Tealbook, a startup that aims to make sourcing of suppliers more efficient for enterprises, has raised $6.53 million CAD ($5 million USD) in what it is calling a seed plus funding round, or what is more commonly known as a bridge round.
The round was led by United States-based venture firm Refinery Ventures, which specializes in early-stage companies, making investments between post-seed and Series A. Tealbook’s round saw participation from two other US investors, Grand Ventures and Workday Ventures, the strategic capital arm of enterprise cloud company Workday.
“We found our product market fit and now we’re able to put more capital behind it.”
Existing investors StandUp Ventures and BDC Capital’s Women in Technology Venture Fund also participated in the round.
The $6.53 million comes as Tealbook, led by CEO and founder Stephany Lapierre, spent the last six months repositioning its business to pivot its offering and message.
Tealbook was founded in 2014 with the goal of bridging the gap created by traditional procurement processes. Using machine learning, the Toronto-based startup developed a platform to help enterprises more easily source and access their supplier base.
Over its five year lifespan, Tealbook was originally focused on building an interface as a way to collect and disseminate data. Lapierre called it a very use case-focused business. Now, the startup is focused more on data.
Instead of leading as a software company, Tealbook is positioning itself as a data company that uses machine learning to supplement existing procurement software that enterprises may already use. The idea is to power all procurement software and be fully integrated across a company’s entire technology stack.
“We found our product market fit and now we’re able to put more capital behind it,” Lapierre told BetaKit. She noted that Tealbook is addressing a gap in what is seen as a $20 billion digital procurement market. The Government of Canada itself procures an average of $20 to 26 billion in goods and services each year.
“There’s a need for increasing the amount of insight and data analytics for procurement teams to be able to move into the future digital transformation, and, so far, they’ve been quite paralyzed,” Lapierre said.
Impressively, Tealbook was able to reposition itself without having changed its technology or roadmap. Lapierre attributes much of this to the recent hire of Matt Palackdharry who joined the company in July as vice president of sales and strategy.
Formerly the head of sales at real-time procurement software company Aquiire, which was purchased by Coupa in October of 2018, Palackdharry actually reached out to Tealbook suggesting that the startup was sitting on a “gold mine” and there was a better market fit than what was presented in its marketing materials.
Palackdharry joined Tealbook from Cincinnati, Ohio, where Tealbook decided to open an office at the end of September. Within two months, Tealbook was closing deals with large companies that were interested in its newly focused offering.
The repositioning was also a key reason Tealbook was able to attract its recent investors. “It got investors very excited about the market opportunity and also to see the traction we got in six months,” said Lapierre. “Seeing how well it landed, and we started closing much larger and much faster deals with companies.”
“Advanced analytics depend on good data,” said Tim Schigel, managing partner of Refinery Ventures. “This is especially true in the eProcurement market. And in order to make progress, organizations must have the ability to access the right data. Tealbook is the only company that can provide this type of granular visibility to its customers.”
Tealbook plans to use its seed plus funding to continue to build out its Cincinnati team, with a focus on growing its marketing and sales department. It hopes to accelerate its growth and solidify its position as the go to platform for supplier data. Tealbook plans to grow its current team of 20 to more than 30 employees by the end of the current quarter, with the goal of 50 people by the end of the year.
The capital will also be heavily spent on enhancing Tealbook’s machine learning capabilities, as well as expansion on a global level. The startup plans to develop versions of its platform for international users, in a number of native languages. It will also focus on developing APIs and generally being “data first.”
“[This round is] great news for us and it validates that what we’re doing is on the right path,” said Lapierre. “Especially with the investors that have come into this round…[it’s] great validation that they got so excited about our technology and our data positioning.”
This seed plus financing brings Tealbook’s total funding to date to around $10 million. The startup had previously raised seed funding in 2017. Lapierre called the $6.53 million a way to validate its repositioning and set the company into a hyper-growth stage. And with its newfound success, Lapierre is already eyeing a Series A round for the end of 2020 or the beginning of 2021.
Images courtesy Tealbook