SourceDay Collects $6.5M In Series A Funding, Plans Expanded Sales And Channel Efforts

Supply chain and procurement application startup SourceDay has completed a $6.5 million Series A round of financing, the company said Wednesday.

The company, founded in 2013 and based in Austin, will use the new financing to expand its sales and marketing efforts – including expanding its channel initiatives – and broaden and accelerate its product development work, CEO Tom Kieley said in an interview with CRN.

"This round of funding is very strategic for us," Kieley said. The financing came from venture capital firms Silverton Partners, Draper Associates and ATX Seed Ventures and brings the company's total financing to $10.8 million, including a $750,000 convertible note in 2015 and a $3.5 million seed funding round last year.

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SourceDay develops cloud applications for automating direct spend procurement, purchase order management and supplier collaboration. ("Direct spend" is the purchase of materials, components and supplies used to assemble a company's products.) The company's Software-as-a-Service applications, which debuted in 2015, help manufacturers manage the often complex "procure-to-pay" processes associated with working with hundreds, even thousands of suppliers.

The company said it is especially winning customers as more manufacturers look to apply digital transformation to their supply chain management. Digitization is seen as key to controlling spending, managing parts inventory and improving collaboration with suppliers.

By 2025, more than 50 percent of global midmarket and large enterprise companies will be using procure-to-pay applications deployed in the cloud, according to market researcher Gartner.

SourceDay's target customers are mid-size discrete manufacturers with revenue between $50 million to $1 billion, with companies with revenue in the area of $250 million the sweet spot, according to Kieley.

SourceDay applications are built on a single-instance, multi-tenant architecture that allows buyers and suppliers to connect on the same system. SourceDay applications connect with Enterprise Resource Planning (ERP) application systems from such vendors as SAP, Oracle, Microsoft, NetSuite (now owned by Oracle), Acumatica, Epicor, Infor and others. "We're driving real-time data out of the ERP systems, which is driven by the purchase demand," Kieley said.

The company has technology partnerships with some of those vendors and the company works closely with the regional and global systems integrators and ERP consultants that provide ERP system implementation and customization services. SourceDay's partner roster includes Business Intuition, Estes Group, LogicData and Synergy.

SourceDay plans to use some of the new funding to increase the number of its technology and reseller partnerships and Kieley said the company is close to hiring an executive to oversee its strategic alliance partnerships.