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10 Theories on Procurement Technology Venture Stage Investment (Thesis 4: Bridges)

08/17/2020 By


In a series of columns this summer, I’ll share 10 theories that I believe will drive investments in earlier-stage (angel/seed and Series A/B) start-ups in the procurement technology market. Today we’ll talk about Bridge solutions — or perhaps more accurately described as “stop gap” solutions. They are beautiful solutions, despite the fact that no one wants to be labeled one.

I would argue that is precisely why it’s such a clever category of product. After all, bridges, even if they’re not singular in defining a category (like contract lifecycle management), often end up becoming permanent solutions, far beyond the initial contracting cycle.

And sometimes, they can break out of their lanes and spans, becoming the only road to a destination that everyone decides they need. When DocuSign moved from being a signing workflow solution to the Agreement Cloud, it had already made this jump, as just one example.

For perspective, Thesis 1 looked at automation and vendors in that space. Thesis 2 looked at providers of marketplace solutions. Thesis 3 looked at UI/UX technology and adoption in the start-up stage. Now let’s dig deeper into bridge solutions.

Bridges are also a way to solve specific problems, which for a larger provider might just be a module or even a feature within a module. But the bridge solution tackles the problem differently.

How do you know you have a potential bridge on your hands? Or, how can you turn a product you have into a bridge? After reading our nine-point checklist, see how many items apply to your solution to judge if it’s a bridge solution.

  • <4 checks = not a bridge
  • 4-6 checks = potentially a bridge
  • 7 (or more) checks = definitely a bridge

Does the solution:

  • Solves a problem that existing ERP and SaaS platform investments within a company (e.g., Salesforce, Coupa, etc.) tackle only partially or not at all
  • Connects to specific vendor islands that already exist in an IT portfolio (or broader third-party partner portfolio, such as banking or payment partners)
  • Fills a hole based before a planned upgrade cycle is completed or even agreed to internally (temporarily, at least as viewed at the start)
  • Plugs into existing ecosystems in a seemingly “out-of-the-box” way
  • Fills a defined gap that is obvious to anyone looking at it (who is a target buyer). The response should be, “Yeah, that’s a no brainer. I get it.”
  • Has the ability to sell itself (even in pilot form) in a matter of weeks in specific circumstances (once the economic buyer is identified)
  • Gets shortlisted without anyone else on the shortlist (i.e., avoid the RFI and a drawn out competitive process)
  • Is a “bridge” out of procurement into adjacent areas of the business, while supporting both
  • Fills a very specific category or vertical specific (e.g., category specific analytics, connectivity, etc.)

For providers, bridges are usually easier to sell in the first place than suites or modular monoliths, since they’re filling a predefined hole, insofar as the economic buyer knows they have a gap to fill in the first place — a sentiment that clever marketing can help accomplish.

Here’s a quick list of “bridges” the Spend Matters analyst team is seeing in the market.

I’ve got a couple to add to it that are not included, but some providers I know that are providing incredibly effective bridges do not want to capture the headlines yet until they become “the standard” for the problem they are solving. There is one vendor in particular I spoke to this week, run by an old industry friend, that is incredibly clever (and has ARR metrics that would make any investor salivate over). But it wants to remain in stealth until it hits escape velocity.

But I digress. Here’s a working (and not complete) list. Please feel free to add to it in the comments section!

BidMode — It’s a bid/sourcing optimization solution that can be embedded as a feature of sourcing products (and even OEM’ed by sourcing providers). We’ve analyzed BidMode’s solution overview and its strengths and weaknesses in the market before. Archlet is another example of a young sourcing optimization provider that is looking to position itself effectively as a bridge.

Catalytic — While I mentioned Catalytic before under my thesis on automation, it is also a bridge solution. It combines no-code digital process automation, AI, integrations, workflow and templates as a procurement and supply chain automation platform. While not a fixed app or module (e.g., supplier management), it does provide an underlying data model to support the procurement process and is an ideal fit for general purpose automation when clear holes exist within an existing systems infrastructure (e.g., take me to Scout RFP for this, SAP Ariba for this, pull data from this system). Use cases can extend beyond automation and systems of record to provide visibility and traceability to support master data, supplier interactions/portal, supplier integration and collaboration (e.g., POs, ship notices, etc.).

Fairmarkit — A Fairmarkit-type solution should be a part of P2P suites, but it is not (yet) and may never be. As a “bridge” to the better management of tail spend, Fairmarkit “automates the construction of requests for quotes (RFQs), populating potential vendors for a bid based on manufacturers, part numbers or free text entries” as we have noted before (Fairmarkit’s solution overview and its strengths/weaknesses). Further, “the solution uses machine learning to facilitate recommendation of vendors, training the system over time to identify the right set of vendors for the optimal number of bids within different units of a company and across categories.”

Globality and ZivioFor the management of targeted SOW-based services categories and (and events/needs) in a non-invasive, non VMS-ey manner.

GRMS — A compliance (e.g., insurance certification) and supplier onboarding managing service (including supplier support desk) plug-in that sits on top of existing or planned S2P/P2P suites or supplier management modules. As we have noted before, “As a managed service provider for supplier onboarding, validation and compliance (from a data-driven perspective), GRMS can solve a range of headaches for its clients in a cost-neutral manner that is palatable for suppliers from a cost standpoint.”

Per Angusta — Per Angusta and others like it (honorable mention: Cirtuo and Provalido) are in the procurement strategy space broadly speaking, and they make sense to incorporate into S2P category management capabilities. As we’ve said before (see coverage Per Angusta’s solution overview and its strengths and weaknesses), Per Angusta is “essentially a SaaS-based procurement program management solution designed to integrate with, and manage the workflow of, other sourcing and procurement technologies.”

ProProcure G-Quotes — Essentially a Coupa plug-in (that Coupa could build themselves but has not), G-Quotes literally, “get quotes” from potential services suppliers without cluttering up your supplier master pre-award. In essence, it has a P2P bolt-on that helps service providers create catalogs, and users to buy off them.

TransferMate — TransferMate bridges a key component of the last mile of P2P for companies: global payments. It can sit on top of existing P2P and banking infrastructure. As we have noted before, “it eliminates the cost of sending international payments by collecting and sending payments using their own local bank networks. The provider is regulated in 180 countries and holds money movement license in all U.S. states. It also offers a technology interface that can eliminate problems of SWIFT reconcilement.”

Vroozi — While ostensibly a nimble e-procurement (and procure-to-pay) solution, Vroozi also offers a bridge solution that sits on top of transactional purchasing and ERP packages, especially legacy SAP (ECC/SRM). It is attempting to be a more modern day version of what Hubwoo and others (e.g., jCatalog, Wallmedien, etc.) have done in the past. Designed to extend the life of pre-cloud ERP by offering a modern SaaS front-line shopping and catalog interface with direct integrations, this offering from Vroozi is a quintessential bridge.