Personal blog of Yzmir Ramirez

The pandemic was a catalyst for showing companies looking to cut costs just how much they were spending on their software tools. New York-based Tropic’s platform not only uncovers those savings, but also brings a click-and-approve approach to buying software. Today, the company announced a $25 million Series A round of funding.

Canaan Partners led the round, with participation from Founder Collective and Mo Koyfman’s new fund, Shine. It gives Tropic $27.1 million in total funding since the company emerged from stealth in 2020, CEO David Campbell told TechCrunch.

Prior to founding the company with Justin Etkin, Campbell was in technology and sales roles, selling software contracts of every size, and realized how complex and rigid the contracts were getting as companies grew larger and the lack of price transparency increased. The complexity of some contracts can cause companies to overpay, even locking companies into payments they can’t afford, Campbell said.

On top of that, more buyers are younger now and their experience with purchasing software is pulling out their phone to download an app, while buying a customer relationship management tool will take six months to buy and cost thousands of dollars.

“Looking at the space, we are in a mirror maze of software, including companies using software to build products that they then sell back to the software companies,” Campbell said. “Companies are only buying software once a year, yet the process can be so complex.”

Tropic’s SaaS procurement model gathers the whole process under one platform. Unlike some competitors’ approaches, it takes on the heavy lifting so when companies have to buy or renew a contract, users can access Tropic’s one-click purchasing service to outsource the transaction. After the contracts are signed, its platform manages the technology and ensures financing is in order. This approach saves companies 23%, on average, on the software purchases, which Campbell said “moves the needle” for many companies where software is the No. 1 cost after salary.

In recent years, cloud software has become a fast-growing spend category across most businesses. Campbell said the average company can have more than 100 software contracts, while that jumps to over 500 for enterprise organizations. Meanwhile, global spend on enterprise software is forecasted to reach $599 billion by the end of 2021, a 13.2% increase over the previous year, according to Statista.

In the last 12 months, the company added over 60 customers, counting Qualtrics, Vimeo, Zapier and Intercom, surpassed $250 million in managed spend and processed transactions for over 1,200 vendors. The company is seeing 100% quarter over quarter growth, and in the last quarter, doubled its annual recurring revenue, Campbell said.

Tropic will use the funding for R & D and to deepen integrations with existing procurement tools in the cloud software ecosystem. Over the past year, the company’s headcount has grown to 50 and Campbell has “aggressive hiring plans between now and the rest of the year” focused on the tech side with engineering and product management.

Hootan Rashidifard, principal from Canaan Partners, said his firm was tracking the software procurement sector and learned about Tropic through Founder Collective, which led the company’s seed round.

“We’re seeing software and financial services converge and Tropic sits squarely at the intersection of both in a category with massive tailwinds,” Rashidifard said via email. “Software is accelerating the share of expenses while also penetrating every part of an organization, and software purchasing is becoming more decentralized. Tropic’s platform is in a fragmented market with high payment volume, which is ripe for layering on all kinds of adjacent services.”

It seems like everything is being pushed online now, but network procurement stubbornly has remained an in-person or phone-based negotiation. Lightyear, an early-stage New York City startup, decided to change that last year, and the company announced a $13.1 million Series A today.

The round was led by Ridge Ventures with participation from Zigg Capital and a slew of individual investors. Today’s investment comes on the heels of a $3.7 million seed round last October, bringing the total raised to $16.8 million.

CEO and co-founder Dennis Thankachan says that the company has been able to gain customers by offering a new way to procure network resources, which was a great improvement over manual negotiating.

“Last year we launched Lightyear, which was the first tool for buying your telecom infrastructure on the web. And although changing behaviors and the way that enterprises have done things for years is difficult, the status quo in telecom has been zero transparency, no web-based ways to do things, and oftentimes interfacing with really, really large vendors where you have no negotiating leverage even if you’re a big enterprise. That experience was so poor that a lot of enterprises were extremely happy to see what we put in the market,” he said.

What Lightyear offers is an online marketplace where companies can interact with vendors and get a range of price quotes to make a more informed buying decision. The company spent a lot of time improving the product since last October when you could configure some basic stuff, get a price quote and Lightyear would help you buy it.

Now Thankachan says that the solution covers the full life cycle of services including configuring a bigger array of services, helping manage the installation of the services and helping reduce the amount of delays and errors in installs. Finally, they help track and manage network inventory and can automate renewal for a whole group of services.

That has resulted in 4X growth in just nine months since the last round. In addition, the company had relationships with 400 vendors in October and has grown that to mid-500 vendors today. The startup has also doubled the number of employees to around 20.

