The funding landscape remains tough for tech startups, but there are still some pockets, and specific companies, that are currently attracting a lot of investor interest because they seem like will outpace whatever current macroeconomic trends are gripping the world. Today, a startup in Munich is called IntegrityNext announced that it has raised its first funding, a 100 million euro ($109 million) equity round, for a new twist on supply chain software: a platform that helps organizations have many suppliers that automatically check and monitor those companies for compliance with environmental and sustainability governance (ESG) rules — both those that companies set for themselves, as well as Rules coming from governing bodies are evolving.
The funding comes from a single investor, EQT Development, and it will be used to continue building the breadth of the platform and the company’s go-to-market position: it has a growing number of clients. growing — and even a nascent number of potential suppliers — across the US and Europe, and so the plan is to build more capacity to meet that opportunity. Those capabilities will fall within its commitments to the environment and ethical labor, and there are currently no plans to repeat audits around, for example, whether a supply chain involves a company. in the act of violating the embargo against countries on political disputes or national affairs. protect.
The product’s bottom line is a publicly available big data entry tool sourcing platform that helps develop risk profiles for different markets and different companies , supplemented by regular contact with businesses in the supply chain to provide insights. All of this is aggregated into a database, which then provides an alert and audit system for IntegrityNext customers to better understand what’s going on in their supply chain. However, what they do next is up to those clients: they can then use this to help ask their partner to change or change partners, or send an auditor to investigate. deeper or I guess nothing at all. But in the end, this is about building a way to manage what can be thousands of suppliers for a number of companies.
“You have to find an effective way to manage that,” said Dominik Stein, a partner at EQT Development. “You can’t go to every company and test everything yourself, that doesn’t work.” (Stein will be on the advisory board in this round.) From what I understand, a typical customer can pay $60,000/year for service, but this number could be significantly higher or lower depending on depends on the size of the supply chain.
IntegrityNext, and this round, are part of a group of startups that have grown impressively over the past few years, but under the radar. The startup has been profitable since 2004 and so far it is fully bootstrapped. On its own, it selected a list of 200 enterprise customers, including Siemens Gamesa, Infineon and SwissRe, with a supply chain database monitoring nearly 1 million suppliers across 190 countries. According to CEO Martin Berr-Sorokin — who co-founded the company with Simon Jaehnig (CRO) and Nick Heine (COO) — the decision being made to advance right now is essentially a strike while the iron is still on. hot.
The company has never received capital from outside, he said, but it has no shortage of domestic interest, and the state of the market and the fact that raising capital may not be easy later on affected everyone. rank.
“We want a strong partner for the next phase of growth,” Berr-Sorokin said in an interview. “We are moving to the next stage, we need support to recruit, expand our network, sales and marketing, and penetrate new markets in Europe and the US. We don’t need to do that. It was a choice, and we feel fortunate to have made it.”
ESG is growing rapidly as a market opportunity at the moment. On the one hand, consumers, thanks in part to social media, have become significantly more aware of how a business’s supply chain can effectively adorn it with the tar of labor exploitation. and poor environmental practices, and that’s putting a lot of pressure on those businesses to do better. Meanwhile, businesses themselves are ultimately run by people. Some can be tough when it comes to getting the business done at any cost, but others are conscientious and want to do the right thing, not just for looks.
On the other hand, there have been notable developments taking place in the legal arena that could make anything “yes good” around ESG more of a “must do”. In Germany, companies with more than 3,000 employees are required to provide audit and reporting services to prove their own ESG compliance — compliance set by the regulator — to avoid penalties and other penalties. That number is down in 2024 for 1,000 employees. And in Europe, there is a regulation underway that will place similar requirements on EU companies, reducing the number of employees to 250.
And that opportunity is definitely the one to be discovered by others: world And previous wave is also building platforms that automate the inspection and monitoring of enterprise suppliers. others like Sales force have started to include ESG supplier monitoring in their sustainability suite, and a startup in France, sesameis building AI technology to help companies deliver on their sustainability commitments.
That’s not the whole story, though: there will be inevitable hurdles to these regulations, and there’s a big question mark as to how all of this will play out in one of them. the largest and most industrialized countries in the world, the United States, where some legislators have floated the idea of not only staying away from any regulation of this kind, but even actively prevent Development on this front is against economic progress. Businesses aren’t all on board either.
“Yes, some companies complain but others see it as a competitive advantage to being good in ESG,” says Berr-Sorokin. “Of course the management regime will help us but if it is pushed back, we still tend to be in the society and the good practices of the company.”
