In this special edition of Supply Chain Matters This Week in Supply Chain Tech, we highlight the announcement of added equity funding for o9 Solutions.
This week, Dallas, Texas based supply chain planning and advanced analytics software technology provider o9 Solutions announced an added round of private equity funding amounting to $116 million.
This tech provider’s stated mission is to provide global companies with a game-changing planning platform to transform their supply chain, commercial, finance, and sustainability decision-making. The company’s AI enabled Integrated Business Planning platform is termed the “Digital Brain.” Lighthouse customers include names such as ABInBev, Caterpillar, Nestle, Pepsico, Samsung, among other listed names.
Our readers may well be familiar with the two founders of o9 Solutions. The company was founded in 2009 by Sanjiv Sidhu and Chakri Gottemukkala, tech entrepreneurs with a track record of value creation by delivering innovative planning solutions for global companies. Sanjiv was the Founder and CEO of the former i2 Technologies, a company that provided supply chain advanced planning and supply chain management software in the early 1990s and 2000s.
Reportedly, this latest investment follows a continued period of growth, reportedly including 55 percent year-over-year growth in Annual Recurring Revenues (ARR) as of Q2-2023. The company reported 65 percent ARR growth for 2022. No profitability performance was provided.
General Atlantic’s BeyondNetZero, the inaugural companion fund for the growth equity firm’s climate investing efforts, led this latest round, with participation from existing private equity investors KKR and Generation Investment Management.
In conjunction with the transaction, o9 announced that General Atlantic Operating Partner Gary Reiner has joined the company’s Board of Directors, bringing deep expertise at the intersection of technology, strategy and operations. Mr. Reiner joined General Atlantic in 2010 and provides strategic support and counsel to the firm’s technology investment teams and portfolio companies. Prior to joining General Atlantic, Mr. Reiner served as Senior Vice President and Chief Information Officer at General Electric for nearly 20 years.
General Atlantic’s other supply chain planning or ESG focused tech providers include Coupa and Ecovadis.
Pegged Valuation
The most significant byline to this latest o9 investment announcement is the pegged valuation.
This column highlighted o9 Solutions’ prior $295 million investment in January 2022. That prior round was led by KKR and valued the supply chain technology provider at $2.7 billion.
This latest round values the tech provider at $3.7 billion, a considerable increase given today’s market conditions, especially in the current challenging equity market that has throttled down tech provider valuations.
Added equity investment deals in the current environment will often include specific performance objectives, growth milestones and added considerations for equity partners. We would not be surprised if this transaction included such considerations, although we have not been briefed on added specifics.
Added Perspectives
The latter part of o9 Solutions’s mission statement, sustainability based decision making, has by our lens, provided the added impetus for continued equity investment.
Supply chain planning and response technology providers, both independent best-of-breed and enterprise ERP based, have been augmenting their supply network planning and decision-making support applications to increasingly weight or optimize supply network Scope 3 emissions mitigation considerations for optimization weighting. Thus, by our lens, the o9 Solutions added investment implies a broader and more sustained momentum in this direction.
A further factor in this specific technology area is the coming together of traditional supply network and customer fulfillment and logistics execution process, workflow and overall decision-making capabilities. This is a fusion of tactical and operational planning with digital based scenario and what-if simulation connotations.
From our lens, the needs for bringing all of these areas together in overall planning and synchronization of material movements, along with addition of emissions mitigation, is a future direction in this market. This will most likely be a further consideration for o9 Solutions moving forward, as will be profitability growth.
Bob Ferrari
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