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.

Notion Capital launches new $150M fund aimed at European B2B tech

Notion Capital today announces a new $150M fund in a bid to bolster its claim to being the go-to investor for European B2B tech.

Launched ten years ago after the $700M exit of MessageLabs by co-founders Ben and Jos White, this new fourth fund will continue its previous focus on Series A SaaS and enterprise tech, but will now come with an increased focus on cybersecurity, automation and marketplaces. Notion now has $500M under management and over 50 investments. Its portfolio includes several European unicorns, including Tradeshift, GoCardless Unbabel, Paddle, CurrencyCloud, Duedil, Mews Systems and others.

Commenting, partner Stephen Chandler said: “When we founded Notion in 2009, we felt there was a mouth-watering, once-in-a-lifetime opportunity to help transform an industry and create a huge amount of value along the way. Having built the largest EU SaaS exit, we firmly believed that SaaS, as a fundamentally better way of delivering software, was going to be transformational and that we had a unique perspective.”

He also said: “Notion is the only post-seed VC in Europe started by B2B founders. That means a culture of entrepreneurial empathy and investigating the whys and hows, instead of just cold KPIs. We ran and built one SaaS company for ten years and have subsequently invested in and worked with 60+ SaaS companies over the next ten.”

In May of this year, Notion launched Included, a VC fellowship program, to increase the number of underrepresented communities within the venture capital industry and the diversity of deal flow.

It has now had more than 1,500 applications for 30 places on the 12-month fellowship which starts this month. Whilst Notion was the pioneer behind this initiative, the program is now widely supported and funded by a wide group of European VCs and other sponsors.