Tradeshift has $240 million funding round, plans to restructure and focus on near-term profitability

procurement

Tradeshift, a solution provider known for its network, supply chain payment offerings and marketplaces, announced today that it has a funding round of $240 million in equity and debt that sets “the company on a direct path to profitability in the near future,” the announcement said.

CEO Christian Lanng spoke with Spend Matters and said this marks a time for refocusing on high-value efforts and restructuring the company, which was founded in 2010.

“It's been a very long journey to get critical mass. It actually doesn't feel this long today. Ten years is quick in our space,” Lanng said, reflecting on the company’s style but also how it’s evolving. “We are very loud, sometimes rowdy, not afraid of big battles. I think that Tradeshift, just in the last few years, we did a lot more to focus on our own execution, our own products.”

Lanng said the investors include the same ones from a Series E round a couple of years ago and a new one.

“It’s clear that the investor community has a strong focus on growth combined with profitability, and they like our plan,” Lanng said in the press release. “As a network business, growth is always going to be a key part of our story. But it’s also important that we manage that growth responsibly.”

Tradeshift Update: Numbers and Names

Prior to the announcement, Lanng shared with Spend Matters a number of insights on the technology and marketplace provider.

He notes that Tradeshift is welcoming one major new investor with the debt and equity funding round (which will soon be announced) alongside previous investors, including Gray Swan, a venture company established by Tradeshift’s founders, according to a previous press release.

According to Lanng, Tradeshift:

  • Currently has 1,200 global employees
  • Will become cash-flow profitable in 2020
  • Realized “well north” of $100 million in revenue for 2019, representing 60% growth
  • Has above “half a trillion in GMV” (volume) and “will cross a trillion in 2022”
  • Is realizing high growth in Latin America (LATAM), which has become the “fastest-growing market for new enterprise customers” with China coming in second
  • Major customer additions (from direct sales) include: Corning Glass, Smuckers, Mondelez, Innogy, CBC, Jacobs Douwe Egberts, Ikea and Danone
  • Added new strategic partners in 2019, including Genpact and Accenture
  • Has deployed its AI/machine learning capability (Ada) across all customers
  • Welcomed 300 new customers for “Tradeshift Go” — it’s mobile-enabled procurement and payment solution
  • Added two major executives with SAP experience: Tony Alvarez, who is serving as SVP of the Tradeshift network business, and Janet Heppner-Jones, who is Tradeshift’s VP of sales, Americas

Lanng also noted Tradeshift is not planning a 2020 IPO given the election year cycle, but that becoming cash-flow positive this calendar year will provide the maximum number of options, including the potential for a future IPO.

He also told Spend Matters that supplier revenue is becoming an increasing growth area for Tradeshift, and that the restructuring is in line with this change (and that by 2025, supplier revenue will outstrip buyer and partner revenue).

Finally, Lanng shared details around current and planned restructuring activities within Tradeshift.

Margin Improvement and Restructuring

Lanng told Spend Matters that Tradeshift is restructuring its operations to drive profitability and  margin improvement and to emphasize specific product lines from an internal development perspective over others.

According to Lanng, components of Tradeshift’s restructuring will include:

  • Moving select roles in North America and the Nordics from high-cost to low-cost regions
  • Adding net new headcount (overall)
  • Emphasizing development of app and marketplace capability (and partners) focused on the payments area
  • De-emphasizing enterprise procurement (e.g., not going “head-to-head” against Coupa and SAP Ariba) for “straight-up” deals within its own product portfolio. Tradeshift will still compete in procurement with its own apps, but only in support of differentiated use cases.
  • Continuing to focus on marketplace partners (including BuyerQuest, Jaggaer and Corcentric/Determine) for procurement more broadly. Tradeshift also recently added Wax Digital as a procurement app partner.

Emphasizing Payments

Lanng noted that payments will be the highest priority product development, sales and channel effort going forward.

The payment emphasis will include “building brand-new products from scratch that solve buyer/seller problems much better.” Product development efforts will include targeting previously decoupled processes (e.g., supplier/customer onboarding, KYC, broader compliance, financing, moving money, etc.)

Conversely, Tradeshift will focus less on developing custom apps for financial services customers that are not leverageable on the platform/marketplace level.

Partners will also play a role in the broader payments ecosystem for Tradeshift. Lanng suggests that areas such as tax compliance will receive “increasing emphasis on the app/platform side.”

