An Austin startup that helps connect manufacturers with suppliers in the U.S. just raised a fresh round of capital to fuel its growth in Texas and beyond.
Sustainment Technologies Inc. has raised a $12 million series A investment led by Boulder-based Unless Ventures LP, Sustainment CEO Bret Boyd said. University of Texas alumni venture group Congress Avenue Ventures and Oklahoma City-based Victorum Capital also got in on the round along with several family offices and angel investors.
That adds to a $2.1 million seed round in late 2020 that included local angel investors such as Brett Hurt, Andrew Busey and Chris Shonk.
Boyd, a West Point grad and former Army Ranger, co-founded Sustainment in 2020 with Michael Morford, who is also an Army vet. Boyd is former vice president at Austin-based TrackingPoint Inc. and Stratfor. More recently, he was CEO at Knoema and co-founded Grayline Group with local entrepreneur Joseph Kopser. Morford, meanwhile, has a long resume of corporate roles in oil and gas, defense and other industries, and he is also a founding board member of the Oklahoma Defense Industry Association.
Initially, Sustainment was focused on developing software, along with a network of U.S. parts suppliers, for the U.S. Air Force, which remains an anchor customer today. Its platform uses an AI and machine vision to analyze the text of technical specifications and extract information about parts based on images.
"We use that data, the dimensional data of the part, to connect with the suppliers that have the capability and the certifications to build that part for you," Boyd said.
He said heavy industry companies often still rely on catalogs and their own institutional knowledge and networks to find parts suppliers. Meanwhile, there's already significant technical infrastructure designed to help U.S. companies find suppliers overseas.
But as global supply chains have become more complicated, there's a push to bolster U.S. manufacturing, as well as a need to help small businesses connect with more opportunities.
"By virtue of making those connections on the basis of what's actually being built, as opposed to the business development relationships between companies, we really think we can knock down some of these silos between between groups," Boyd said. "And that idea is really getting traction at the state and national level."
Sustainment has already partnered with the U.S. Department of Defense and state government clients, including the Oklahoma Department of Commerce. It also recently formed a partnership with the Texas manufacturing Assistance Center, which is the official representative of the MEP National Network in Texas, as well as the Austin Regional Manufacturing Association.
Sustainment has about 15 employees, along with about 10 full-time contractors. Its team is split between its Austin headquarters in West Austin and its office north of Dallas. It's also opening an office in Oklahoma City to be close to one of its Air Force customers.
Boyd said the company, which is a public benefit corporation, plans to roughly double the size of its team in coming months, with hires largely for its engineering and community teams.
The funding and growth come during a period when raising venture capital funding has become more challenging for startups, at least compared to the frothiness of the past few years. But supply chain startups, which began catching tailwinds after the pandemic set in, continue to be one of the exceptions in this more challenging environment.
For example, Q1 of this year was the third best quarter for supply chain funding, even though the total amount of $9.4B was down 5% from Q4 2021, according to CB Insights.
"When we started this business, supply chain was not top of mind for most people, for most investors," Boyd said. "And since we started this business, we've had a U.S.-China trade war. We've had Covid. We had a giant boat get stuck in the Suez Canal. And now we have like a major land war on the European continent, all of which have exposed the fragility of some of these hyperextending global supply chains. And I mean to the effect that every customer who goes to buy items now can see some of the implications of this. And so we certainly benefit from a greater awareness and the significance of what's happening."
Looking broadly at supply chain companies, we've seen recent mega rounds, such as a $935M series E for tech-enabled freight services startup Flexport, as well as seed money for companies like the $2.5M round landed by Philadelphia supply chain software startup Stimulus Inc. Meanwhile, Austin supply chain and logistics startup Convey's acquisition by Project44 in 2021 is among the top M&A deals for an Austin startup in recent years.
"This, admittedly, is not the best macro environment to raise in," Boyd said. "But, really, when you look at what's happening in manufacturing, there's a lot of capital flowing into this sector. And there is ... a meaningful long-term shift that's happening that's driving companies to build more resilient and more local supply chains. We're really grateful and proud to have investors that see the long-term future of American manufacturing, regardless of the macro financing environment."
