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Tradeshift cuts headcount by three figures in effort to turn towards profitability

Last month Tradeshift, a platform for supply chain payments which has achieved unicorn startups in recent years, had some good news and some bad news. It announced a Series F funding round of $240 million in equity and debt, raised from a combination of existing and new investors. It’s now raised a total of $661M since it started in 2008 and investors include Goldman Sachs, Principal Strategic Investments and Wipro Ventures among others.

The new funding came, despite talk of a possible IPO last year. In effect, this new funding round was an admission by the company that it was delaying any IPO and setting the company “on a direct path to profitability in the near future,” which is exactly the kinds of noises many larger tech firms have made in the wake of the WeWork and Peleton issues with the public markets.

During that announcement CEO and co-founder Christian Lanng also admitted that the drive toward profitability would mean a cost-cutting exercise ahead of any possible IPO.

Lanng said this would likely mean reducing headcount in its expensive San Francisco offices, but reallocating resources and talent to locations where that is more affordable.

The company has many no formal announcement about the detail on that, but yesterday we got confirmation from the European tech press that the cuts were indeed starting to bite.

The Danish version of ComputerWorld reported that the staffing cuts have now run into 3 figures and were conducted in mid-January.

The cuts came from headcount at the company’s offices in Copenhagen, San Francisco and other offices.

Mikkel Hippe Brun, a co-founder of Tradeshift and head of the company’s Asian business, confirmed the information to Computerworld, but indicated that “there are still some consultations around the world, where we are subject to different rules about notifications and opportunities to raise objections.”

However, he said that the company still has more than 1,000 employees worldwide, which is “significantly more employees” than two years ago.

At the same time, the company has also brought in new executives from SAP, Oracle and Microsoft, among others, as the company tightens its belt, according to ComputerWorld.

Tradeshift has an impressive array of investors such as Goldman Sachs, although it’s notable that this doesn’t include any of the usual round of typical SaaS-oriented Valley VCs.

Tradeshift customers have included Air France KLM, Kuehne + Nagel International AG, DHL, Fujitsu, HSBC, Siemens, Société Générale, Unilever, and Volvo.

Tradeshift raises $240M and appears to put its expected IPO on hold — for now

Tradeshift — the startup which set out to disrupt the traditional arena of supply chain payments and marketplaces when it first appeared in 2008 – has today announced a new funding round of $240 million in equity and debt, raised from a combination of existing and new investors.

The funding will be used to help accelerate its growth and, it says, set the company “on a direct path to profitability in the near future.”

That last line is telling, as the new funding comes in the context of what was widely held to be a window of opportunity for Tradeshift to head towards an IPO.

What this new funding means it that Tradeshift is effectively delaying its IPO to get its ‘house in order’ in the context of a new economic environment which has become skeptical towards tech IPOs in the wake of the WeWork debacle, which saw public investors cool towards new tech company listings.

Although the company isn’t saying this, perhaps in this instance, it’s motto should be temporarily changed form “shift happens” to the more apt “shit happens”.

Still, at least Tradeshift is coming from a position of relative strength. In a statement, the company said it has reported more than two years of strong growth in quarterly revenue, recorded its best-ever year in 2019, including more than 60% revenue growth, with more than 250 deals closed (the average deal size was doubled). Furthermore, more than 40% of the total cumulative transaction volume across its platform came in the past year, it says.

Tradeshift said the additional capital will be used to further momentum it’s seen across core product lines including Tradeshift Pay, which was ranked in 2019 as the strongest ePayables SaaS solution in the industry by analyst firm Ardent Partners, and Tradeshift Go, with over 200 new customers signed in 2019.

The new investment will also support the monetization of its trade finance proposition across a user base of over two million suppliers.

“The additional funding we’ve secured is a testament to the belief the investor community has in our vision and our business model,” said Christian Lanng, CEO of Tradeshift in the statement.

“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.”

I asked him what he means by ‘networked’. Lang believes we are moving “from cloud businesses to networked businesses”, where, instead of companies, like Microsoft, having one single solution, but offering a variety of other products (such as LinkedIn and Skype), rather thanks single-use tools.

“The fact that both Microsoft and Salesforce bid for Linkedin shows that we have moved into a Network era” he told me.

Tradeshift’s drive towards profitability ahead of possible IPO, also means it’s going to slash costs to bring overheads in line with revenue.

Lanng said this will likely mean reducing headcount in its expensive San Francisco offices, but reallocating resources and talent to locations where that is more affordable. He told me “costs and margins” would now be the focus.

“As we reach the next phase in the maturity of our business, our focus for the coming year will be about doubling down in areas where we’re seeing the greatest momentum, while continuing to ensure we have the necessary balance in place to fully capitalize on the enormous opportunities in front of us,” he said.

What is clearly unspoken about this latest move is that this leaner, meaner Tradeshift is going to continue to weather this year, at the very least, as a private company before, most likely, looking towards its long-awaited IPO in the mid-term.

Tradeshift says it’s seen a ‘huge drop’ in UK transactions amid Brexit uncertainty

The U.K. is experiencing a significant and drastic fall in the volume of business-to-business transactions, according to the CEO of one of the world’s largest B2B payments and supply chain logistics platforms.

In an exclusive interview with TechCrunch at the World Economic Forum in Davos, Switzerland, Tradeshift CEO and co-founder Christian Lanng said: “We see the numbers. There has been a huge drop in the purchase orders in the U.K. in December last year. Especially in retail. But it’s cross-sector. It’s manufacturing, retail, logistics.”

Tradeshift is a cloud platform for supply chain payments, marketplaces and apps, and is one of Europe’s tech unicorns and has raised more than $432 million to date.

He said Tradeshift works with a “major manufacturer” in the U.K. which has “one hour of inventory” feeding its production line. He declined to name the firm.

Speaking about the effects of Brexit on supply chains, he said: “If you add 10 minutes of custom checks to every truck feeding that production line you create a traffic jam that cannot be resolved. It would last a week before it would get sorted out. They literally cannot operate the factory,” he said.

“Forget about the politics. This is just a very technical thing that’s going to happen. People don’t understand the facts. You can discuss it in a very abstract level but literally, it’s just like that.”

“People forget about the practices or realities of the supply chains across the channel and nobody is engaging really in any serious way with the people who know how that stuff works, because [Brexit] is like a circus, right?”

Speaking about Tradeshift’s recent acquisition of Bableway, a cloud integration technology platform, Lanng said the combined companies will process “more than a trillion dollars of payments. That’s twice as large as PayPal and three times as large as Amazon in just payment volumes,” he said. “Between us we’ll have a bigger chunk of the world economy in terms of B2B, not B2C.”

Does Laang think there will be a global slowdown, as some are predicting? “Our view is pretty simple. China freaked everybody out about how fast they moved with technology such as on healthcare, renewable energy, electric cars, AI and financial services. And they’re now starting to push ‘Made in China’ by 2025.”

“So [the West] is losing the global leadership. We have been slow to adapt to electric, or renewable energy. It was described as a hippie thing, but now it’s the future of the world. Countries using tariffs [to slow down China] it’s not going to work. We’re very bullish on Asia and any country in the world that’s ‘leaning in’ to technology.”