We are announcing today a $6m (£4.5m) investment in UK headquartered supply chain automation company Virtualstock. This investment represents the latest development in a theme we have long followed at Notion. Digital disruption in commerce is having a profound impact on businesses, whether it be sellers seeking to distribute their products in an increasingly omnichannel world or buyers under pressure to optimize their supply chains. The former drove our investments in Volo and Brightpearl; the latter in Tradeshift and now Virtualstock. But these are really two sides of the same coin. Both bring significant challenges for market participants around catalog management, inventory, pricing, and data. But with challenge comes opportunity – the opportunity to sell more products (range expansion) to more people (extended marketplaces) at better margins (price optimization) holding less inventory (drop-shipping) – and to do so in a way which delivers an exceptional customer experience. The ultimate destination will be that networks and marketplaces become the de facto standard for B2B commerce, as they increasingly are for B2C. Forrester estimates that B2B e-Commerce will top $1.2 trillion in the US alone by 2021, more than double B2C e-Commerce. Read more about Virtualstock here.
Existing enterprise ERP systems are poorly equipped to deliver simple and seamless integration with supply chains or wider marketplaces – and internal IT resources have many competing priorities. Virtualstock solves this problem by providing a many-to-many integration layer with real time data mapping between large enterprise companies and their supply chains and, in doing so, enabling procurement-to-pay processes for businesses which rival buyer experiences on Amazon. They currently focus on two sectors: retail (their origins, having co-developed their offering with Tesco) and more recently health (where the NHS is under extreme pressure to deliver procurement savings and improved efficiencies for users through modern purchasing practices). These are both big markets in the UK but Virtualstock’s ambition extends well beyond these shores and sectors.
As with so many other market segments in technology, this is one where the impact of emerging machine learning technologies will be profound. Virtualstock has a massive proprietary data set of products and buyer behaviors. They will increasingly focus on leveraging this asset to drive supply chain efficiencies as the business grows.
Largely ‘bootstrapped’ to date, the team at Virtualstock has built a multi-million-pound revenue business on scarce resources. Founders Tim Ingham (product) and Ed Bradley (sales) brought in ex Samsung and Cambridge Technology Partners executive Andrew Mills as CEO a couple of years ago and he has built upon their vision, expanding the leadership team and developing a number of high-potential commercial partnerships. Lots still to do but the business feels poised for scale and we look forward to helping them on the next chapter of their journey.
Posted by Stephen Chandler, Managing Partner at Notion Capital
Join our network of 1000+ subscribers to keep updated with our new investments, partner insights and portfolio news.