing palletizing de palletizing. And sortation because they develop these robots with human, like dexterity, including touch in warehouses, robots that pick and place anything. And can they say gracefully adapt to unpredictable situations? So maybe they’re better than humans in that regard. This company just came out of stealth mode. So stealth mode means they were operating behind the scenes. Hadn’t really announced what they were doing. Usually you do that when you don’t want the competition to get the jump on you, or you’ve got something really big and you want to wait until it’s ready for the world to bring it out. They were not in the market yet focusing for two and a half years on designing and building the technology. Having already deployed a team of collaborative, intelligent robots in production. I don’t know who the customer is, who has deployed that.
Greg White (20:54):
Another interesting thing, their robots have these unique capabilities aside from human light touch and dexterity, they can collaborate. So the company has described this roadmap that they present for these dexterous intelligent robots level one immobile robots locked in cages and cells work on one pre CRO program task level, two immobile semi-intelligent robots that can adapt and are able to do one of a few semi structured tasks, level three, a team of immobile semi-intelligent robots working on a shared unstructured task with predefined human robot interactions, level four, a team of mobile intelligent robots that collaborate and work in synchrony on an unstructured task with dynamic human robot interactions, meaning not predefined human robot interactions and an unstructured task, meaning not specifically defined by code or process flow or something like that. Level five, a human robot team working on a set of interrelated, collaborative tasks with everyone focused on doing what they do best, sorry, that’s mindblowing.
Greg White (22:18):
Let me say that again. A human robot team working on a set of interrelated, collaborative tasks with everyone focused on doing what they do best robots, doing what they do best humans doing what they do best virtually maybe literally standing side by side, to do these things and interacting and collaborating actively. Okay. And there is actually a level six, a distributed human robot team that operates in synchrony to do multiple related tasks in multiple unstructured workflows, across locations with cross task scheduling and global productivity optimizations. Whew. Okay. Dexterities robots are currently operating at level four in production at customer warehouses today and are laying the groundwork for a transition to level five. So level four is pretty impressive. Mobile intelligent collaboration, robots working in synchrony again with dynamic, not pre-prescribed human robot interactions and, and they’ll soon be moving to level five, the mind blowing one, where they work on a set of interrelated, collaborative tasks, all unstructured with everyone doing what they do best they’ll jointly optimize this whole productivity of these home human robot teams.
Greg White (23:45):
They will work together to optimize the productivity. Um, I can’t even imagine the science that must be behind that really impressive. Obviously it’s impressed. Some really big investors, Kleiner, Perkins, and Lightspeed, both are particularly insightful and foresightful investors so impressive that they would invest at such a high level in such an early stage company. There must be something really special there that’s the takeaway from that. All right, gang, I hated to let one more episode go without a specific lesson, but there was a lot of learning in the deals we talked about, but Hey, if there is ever anything you want to know about regarding founding growing or investment in early stage techs, please feel free to ping me on LinkedIn or on Twitter. I’m at Gregory S. White. I’m happy to help any time. All right, that is all you need to know about supply chain tech for this week.
Greg White (24:45):
Don’t forget to get to supply chain now, radio.com for more supply chain. Now series like the one I described earlier, supply chain is boring. Love that title for interviews and events and all kinds of activities going on at supply chain now. And don’t forget to get your buzz on our supply chain. Now weekly live stream, you got to join 10,000 or so of your fellow supply chain professionals for the supply chain news of the week. Each Monday at noon Eastern time with Scott Luton, Scott Luton and me live on LinkedIn, YouTube, Twitter, Facebook, or Twitch. And in one of our episodes, you might even get to hear from mr. Supply chain, Daniel Stanton, just follow supply chain now on any of those platforms and get notified when we go live. And this is my final request. If you’re listening and you haven’t subscribed, please commit subscribe to tequila, sunrise, wherever you get your podcasts. Most of you listen on Apple podcasts or Spotify, by the way, I do look at the analytics of listen up. Thanks for spending your valuable, valuable time with me and remember acknowledged reality, but never, ever be bound by it.
Would you rather watch the show in action?
Watch as Greg introduces you to TECHquila Sunrise through our YouTube channel.
Hosts
Additional Links & Resources
Check Out Our Sponsors
