VNDLY raises $35 million in Series B to try to outsmart VMS

VNDLY, a cloud-based workforce management system (WMS) provider that has been making waves in the VMS solution market, announced a $35 million Series B round today. Insight Partners led this round, with participation from Battery Ventures, Hyde Park Venture Partners, EPIC Ventures, Bowery Capital, and the Cintrifuse Syndicate Fund. Perhaps a bit of a surprise, ServiceNow — which provides digital solutions to structure and deliver services for enterprise operations — also participated in the funding round.

VNDLY who?

In mid-2017, Cincinnati-based VNDLY  completed a $3 million Seed Round with Bowery Capital and launched with beta clients. In February 2019, VNDLY raised an $11 million Series A round with Battery Ventures and Hyde Park Ventures  in February 2019 (see our PRO brief, VNDLY Closes $11 Million Series A Funding Round: A VMS Category Buster in the Making?). Such a brief interval between that $11 million Series A and the current $35 million Series B funding rounds is uncommon.

The current Series B round, which brings the company’s total external funding to $49 million, will be used “for continued product innovation, global expansion, and the continued investment in customer service and support,” according to the announcement.

VNDLY, short for “vendor friendly,” appeared as a surprising new entrant in the contingent workforce technology solution market, where a relatively small number of major VMS solutions hold sway. These solutions — originating as many as 20 years ago — were originally built to source and manage temporary staffing suppliers and workers. But over time, they have added capabilities to support enterprise and MSP control over temporary staffing and other contingent workforce types, as they seek to evolve their underlying technology platforms.

Recognizing that growth in the use of contingent workforce and change in information technology have been accelerating over the past eight years, VNDLY has been developing what it calls a workforce management system or WMS. VNDLY says its solution model will provide companies with capabilities to manage the entire non-employee engagement lifecycle — from talent acquisition to training to payment and offboarding. VNDLY’s state-of-the-art, cloud-native platform “helps simplify the implementation, integration and change management aspects compared to legacy VMS solutions,” the company asserts.

It bears mentioning that a young VNDLY fearlessly waded into Spend Matters’ SolutionMap for enterprise Temp Staffing solutions as early as 2018. And it received the top ranking in the upper-right, Value Leader quadrant for the Nimble buyer Persona.

Making waves?

VNDLY’s co-Founder and CEO, Shashank Saxena, told Spend Matters, “we are excited about the continued growth we’ve seen in 2019 and how we’re positioned for 2020. Our seed round in 2017 was an experiment to analyze whether the market needs a new and modern, cloud-native VMS. The answer was in the affirmative, and we saw some good growth in smaller mid-market clients. And that positioned us well for the $11 million Series A round we raised earlier this year.”

“Since then,” Saxena said, “we’ve not only been able to validate the market’s readiness for a new and modern cloud-native VMS platform, but to also validate that large enterprise customers are willing to replace their legacy VMS solutions to upgrade and modernize with VNDLY. We’ve seen a similar story play out in other SaaS verticals, and we are excited about what the future holds for us. This $35 million Series B round helps us successfully execute against this strategy.”

According to today’s announcement reported that “VNDLY has added multiple new clients [over the past] year, including 12 Fortune 500 companies, half of which are financial services clients.” It also indicated that the total customer base spans other industries, including healthcare, retail and consumer goods, automotive, oil and gas, energy and utilities, manufacturing and distribution, and higher education.

The voyage continues

VNDLY’s progress is matched by bold expectations and strong private equity support, and an industry environment where one finds at least pockets of transformation.

Jeff Lieberman, Managing Director at Insight Partners, was quoted as saying: “As the gig economy continues to transform the future of work, VNDLY has been on our radar since its inception. We are excited about VNDLY’s traction with the Fortune 500 customer base and differentiated work management system as we begin working together to transform the VMS market.”

Michael Brown, Partner at Battery Ventures, also said, “I’ve served on the VNDLY board since our investment in the Series A round earlier this year and am extremely excited about what the future holds for VNDLY. We continue to be impressed by the operational effectiveness, relentless customer focus and modern, disruptive technology vision that the VNDLY team brings to the market. That’s why we decided to double down on the opportunity and increase ownership interest in VNDLY in this round.”

With respect to ServiceNow relationship, Saxena said “We are really excited to have ServiceNow as an investor and partner in our journey. ServiceNow is one of our most commonly requested integrations by mutual customers so we are excited about further deepening the partnership with this equity investment.”

With $35 million in the bank, a beachhead in the solution market and a different vision of what the market wants and how new technology, analytics and AI can deliver it, VNDLY seems poised to continue to execute its strategy, gain new customers in 2020 and further scale (which will bring its own set of challenges). We will have to see whether, in 2020 (compared to 2019), a higher number of organizations trade-in their beloved VMS solutions for “a new VNDLY.” The competitive dynamic in the market is becoming driven by more than head-to-head contests between VMS systems, and there is much more change occurring than just the entry of new player that aims at disruption — there are broader, deeper and stronger currents at work.

Spend Matters will be back with our own bigger picture PRO analysis of VNDLY and the changing world of contingent workforce technology solutions. Until then, for additional reading, check out Five Scenarios for VMS 2025 — An Introduction; Five Scenarios for VMS 2025: Scenario 1 — Status Quo, and What is a VMS today? Spend Matters’ SolutionMap helps define it.