Ivalua Raises $70 Million from KKR: First Take Analysis

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Ivalua, a procurement technology suite vendor, announced Wednesday it had raised $70 million in a minority investment round from private equity firm KKR.

Originally a France-based firm, Ivalua moved its headquarters to the U.S. in recent years and has continued to expand globally. While neither terms of the investment nor Ivalua’s revenue were disclosed, Spend Matters estimates the transaction values the firm at less than the price/revenue multiple of Coupa and more than what Accel-KKR paid for Jaggaerwhen it took SciQuest private. (KKR and Accel-KKR are separate firms; each operates independently of the other.)

Ivalua initially focused on developing strategic procurement technologies, but later expanded into e-procurement and invoice-to-pay solutions and has since built out a procurement technology suite that one could argue has the greatest “average” functional depth across all its modules relative to peers. Yet this observation only begins to scratch the surface of what makes Ivalua different from SAP Ariba, Coupa, Jaggaer, GEP and the hundreds of other providers that make up the fragmented procurement technology solutions market.

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How Does Ivalua Stack Up?

For a more than 15-page comparative analysis of Ivalua, PRO subscribers can read Spend Matters’ three-part Vendor Snapshot — including a detailed module-by-module analysis, product strengths/weaknesses and competitive alternatives — via the following links:

PRO subscribers can also see how Ivalua recently stacked up to peers by module on the category/sub-category areas for e-procurement (compared to 14 other providers), invoice-to-pay (compared to 10 other providers) and procure-to-pay (compared to eight other providers).

Spending the Money: Sales/Marketing, Geographic Expansion and Product Innovation

Prior to the announcement, we had the chance to catch up with Daniel Amzallag, CEO of Ivalua Inc.

The Spend Matters team asked him, “Where do you plan to spend the money?”

Amzallag suggested three key areas: sales and marketing expansion, geographic investment and product innovation.

In the areas of sales, marketing and geographic expansion, Amzallag noted that the plan is to “drastically increase the brand awareness in all the regions where Ivalua wants to be, which includes fully scaling up our sales and marketing function. We will cover much more territory, including the Asia/Pacific region. Europe, the U.K., Germany and Nordics will all receive additional focus and investment.”

“Ivalua is going to have much more presence in the global field not only to drive sales, but to support our global customers across the implementation and adoption lifecycle,” he said. “With new levels of investment, Ivalua will become a global procurement brand to reckon with, supported by a track record of delivering consistent and proven capabilities for customers with different levels of complexity, from supporting core needs to meeting highly customized use cases and requirements.”

In the area of R&D, Amzallag noted that product innovation is going to focus a lot on the user experience:

“We know this is an area of opportunity for Ivalua and are putting together a team of experts to not just enhance the look/feel of the Ivalua suite but to embed artificial intelligence across all the modules to enable procurement with new levels of decision making and automation.

"We also plan to invest in pre-configured capabilities for specific industries (e.g. manufacturing, public sector, financial services, healthcare and oil and gas) and double-down on direct materials procurement enablement to help companies better manage their global sourcing and supply chains from a procurement vantage point. Vendor master data management will also be an area of continued investment for Ivalua as well.”

Spend Matters Take

Ivalua’s funding by KKR at an IPO level of capitalization more than represents the equivalent of showcasing a pretty new girl at the procurement technology debutante ball. The investment puts the suite vendor firmly in the global spotlight.

It’s also curious for us to see two private equity firms place separate bets on the sector: Accel-KKR betting on Jaggaer and KKR betting on Ivalua.

Certainly the pension funds and other institutions invested in both PE funds/firms now have considerable exposure — we would argue positively — to the general upswing and investment in procurement technology. But interestingly, both Ivalua and Jaggaer (along with SAP Ariba, to a more targeted degree recently in manufacturing/direct spend) have opted to go down a vertical-centric path with their solutions, configuring them to serve the needs of targeted industries.

This marks a contrast to others, including Coupa, BravoSolution, GEP, Determine, and Zycus, which have focused more on general innovation and suite build-out versus taking vertical-specific approaches to developing solutions. Of course, there are also more radical takes on the sector, such as the platform-driven model Tradeshift is pushing.

We’ll cover the KKR investment and our comparative outlook on Ivalua more in our subscription coverage on Spend Matters PRO in the coming days. For now, here are a few additional observations on the market overall and what this investment (and other recent activities) signal:

  • The investment highlights the fragmented nature of procurement technology solutions market today. While it seems many vendors will claim they are “gunning” for the third spot behind SAP Ariba and Coupa in terms of revenue and market share, the actual procurement suite and best-of-breed solutions market is reflective of massive diversity of customer needs, technology investment and vendors. It is our view that there are no standout leaders today factoring into account both transactional/P2P capabilities and strategic procurement technologies (let alone services procurement, T&E, trade financing and related areas). Could Ivalua become the first to break out as an integrated suite vendor? We’ll see. But fragmentation still rules the day.
  • PE and general venture interest in the sector is at an all-time high from where we sit advising and working with a range of private funds. This is (with certain caveats) good for innovation and good for procurement organizations, as large-scale investment interest should fuel R&D and new, more tailored capabilities, as well as increase the overall rate of innovation.
  • M&A interest is likely to continued unabated. Might Ivalua opt to use its war chest to fund M&A activity like Coupa? Our guess would be to read between the lines of its expansion plans as noted by Amzallag above. At the core of the suite, our guess is “no,” but when it comes to adjacencies, geographies and related considerations, “tuck in” moves facilitated by the deal team at KKR would no doubt make sense.

The Last Word 

It’s an exciting time for procurement technology. KKR placing a big investment in Ivalua is further proof of the rate of growth, innovation and organization investment in the sector. But procurement, finance, IT and supply chain teams need to do their own homework to identify which procurement solutions are right for them.

In nearly all cases for Global 2000 firms, taking a portfolio approach to technology selection and adoption — even with a suite or suites at the center of the mix — still represents the most pragmatic approach to technology selection and adoption, even with “core” solutions, let alone the broader mix of peripheral, category-specific and adjacent capabilities that a diverse mix of cloud, platform, managed services, business process outsourcing (BPO) and information/intelligence providers have on offer today.

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Voices (3)

  1. Michael Robertson:

    As you noted Jason we’re really excited about delivering major UX improvements in the near future. With new offices in Redwood City and NYC and now this investment announcement the Ivalua team is energized for a big push. We’re looking forward to sharing out UX progress with SM.

  2. Jason Busch:

    An additional detail we just read: “As part of the deal, KKR has negotiated a master contract with Ivalua to provide its procurement platform to a selection of the private equity house’s 120 portfolio companies.”

    Source: https://www.fnlondon.com/articles/kkr-tech-fund-boosts-investments-to-239m-20170426

    1. Gary Hare:

      Another confirmation of our overall market’s growing value, increasing visibility and continued maturation. Great job Ivalua and KKR!

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