With COVID-19 disrupting the entire manufacturing supply chain including semiconductor shortages, companies across multiple industries have been struggling to seek a procurement solution that can rebalance the gap between supply and demand.
CADDi, a Tokyo-based B2B ordering and supply platform in the manufacturing and procurement industry, helps both procurement (demand side) and manufacturing facilities (supply side) by aggregating and rebalancing supply and demand via its automated calculation system for manufacturing costs and databases of fabrication facilities across Japan.
The company announced this morning a $73 million Series B round co-led by Globis Capital Partners and World Innovation Lab (WiL), with participation from existing investors DCM and Global Brain. Six new investors also have joined the round including Arena Holdings, DST Global, Minerva Growth Partners, Tybourne Capital Management, JAFCO Group and SBI Investment.
CADDi was founded by CEO Yushiro Kato and CTO Aki Kobashi in November 2017.
The post-money valuation is estimated at $450 million, according to sources close to the deal.
The new funding brings CADDi’s total raised so far to $90.5 million. In December 2018, the company closed a $9 million Series A round led by DCM and followed by Globis Capital Partners and WiL and Global Brain.
The funding proceeds will be used for accelerating digital transformation of the platform, hiring and expanding to global markets.
“We enable integrated production of complete sets of equipment consisting of custom-made parts such as sheet metal, machined parts and structural frames, CEO and co-founder Yushiro Kato said. “Using an automatic quotation system based on a proprietary cost calculation algorithm, we select the processing company that best matches the quality, delivery date and price of the order and build an optimal supply chain.”
The goal of CADDi’s ordering platform is to transform the manufacturing industry from a multiple subcontractor pyramid structure to a flat, connected structure based on each manufacturer’s individual strengths, thus creating a world where those on the front lines of manufacturing can spend more time on essential and creative work, Kato said.
CADDi’s ordering platform, backed by technology, including an automatic cost calculation system, optimal ordering, and production management system, and drawing management system, offers a 10%-15% cost reduction, stable capacity and balanced order placement to its more than 600 Japanese supply partners spanning a multitude of industries.
“The demand for CADDi’s services has seen significant acceleration,” Kato said. “Our business has been growing very fast, and our latest orders have grown more than six times compared to the previous year, leading to the company’s expanded presence into both eastern and western Japan in order to meet this increase in demand.”
The company plans to provide the production management system and drawing management system to its customers, Kato noted.
“As a start point, in the near future, we are thinking about selling ‘Drawing Management SaaS,’” which has been used internally for CADDi’s ordering operation to help customers solve operational pains in handling piles of drawings. Its drawing management SaaS technology will not only help manage drawings as documents properly but also allow the utilization of data of drawings in a practical way for future decision-making and action in their procurement process, according to the CEO.
CADDi’s next axis of growth will be other growing markets, especially in Southeast Asia, Kato pointed out. “Many of our Japanese customers have subsidiaries and branches in these countries, so it’s a natural expansion opportunity for us to strengthen our value proposition and provide more continuity and seamless service to our customers,” Kato said.
The startup, which had 102 employees as of March 201, intends to hire 1,000 employees in the next three years, with a goal to generate sales of USD 9.1 billion (that is 1 trillion YEN) by 2030.
Masaya Kubota, partner at World Innovation Lab, told TechCrunch, “CADDi’s solution of aggregating and rebalancing supply and demand has once again proven to be indispensable to both purchasers and manufacturers, with the pandemic disrupting the entire supply chain in manufacturing. We first invested in CADDi in 2018, because we strongly believed in their mission of digitally transforming one of the most analog industries, the $1 trillion procurement market.”
Another investor principal at DCM, Kenichiro Hara, also said in an email interview with TechCrunch, “The pandemic made the manufacturing industry’s supply chain vulnerabilities quite clear early on. For example, if a country is on lockdown or a factory stalls the operations, their customers cannot procure necessary parts to produce their products. This impact amplifies, and the entire supply chain is affected. Therefore, the demand for finding new, available and accessible suppliers in a timely manner increased in importance, which is CADDi’s primary value-add.”