Thankachan says that as a person of color he is particularly cognizant about building a diverse and inclusive culture. “I’m a person of color, who has been a minority in different work environments in the past, and I know how that feels and how frustrating that can be for a person who feels like their voice is not heard. […] So I think we can start to build a culture that is not necessarily the norm in [the telecommunications industry] by trying to give opportunities to [underrepresented] people,” he said.

Yousuf Khan, a partner at Ridge Ventures, who is leading the round and will be joining the board under the terms of the deal, says that as a former CIO he found Lightyear’s approach quite appealing.

“As a former CIO and someone who has led global technology operations, it’s refreshing to see Lightyear transforming the way business infrastructure gets bought…I wish Lightyear existed during my years as a CIO,” Khan said in a statement.

As the pandemic has raged on, it has shone a spotlight on the importance of procurement, especially in certain sectors. Fairmarkit, a Boston startup, is working to bring a modern digital procurement system to the enterprise. Today, the company announced a $30 million Series B.

GGV Capital and Insight Partners led the round with help from existing investors 1984 VC, NewStack and NewFund. Today’s investment brings the total raised to $42 million, according to the company.

Fairmarkit wants to replace large procurement software systems from companies like Oracle and SAP that have been around for decades, says company co-founder and CEO Kevin Frechette. When he looked around a couple of years ago, he saw a space full of these legacy vendors and ripe for disruption.

What’s more, he says that these systems have been designed to track only the biggest purchases over $500,000 or $1 million. Anything under that is what’s known as tail spend. “So procurement really focuses on companies’ biggest purchases, say things over a million, but anything under that size just gets forgotten about and neglected. It’s called tail spend, and it’s still 80% of what they buy, 80% of their vendors and 20% of the budget,” he told me.

This spending accounts for billions of dollars, yet Frechette says, it has lacked a good tracking system. He saw an opportunity, and he and his co-founders built a solution. Its first customer was the MBTA, Boston’s mass transit system (a system that could use all the help it can get in terms of getting more efficient). Today the company has more than 50 customers across a variety of industries.

The system acts as a marketplace for vendors and a central buying system for customers where they can find goods and services at this price point below $1 million. It imports a customer’s vendor data, and then combines this with other data to build a huge database of buying information. From that, they can determine what a customer needs and using AI, find the best prices for a particular order.

Frechette says this not only provides a way to save money — he says customers have been able to cut purchase costs by 10% with his system — it also provides a way to surface diverse vendors, whether that’s businesses owned by women, people of color, veterans, local business or however you define that.

He says too often what happens is that these deals aren’t put under typical procurement department scrutiny and they just get passed through, but Fairmarkit helps surface these companies and give them a shot at the business. “So because the core of our technology is a vendor recommendation engine […], we can help to invite those diverse vendors and really just give them a fair shot,” he said.

The company started the year with 40 employees and have added 30 since. The plan is to double that number next year, and as they do, Frechette hopes to reflect the diversity of the company’s product by building a correspondingly diverse employee base.

“It’s really just keeping it at the forefront. We want to make sure that we’re not just doing surveys around how we are doing for diversity and inclusion, but we’re putting programs in place to help out with it. It’s something I’m very very passionate about because it’s been such a sticking point as well on how we’re helping diverse vendors,” he said.

Frechette says that he has managed to grow the company and build a culture in spite of the pandemic not allowing employees to come into an office. He doesn’t see a world where the office will be a requirement in the future.

“We’ve hit an inflection point this year where there’s no world where we need everyone to be in an office […], which once again only helps to accelerate our business because we’re not constricted by everyone in this one small [geographical] sector. We can operate across the board [from anywhere],” he said.

Procurement isn’t the most exciting topic in the world, but for large businesses, it’s an area where inefficiencies can quickly affect the bottom line. Simply getting a complete view of all of the products and services that a company buys is a challenge in itself, though, which in turn makes it hard to find savings, ensure compliance with company policy or government regulations or detect potential fraud. Suplari wants to change this by bringing its AI systems to bear on this problem.

The company today announced that it has raised a $10.3 million Series A round led by Shasta Ventures. Existing investors Madrona Ventures and Amplify Partners also joined this round, as well as new investors Two Sigma Ventures and Workday Ventures.

“Suplari uses advanced artificial intelligence on top of existing enterprise systems to proactively uncover the highest-value opportunities to pursue and empower the CFO or Chief Procurement Officer to unlock savings and profit that can be invested in growth, innovation, and their people,” said Suplari CEO and co-founder Nikesh Parekh in today’s announcement.

The company’s cloud-based service allows businesses to analyze all of their procurement data across platforms and formats. This data can include contracts, purchasing data, product usage information and data from corporate credit card accounts.

A number of Fortune 1000 customers have already signed up for the service and Supplari argues that it has helped its customers save software licensing fees by 33 percent and consolidate $200 million in professional service and temporary labor suppliers.