Previous Coverage

We encourage Spend Matters’ readers to take a closer look at our recent coverage of Tradeshift, including Spend Matters PRO and SolutionMap:

Q4 2019 Invoice-to-Pay (I2P): Provider Scoring Summary [SolutionMap Insider]

 

Q4 2019 Procure-to-Pay (P2P): Provider Scoring Summary [SolutionMap Insider]

 

Tradeshift: Vendor Analysis Update (Part 3) — Summary and Competitive Analysis [PRO]

XAVIER OLIVERA - December 13, 2019

Tradeshift: Vendor Analysis Update (Part 2) — Product Strengths and Weaknesses [PRO]

XAVIER OLIVERA - November 26, 2019

Tradeshift: Vendor Analysis Update (Part 1) — Background and Solution Overview [PRO]

XAVIER OLIVERA - November 19, 2019

Afternoon Coffee: Tradeshift, Genpact partner up

SPEND MATTERS TEAM - October 30, 2019

Afternoon Coffee: Tradeshift, Abreon partner up

SPEND MATTERS TEAM - October 17, 2019

Afternoon Coffee: Tradeshift partners with 71lbs to cut shipping costs

SPEND MATTERS TEAM - August 27, 2019

Afternoon Coffee: Jaggaer sells majority stake; Tradeshift Go 2.0 has team approach

SPEND MATTERS TEAM - July 8, 2019 1

Tradeshift’s customer reviews are in the new SolutionMap Customer Insights report

SPEND MATTERS TEAM - June 19, 2019

Tradeshift Innovation Summit in London: A Few Takeaways

MICHAEL LAMOUREUX - April 18, 2019

Afternoon Coffee: BuyerQuest, Tradeshift Partner Up

SPEND MATTERS TEAM - April 4, 2019

Updated: Basware-Tradeshift Talks for M&A Fall Through

JP MORRIS - February 28, 2019

Afternoon Coffee: Tradeshift Reports $1.2 Billion Valuation

JP MORRIS - January 22, 2019

Tradeshift Buys Babelway: A ‘First Take’ Analysis [PRO]

JASON BUSCH AND PIERRE MITCHELL - December 18, 2018

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Voices (4)

  1. Jason Busch:

    Illari,

    Thank you for the note as well. Tradeshift has been put through the ringer (along with its competitors) in the P2P benchmark (which comprises E-Procurement and Invoice-to-Pay). Both our analyst and customer ratings are completely data-driven on a granular basis (i.e., no subjectivity at the vendor or module level). For analyst ratings, our team considers 500+ individual fields/capabilities in P2P. While the (much) deeper insights are in the subscription P2P and E-Procurement Insider Reports (last published Q4 2019), even in the free ranking charts you can refer to the “Deep” Persona to get a sense of overall comparative capability — which is the closest to a straight line weighting across all scored fields. Here, Tradeshift is above the benchmark overall for I2P, and right at the benchmark level (overall) for E-Pro. In other words: average for E-Pro.

    I hope this helps. As reference, the E-Procurement benchmark is comprised of 16 vendors (including those that target SMBs and and organizations with industry-specific requirements). I think what might explain the difference is that Gartner and Forrester are also rating their view of the company rather than taking a 100% product/capability and customer rating approach, as we do with SolutionMap. Neither model is necessarily better or worse (one could argue there is value in both), but the methodologies are like comparing apples to oranges.

    With SolutionMap the more you peel the onion (and assemble the data in ways that are valuable, such as weighting specific business requirements for selection which can then map to technology capabilities), the more Spend Matters’ model diverges from other approaches. Our emphasis is on generating the best possible, most granular data set based on analyst and customer scores, updated multiple times per year to stay current. From that, it becomes possible to build reports, charts and much more.

  2. Ilari Nurmi:

    Interesting development at Tradeshift. They raised 250 MUSD just 20 months ago and now they have to raise almost the same amount again. It means more cash burned than revenue generated during that time.

    After 10 years in the business, the company is not typically a real start up anymore and the financial picture for successful companies often looks quite different. Thus it is easy to understand the cost cutting that has to be done, but all of this would have a sizable impact on the valuation.

    One area that would be good a get your view one is the withdrawal of Tradeshift from the procurement side with their own products. Most of the old schoold analyst (Gartner/Forrester) have not really ranked Tradeshift as a strong player in P2P space, but Spendmatters has traditionally had a more favorable stance. How is the planned withdrawal or significant reduction of investment in procurement reflected in P2P rankings from Spendmatters?

  3. Jason Busch:

    James,

    Thank you for your note. I am planning on sharing my own thoughts on this in the next week or two, after the new investment partner is announced, as I think that, and the closing of the round, will answer some of the questions everyone is interested in. I think it is fair to ask about the shift in strategy and products.

  4. James Montgomerie:

    The statement on the funding round says “with more than two-thirds already closed”. So dos this suggest they haven’t got the full $240 million? A bit odd to announce before closing it surely? And what is the overall valuation- no word on that? Also retreating from procurement and focusing on payments seems like a pretty big move? This all raises more questions than it answers for me. I’d like to know what Jason Busch, Magnus and the other big brains at spend Matters really think about this.

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