Computer chip shortages, restaurants lacking the ingredients or even the accessories they need and delays major and minor to just about every nook and cranny of the consumer economy.
It's 2022, and the term supply chain has become commonplace at the dinner table. This is life in the pandemic, but it's also part of living in a global economy where gridlock at ports or protests on bridges can lead to the types of delays that can make or break a business.
Austin supply chain software startup SourceDay Inc. has been developing a platform to help suppliers, manufacturers and business owners gain better, real-time visibility into the flow of materials. And the pandemic and its related disruptions have given the startup's niche newfound importance.
The company, created in 2013 and launched in 2015 by CEO Tom Kieley and COO Clint McRee, announced Feb. 15 it had secured $31.5 million in series C venture capital backing. That brings its total funding to nearly $58 million.
Palo Alto-based firm Norwest Venture Partners led the financing alongside earlier investors including Austin's ATX Ventures and Silverton Partners, as well as Baird Capital, Draper Associates and Ring Ventures. Norwest partner Sean Jacobsohn will join SourceDay’s board of directors as part of the deal.
Kieley said he was introduced by SourceDay's early investors to Jacobsohn and the Norwest team about three years ago, and he has remained in touch as the startup continued to scale.
The new money will help SourceDay hire about 40 new employees in Austin and remotely, with an emphasis on product and engineering roles. The startup, which has a flexible workforce and an office in the Arboretum area in North Austin, currently has 88 employees, as well as 20 full-time contractors.
Kieley said Austin has a deep pool of engineering and product talent, but the landscape continues to change.
"I think the challenges we're all facing today are really just competitive pressures," he said. "There's a large and growing number of incredible organizations to choose from when looking for a new employment opportunity. And I think SourceDay offers a lot of uniqueness and challenging career goals and helps people grow. We've prided ourselves in recruiting and hiring from within for our leadership roles and continue to plan to do so. I do see Austin becoming a more challenging market for engineering and software development roles. So hopefully we can continue to attract more talent."
The pandemic and its supply chain disruptions have created a tailwind for SourceDay. The startup spent its first few years largely educating mid-market businesses about the advantages of automating communications about purchase orders and shipment timing. Such interactions have typically occurred via Excel documents and email.
But supply chain factors quickly became obvious to many businesses when the pandemic hit. For SourceDay, which services a broad range of sectors and industries, consumer packaged goods became one of its most active customer types as people increasingly shopped from home, Kieley said.
"Our customers have hundreds to thousands of purchase orders open at any moment, and over 50% of those are changing," he said. "Those changes impact on-time delivery, price points, quality, quantity and being able to hit revenue targets."
SourceDay enables more automated collaboration on purchase order changes, as well as changes in demand and supply in real-time. That means buyers don't have to wait for a delay and email suppliers to find out why. Instead, SourceDay's platform automatically prompts responses and can also proactively help identify potential delays.
In other words, if an overseas shipment is headed toward gridlock at a port, SourceDay customers might have an early heads up and be able to make decisions to avoid slowdowns, such as shipping critical components by air.
SourceDay declined to share revenue figures, but it indicated the company is growing swiftly with 66% year-over-year revenue growth as well as last year adding 50 customers, bring its total to about 225 customers, in addition to 12,000-plus suppliers in its network. The company has processed $124 billion in direct spend for its customers.
With new funding and a growing headcount, SourceDay is developing a broader marketplace where customers can find new suppliers based on transactional data and historical performance.
"All of that data that we're capturing with our customers transacting – hundreds of millions of purchase order lines through the platform, day in and day out – is enabling us to capture true supplier performance that will ultimately open up a marketplace where buyers of components and goods and finished products can can network and be connected with new suppliers to do business with as trading partner," he said. "That marketplace will become available over the next 12 to 18 months as we continue to scale the platform."
